Bankless – Blackrock’s $10T Bet on Ethereum | BUIDL Fund (02.04.2024 Summary)

Bankless – Blackrock’s $10T Bet on Ethereum | BUIDL Fund (02.04.2024 Summary)

BlackRock, the world’s largest asset manager, has taken a significant step in embracing Ethereum by tokenizing one of their funds, called the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), on the Ethereum blockchain.

This move is seen as a milestone for the crypto industry, as it signals the entry of a major traditional finance player into the tokenization space.

BlackRock has initially invested $150 million into BUIDL, which is expected to grow to $300-400 million based on inflows.

Let’s go a little more in-depth:

  • BlackRock partnered with Securitize, a company that specializes in tokenizing real-world assets, to create BUIDL, a tokenized fund composed of short-term treasuries and repos.

  • BUIDL tokens represent units of the fund, and token holders receive yield in the form of monthly “airdrops” of additional tokens, similar to dividends.

  • This move is expected to attract billions of dollars from crypto companies, stablecoin holders, and trading firms seeking to earn yield on their assets while keeping them on-chain.

  • BUIDL’s presence on Ethereum opens up possibilities for integrating with decentralized finance (DeFi) protocols, allowing BUIDL tokens to be used as collateral or traded on automated market makers.

  • The involvement of a major player like BlackRock is seen as a significant step towards the “tokenization of everything” and the potential for traditional finance to merge with the crypto ecosystem.

Overall, BlackRock’s jump into Ethereum with an initial $150 million investment in BUIDL is expected to drive more traditional assets onto the blockchain, improve the narrative around crypto’s legitimacy, and pave the way for further adoption of tokenized assets by major financial institutions.