Tokenized Real-World Assets Show Growth as BlackRock Expands Its BUIDL Fund

On May 27, Token Terminal reported growth in tokenized real-world assets and new investment strategies. They highlighted how asset managers integrate blockchain solutions

On May 27, Token Terminal reported on the growing trends of tokenized real-world assets and new investment strategies being deployed by asset managers to integrate blockchain solutions for broader financial market access.

One case highlighted was the BlackRock USD Institutional Digital Liquidity Fund expanding across multiple blockchain networks. A graph from BUIDL’s website showed that this tokenized money market fund had nearly three billion dollars in assets under management by late May. Among the networks, Ethereum was the largest host for these tokenized real-world assets, with other chains like Aptos and Avalanche each having over fifty million dollars.

RWA Market AUM Breakdown Highlights Ethereum’s Dominance

This chart from mid-May shows a snapshot of BUIDL's total assets under management across various blockchains. Ethereum held the majority with about 2.715 billion dollars of the total. Other large chains like Aptos and Avalanche had just over 50 million dollars each. Smaller chains like Arbitrum, Polygon, and Solana had less than 30 million dollars. These figures highlight Ethereum's dominant role. However, other networks are steadily gaining ground in the asset tokenization domain.

This signifies a broader adoption of these financial products beyond a single platform. The increasing interest in blockchain diversification bodes well for the market's resilience and capacity for competitive innovation.

Securitize Powers Compliance and Token Creation for BlackRock’s BUIDL

The BlackRock USD Institutional Digital Liquidity Fund is a tokenized money market fund that invests in short-term, low-risk debt instruments. It issues BUIDL tokens which are fully backed by short-term U.S. Treasury bills. The BUIDL tokens pay daily dividends to investors based on the yield of the underlying assets. Investors can access BUIDL on Ethereum, Solana, and Arbitrum.

Securitize is the company that manages the creation of BUIDL tokens and ensures they are compliant with financial regulations. They essentially serve as a bridge between traditional finance and blockchain technology by facilitating the issuance of legally recognized digital assets. This approach provides a regulated way to hold shares of funds in a tokenized format.

Securitize also enables the conversion between BUIDL and sBUIDL tokens through a digital vault service. Investors who wish to participate in DeFi protocols can lock their BUIDL tokens in the vault to receive sBUIDL tokens. These sBUIDL tokens can then be used as collateral in lending protocols like Euler or for liquidity provision in decentralized exchanges. BUIDL is designed for stable yield income while sBUIDL is made for additional decentralized use cases.

This service offering from Securitize creates a seamless linkage between regulated financial products and open decentralized finance applications. It guarantees compliance with regulations and facilitates broader access to new markets. Investors benefit by retaining exposure to the fund's yield and gains while having the flexibility to participate in decentralized borrowing options or liquidity provision.

Euler’s Liquidity Access and Wormhole’s Cross-Chain Accessibility

Institutions and crypto traders can access liquidity from sBUIDL tokens on protocols like Euler. People who deposit sBUIDL tokens can borrow stablecoins like USDC or AUSD. This allows investors to gain liquidity without selling their BUIDL tokens to obtain capital for other investments. They still receive daily yield from the BUIDL tokens and interest on the borrowed stablecoins.

Euler’s modular design enables the creation of custom markets with varied collateral rules. Developers can set liquidation parameters, adjust borrowing rates, and design specialized interest rate models for unique yield optimization strategies. Borrowers can also earn additional rewards on specific networks when using sBUIDL tokens for borrowing activities.

For cross-chain movements of BUIDL tokens, services like Wormhole provide seamless transfer capabilities. It enables the interconnection of major blockchains like Ethereum, Solana, Avalanche, and others. This supports the integration of a multi-chain ecosystem where investors can interact across various platforms.

The AUM data clearly shows Ethereum’s dominance but also highlights the increasing traction of newer chains. Aptos and Avalanche each have over fifty million dollars in assets under management, while Arbitrum, in particular, is rapidly gaining ground. These trends suggest a broader diversification of tokenized real-world assets across multiple blockchains.

This could be a positive development as it may lead to more innovation and risk distribution. However, it’s crucial to note that despite these advancements, investments in blockchain-based products still come with several risks. The price of BUIDL tokens is not guaranteed to remain stable at one dollar per token at all times.

Moreover, there is still regulatory uncertainty in the crypto sector, which could impact the performance of these products. Additionally, these products are susceptible to known and unknown risks like defects in smart contracts, fraud, and theft. The services offered by companies like Securitize and Euler help to mitigate some of these risks and improve the usability of blockchain-based products. But it’s important to understand that they cannot