Just three months after its April 2024 inception, BlackRock’s innovative tokenized treasury fund, BUIDL, has quickly grown its assets under management (AUM) to more than $500 million. As a groundbreaking investment vehicle of the digital financial ecosystem, the fund is emerging to integrate blockchain technology with conventional financial assets.
Frax Finance’s proposal, however, suggests that BUIDL only touches government-issued assets like cash, U.S. Treasury bills, repurchase agreements, and notes. Its focus on being a ‘blockchain-based investment solution’ and a reserve back up to other stable investments mean that these would fit right in.
Frax Finance Explores BUIDL for Stablecoin Reserve
Instead, the fund is pegged to the U.S. dollar, and you receive daily accrued dividends to be distributed monthly. Its partnership with Securitize, a leading platform for tokenized securities, also makes this model possible.
BUIDL promotes a secure and efficient way to generate competitive yield opportunities and to improve liquidity for investors. With flexibility over asset transfers across numerous platforms and zero external risk due to partnerships with financial titans including BlackRock, Securitize, and Bank of New York Mellon, it enables the transfer of assets as fluidly and flexibly as possible.
DeFi applications’s the next frontier for building. A move that Frax Finance, a leading stablecoin issuer, is currently exploring is using the stablecoin as a reserve backing asset for the upcoming Frax USD.
“We are excited to work with Securitize and BlackRock and Frax USD to gain exposure to what is probably one of the most liquid assets in the world while still benefiting from the yield-bearing on-chain efficiencies of DeFi that BUIDL aligns with,” said Head of Governance at Frax Finance, Nader Ghazvini.
The need for tokenized financial products continues to rise, as evidenced by BUIDL’s meteoric growth. The fund is a combination of using blockchain with well-established investment principles that should lead to more efficient, transparent, and accessible investment options.
BUIDL has the institutional support behind it and exists in the DeFi ecosystem, and together they will redefine the hybrid of traditional and digital finance.
