BlackRock’s BUIDL becomes world’s largest tokenized treasury fund

adminMay 1, 2024

The BlackRock USD Institutional Digital Liquidity Fund is now the largest treasury fund tokenized on the blockchain, after surpassing Franklin Templeton’s offering this week.

BlackRock’s six-week-old product, BUIDL, has a notch market cap of $375 million, surpassing the $368 million of the 12-month-old Franklin OnChain US Government Money Fund (BENJI), according to the Dune Analytics dashboard.

This follows BUIDL’s $70 million acquisition last week, including $50 million from real-asset tokenization company Ondo Finance’s OUSG token.

Meanwhile, BENJI’s AUM decreased by approximately 3.7% over the same period.

There is currently over $1.2 billion in U.S. Treasury bonds across Ethereum, Polygon, Solana, and other blockchains.

Blockchain-based tokenization of real-world assets has become a hot topic recently, with BlackRock CEO Larry Fink recently saying that moving them on-chain could make capital markets more efficient.

Treasury bills are only one piece of the pie. Stocks, real estate, and many other assets can also be tokenized.

Related: BlackRock deposits $100 million worth of USDC on-chain and then receives meme coins and NFTs.

However, investor demand for these tokenized products is currently low, according to 21.co research strategist Tom Wan, citing “lack of liquidity” as one of the main reasons.

Wan said in an April 30 post that this creates a “chicken and egg problem” as issuers struggle to see a clear benefit to tokenizing on-chain assets amid low demand.

The good news is that there is already demand for U.S. Treasury bonds from industry players in the $140 billion stablecoin market.

So, as demand increases, “it will be easier to find end investors to convert,” Wan explained.

Tokenized government securities currently account for 1.4% of total assets tokenized on-chain. This is an increase from 0.1% at the beginning of 2023. However, Wan expects this market dominance to increase to 10% in the coming years.