- Securitize proposes BlackRock’s BUIDL as collateral for Frax USD.
- BUIDL’s tokenized assets offer deep liquidity and reduced risk.
- BlackRock-backed BUIDL aims to disrupt stablecoin collateral markets.
A bold proposal by Securitize seeks to use BlackRock’s BUIDL fund as collateral for Frax USD, offering a new way to back stablecoins with U.S. Treasury-backed assets. This move promises enhanced liquidity, lower counterparty risks, and steady yields.
BUIDL as Collateral for Frax USD Stablecoin
Securitize has officially proposed the integration of BlackRock’s tokenized USD Institutional Digital Liquidity Fund (BUIDL) as collateral for the Frax USD stablecoin. This proposal aims to leverage the stability and liquidity provided by BUIDL, backed by U.S. Treasury securities, to support the value of Frax USD.
Securitize has facilitated the tokenization of real-world assets (RWA) and over $1 billion in investments. Securitize’s infrastructure enables secure and transparent transactions as well as ensure that BUIDL’s tokenized assets are compliant and easily transferable across various blockchain platforms.
If the proposal is approved by the community, BUIDL will be used to back Frax USD which will potentially provide more stability, increased liquidity and a more secure reserve system. This move could enhance the yield-generating capabilities of Frax USD as well as reduce risks that are traditionally associated with stablecoin collateral.
BUIDL Assets Under Management
BUIDL currently manages about $549 million in assets under management (AUM) and focuses on investments in the U.S Treasury bills, notes, and repurchase agreements. The fund seeks to maintain a stable value of $1 per token. Its tokenized structure provides decentralized finance (DeFi) with a reliable and stable reserve asset.
The tokenized BUIDL fund was launched in 2024 and has quickly gained attention in the DeFi market space. BUIDL’s assets are primarily composed of U.S. government securities, which make it a stable and low-risk option for backing a digital asset. Additionally, it provides a blockchain-based solution for institutional investments.
Benefits of BUIDL as collateral asset
BUIDL’s structure offers several benefits such as high liquidity and reduced counterparty risk, because it is backed by BlackRock, one of the largest asset managers in the world. Its tokenized nature also enables seamless transactions across various blockchain platforms, making it an attractive collateral option for decentralized protocols.
In addition to stability and liquidity, BUIDL generates yield through daily accrued dividends, distributed to token holders in the form of new tokens.This yield generation adds another layer of appeal for investors who are seeking stable returns.
BUIDL to Reshape Stablecoin Collateral Market
The integration of BUIDL into the stablecoin market could disrupt the existing collateral landscape. Other firms such as Ethena Labs also launched USDtb, a stablecoin backed by BUIDL in December 2024.
Additionally, BlackRock is reportedly in talks with major crypto derivatives exchanges to incorporate BUIDL as collateral. This could challenge the market dominance of current stablecoin providers like Tether and Circle.
BlackRock’s involvement in the BUIDL fund gives it credibility and stability which has positioned it as a reliable alternative to traditional stablecoin backing methods. As tokenized RWAs continue to gain popularity, BUIDL is poised to reshape the future of collateralized stablecoins, and efficiently bridge the gap between traditional finance and decentralized finance.