In a recent development, Securitize, the brokerage firm behind the tokenized BlackRock US dollar Institutional Digital Liquidity Fund (BUIDL), has submitted an improvement proposal to add BUIDL as backing collateral for the Frax USD stablecoin. This move is part of a larger trend where tokenized real-world assets (RWAs) are gaining popularity as collateral-backing and reserve assets for stablecoins.
What is BUIDL?
BUIDL is an investment fund that invests in United States government securities, making it a highly liquid and low-risk asset. By leveraging the value of BUIDL, Frax can tap into new yield opportunities, deepen liquidity, and provide transfer options to users. The backing of BlackRock, the world’s largest asset manager, also reduces counter-party risk.
The Benefits of Using Tokenized Real-World Assets (RWAs)
Tokenized real-world assets are gaining traction as collateral-backing and reserve assets for stablecoins due to their cost efficiencies, fast finality times, and potential for high-yield bearing opportunities. RWAs like BUIDL can provide a more stable and secure foundation for stablecoin issuance compared to traditional fiat-based systems.
BUIDL Statistics and Metrics
| Metric | Value |
| — | — |
| TVL (Total Value Locked) | $65 million |
| Trading Volume | $X |
| Market Capitalization | $Y |
Source: RWA.XYZ
Ethena’s USDtb Stablecoin and BUIDL
Ethena Labs, the developer behind Ethena, has developed a BUIDL-backed stablecoin called USDtb. This separate product offering from Ethena’s USDe synthetic dollar utilizes overcollateralization by cash and short-term US government securities held by the BUIDL fund at a 1:1 ratio with US dollars.
Why is BUIDL Important?
The integration of BUIDL as collateral for crypto derivatives trading would challenge the dominance of incumbent stablecoin issuers like Tether and Circle. This development has significant implications for the future of decentralized finance (DeFi) and the role of tokenized real-world assets in providing liquidity and stability to stablecoins.
BlackRock’s Push for BUIDL Integration
In October 2024, BlackRock began pushing for BUIDL as collateral on crypto derivatives exchanges. The asset manager reportedly entered into talks with Binance, OKX, and Deribit to integrate the tokenized fund as collateral on their platforms. This development highlights the growing interest in using RWAs like BUIDL as a more secure and stable foundation for stablecoin issuance.
Elixir Protocol’s deUSD Yield-Bearing Stablecoin
The Elixir Protocol’s deUSD yield-bearing stablecoin can be minted on the Curve decentralized exchange using BUIDL as backing collateral. This innovative approach provides users with access to new yield-generating opportunities while minimizing counter-party risk.
Conclusion
Securitize’s proposal to add BUIDL as collateral for Frax USD stablecoin is a significant development in the world of decentralized finance. By leveraging the value of RWAs like BUIDL, stablecoins can tap into new yield opportunities, deepen liquidity, and provide transfer options to users. As the use of tokenized real-world assets continues to grow, we can expect to see more innovative applications of RWAs in the future.
Related Reading
- Optimism High for Ethena’s USDtb Stablecoin as it Clocks $65M TVL on Day 1
- BUIDL Eyes Collateral Markets
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