BounceBit Executes Bitcoin (BTC) Derivatives Trading Strategy Using BlackRock's BUIDL Token

BounceBit, a crypto infrastructure provider using features from both centralized (CeFi) and decentralized finance (DeFi), has executed a bitcoin (BTC) derivatives trading strategy using BlackRock's yield-generating tokenized money market fund, BUIDL, to enhance returns.

Crypto infrastructure provider BounceBit has executed a bitcoin (BTC) derivatives trading strategy using BlackRock’s yield-generating tokenized money market fund, BUIDL (pronounced “be-dle”), to generate high returns. The strategy, which will be rolled out to institutions and retail users, combines a bitcoin basis trade with a short position on BTC put options, both collateralized by BUIDL tokens.

The basis, or cash and carry arbitrage, alone generated an annualized yield of 4.7%, while writing put options provided an additional 15%. Together with the 4.25% return from BUIDL used as collateral, the total yield exceeded 24%.

Integrating BUIDL as collateral was key to achieving a higher return compared to strategies collateralized by stablecoins, which do not generate any return.

“This strategy allows investors to capture both Treasury Bill yields and funding rate arbitrage returns in a single product, presenting a unique opportunity to maximize returns in the present market conditions,” said Jack Lu, founder and CEO of BounceBit.

BounceBit is a native BTC restaking chain that is secured by both bitcoin and BounceBit tokens. The network enables BTC holders to earn yields through native validator staking, the DeFi ecosystem and a CeFi-like mechanism powered by Ceffu and Mainnet Digital. As of press time, cryptocurrencies worth over $500 million are locked on BounceBit.

BounceBit plans to roll out the BUIDL-collateralised strategy to institutional and retail users soon.

“The successful pilot is a proof of concept to our new product line BB Prime, which will be available to both retail and institutional users in the upcoming months. This strategy underpins BB Prime as a new class of CeDeFi applications built on top of RWAs which are traditionally troubled by a lack of utilities beyond just holding for t-bill yield, hindering mass adoption.”

BounceBit is currently developing a suite of products and services for the institutional and retail markets, which will be powered by the BUIDL token and other yield-generating assets.

BUIDL, launched in March 2024 by Securitize and BlackRock, is a tokenized investment fund that is being deployed on multiple blockchains, including Ethereum (ETH), Aptos (APT) and Polygon (MATIC).

The token, which is currently trading at $24.54 and has a market cap of $2.88 billion, is backed by short-term U.S. government bonds and is designed to maintain a stable value, pegged at one dollar per token.

It is also being used to generate yield for investors, with the goal of providing a best-in-class investment product that meets the needs of today’s sophisticated investors.