BlackRock's BUIDL becomes the world’s largest tokenized treasury fund

The BlackRock USD Institutional Digital Liquidity Fund is now the largest treasury fund tokenized on a blockchain after it surpassed Franklin Templeton’s product this week.

BlackRock’s six-week-old product, tickered BUIDL, has notched a market cap of $375 million, surpassing the 12-month-old Franklin OnChain U.S. Government Money Fund (BENJI), which sits at $368 million, according to a Dune Analytics dashboard.

It comes as BUIDL took in $70 million in the last week, including $50 million from real-world asset tokenization firm Ondo Finance's OUSG token.

Meanwhile, BENJI’s AUM shrunk around 3.7% over the same timeframe.

More than $1.2 billion worth of U.S. Treasurys now exists across Ethereum, Polygon, Solana and other blockchains.

Blockchain-based tokenization of real-world assets has become a hot topic lately, with BlackRock’s CEO Larry Fink recently voicing that capital markets could be made more efficient by moving 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 low at the moment, according to 21.co research strategist Tom Wan, citing “thin liquidity” as one of the primary reasons.

This creates a “chicken and egg problem,” as issuers are struggling to see a clear benefit in tokenizing assets onchain with low demand, Wan said in an April 30 X post.

The good news is that demand for U.S. Treasurys already exist from industry players in the $140 billion stablecoin market.

Therefore, “it will be easier to find end investors to switch over,” when demand picks up, Wan explained.

Tokenized government securities currently account for 1.4% of the total assets tokenized onchain — up from 0.1% at the start of 2023. However, Wan predicts this market dominance will increase to 10% in the future.

Boston Consulting Group estimates blockchain-based tokenization will become a $16 trillion market by 2030.

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