BlackRock, the world’s largest asset manager, has announced the expansion of its flagship tokenized real-world asset fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). This fund, tokenized by Securitize and initially launched on Ethereum earlier this year, is now accessible on five additional blockchains: Aptos, Arbitrum, Avalanche, Optimism’s OP Mainnet, and Polygon.
Each of these new chains offers unique advantages such as faster transaction speeds and reduced fees, providing investors with more options and greater efficiency in their transactions. BNY, a key player in bridging traditional and digital financial ecosystems, facilitated the fund’s launch on these additional blockchains as the administrator and custodian for BUIDL.
What Is BUIDL?
BUIDL is a tokenized fund primarily backed by short-term U.S. government bonds, specifically Treasury bills (T-Bills). With its price pegged at $1, BUIDL offers investors a stable, low-risk asset with consistent yield. The fund pays daily dividends to investors’ wallets in the form of new tokens each month. Since its launch in March, BUIDL has garnered over $520 million in assets under management (AUM), establishing itself as the leading tokenized U.S. Treasury market product.
Expanding Access Across Multiple Blockchains
The expansion of BUIDL to five new blockchains by BlackRock enhances the utility and accessibility of the fund. This expansion also opens up opportunities for the use of BUIDL within DeFi platforms and protocol treasuries, providing a stable and reliable yield option in a historically volatile market. For example, Ondo Finance, a DeFi platform, has already developed products that leverage the BUIDL token, showcasing the growing potential of tokenized funds in decentralized finance. Additionally, the fund can be used as collateral for DeFi trading, further increasing its appeal.
Carlos Domingo, CEO of Securitize, expressed his excitement over the expansion, stating, “Real-world asset tokenization is scaling, and we’re excited to have these blockchains added to increase the potential of the BUIDL ecosystem.” BUIDL charges a management fee of 50 basis points on Ethereum, Arbitrum, and Optimism, while the fee is lower at just 20 basis points on Aptos, Avalanche, and Polygon. Ecosystem development organizations, including Aptos Foundation, Avalanche (BVI) Inc., and Polygon Labs BD Investments (Cayman) Ltd., will pay BlackRock a quarterly fee.
The Rise of Institutional Adoption in Tokenization
BlackRock’s expansion of BUIDL follows other major financial institutions’ significant steps towards integrating blockchain technology. Recently, JPMorgan Chase and Visa partnered to explore the feasibility of tokenizing cash and other assets. State Street, with $4.1 trillion in assets, also recently partnered with crypto tokenization platform Taurus to further this trend.
This move by BlackRock signifies a growing trend of institutional adoption in tokenization, showcasing the increasing recognition of blockchain technology’s potential in revolutionizing traditional financial systems. As more institutions embrace tokenization, the landscape of finance is poised for significant transformation.