BlackRock Enters DeFi. Its Tokenized U.S. Treasury Fund, BUIDL, Can Now Be Used as Collateral on Euler Finance

BlackRock has taken its first step into DeFi by allowing its tokenized Treasury fund, BUIDL, to be used as collateral on the Euler lending platform.

BlackRock is entering DeFi. Its tokenized U.S. Treasury fund, BUIDL, can now be used as collateral on Euler Finance, a decentralized lending protocol running on Avalanche.

BlackRock has taken its first step into DeFi by allowing its tokenized Treasury fund, BUIDL, to be used as collateral on the Euler lending platform, built on the Avalanche blockchain.

The move will enable users to lock up sBUIDL, a digital, fully redeemable version of the BUIDL fund backed by short-term U.S. Treasuries, as collateral to borrow stablecoins like USDC and AUSD. Borrowers will continue to earn yield from the underlying Treasuries while also receiving bonus AVAX, Avalanche’s native token.

sBUIDL, a tokenized version of BlackRock’s BUIDL fund, is fully backed by U.S. Treasuries and can be redeemed at any time, giving it real utility in DeFi without sacrificing liquidity or risk standards.

The system uses Chainlink’s decentralized data feeds to ensure accurate pricing and enhance security.

This initiative is part of BlackRock’s broader strategy to bring BUIDL to multiple blockchain networks—including Aptos, Arbitrum, Optimism, and Polygon—to expand the fund’s utility and reach in the DeFi space.

Until now, BlackRock’s tokenization efforts, mainly through partnerships with firms like Securitize, were focused on issuing digital versions of traditional financial products.

Euler is also launching a new liquidity program to support the integration of sBUIDL with Euler. The program will provide incentives for liquidity providers to contribute to the sBUIDL market on Euler, further expanding the protocol’s capital efficiency and service to the broader Avalanche ecosystem.

The integration also highlights Euler’s comeback story. Once the target of a major exploit, the protocol has rebuilt its infrastructure and reputation, now partnering with the biggest name in asset management.

Euler, a decentralized finance (DeFi) lending platform, suffered a significant setback in 2023 when a smart contract vulnerability was exploited, leading to the theft of $197 million in crypto assets. The attack impacted 3,464 assets across 14 protocols and affected thousands of users.

After months of focused effort, the Euler team successfully completed the migration of the protocol’s core modules to a new architecture. This new architecture is more modular, lighter, and significantly more developer-friendly.

Following the exploit and subsequent months of redevelopment and security upgrades, Euler relaunched in January 2024 on the Avalanche blockchain with a new design and a promise of enhanced security. By spring 2025, Euler had recovered momentum, boasting over $387 million in user deposits and over 26,000 unique users.

As major traditional finance (TradFi) players like Franklin Templeton and Fidelity International make strides in the crypto space, institutions are increasingly engaging with digital assets.

Franklin Templeton was an early adopter, launching the first on-chain money market fund in partnership with Boston Private in 2021. The firm is also a pioneer in tokenizing private credit and real estate assets. As of early 2025, Franklin is managing an estimated $689 million in tokenized assets.

Fidelity International is rapidly expanding its digital asset capabilities. In June 2025, the investment giant tokenized shares of its flagship money market fund on JPMorgan’s Onyx Digital Assets blockchain, marking a significant milestone.

JPMorgan’s Onyx platform is a critical enabler for institutions venturing into Web3. The bank’s engineers developed Onyx to tokenize and move value seamlessly across different blockchains and ledgers.

In May 2025, Harvest, a DeFi protocol, announced the integration of its yield aggregator with Euler. This partnership aims to enhance capital efficiency and liquidity in the Avalanche ecosystem. Harvest is known for its role in aggregating and maximizing yield for liquidity providers.