BlackRock’s BUIDL will be the world’s largest treasury fund.
BlackRock's USD Institutional Digital Liquidity Fund is the largest blockchain-backed treasury fund this week, outperforming Franklin Templeton's product.
BlackRock's six-week-old product, ticked BUIDL, has a market capitalization of $375 million, $368 million more than Franklin Onchain's 12-month-old U.S. Treasury Fund ( BENGJ ), according to Dune Analytics Dashboard.
It comes as BUIDL took in $70 million in the past week, including $50 million from real-world asset token firm Ondo Finance's OUSG token.
Meanwhile, Benji's AUM declined to 3.7% in the same time frame.
More than $1.2 billion worth of US Treasuries now exist 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 capital markets can be made more efficient by moving them onchain.
Treasurys are only one piece of the pie – stocks, real estate and many other assets can also be tokenized.
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However, investor demand for these tokenized products is currently low, according to 21.co research strategist Tom Wan, citing “thin liquidity” as the main reason.
This creates a “chicken and egg problem,” as issuers struggle to see a clear benefit in promoting low-demand properties in Onsen, Wan said in an April 30 X post.
The good news is that demand for US Treasuries is already there from industry players in the $140 billion stablecoin market.
Therefore, when demand arises, “it will be easier to find end investors to switch,” Wan explained.
Tokenized government securities currently account for 1.4% of total assets tokenized onchain – up to 0.1% at the beginning of 2023. However, Wan predicts that this market dominance will increase to 10% in the future.
Boston Consulting Group estimates that blockchain-based tokens will be a $16 trillion market by 2030.
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