In July, the BlackRock USD Institutional Digital Liquidity Fund, the BUIDL distributed a record $2.12 million in dividends to its investors, marking a 16% increase from June.
Since its launch in March this year, BUIDL has paid out over $7 million in total dividends.
Tokenized yield
The fund, operating on the Ethereum blockchain, allows investors to hold digital versions of U.S. Treasury bills, cash equivalents, and repurchase agreements.
There are an established competitors like Franklin Templeton’s FOBXX, so we can be sure the appeal for a tokenized money market funds among institutional investors is clearly strong, and growing.
Deloitte reports that these funds offer better liquidity, accessibility, and efficiency compared to traditional options.
And we know about many DeFi protocols that are using BUIDL for their derivative products. This also expanding the fund’s reach.
Growth strategy
The market for tokenized U.S. Treasuries is also growing big time, with total value rising from $726 million to nearly $1.9 billion in 2024.
Both BUIDL and FOBXX are major players on this field, each holding market capitalizations exceeding $500 million.
DAOs and DeFi projects looking for stable, risk-free yields, and these tokenized funds are the best choice for them.
Analysts think growth will conntinue in this sector, likely reaching $3 billion by the end of the year, and McKinsey predicts that the entire market for tokenized financial assets could reach $2 trillion by 2030.
BlackRock’s strategic focus is on the tokenized funds, not on crypto ETFs
While BlackRock has seen loud success with its Bitcoin and Ethereum ETFs, it remains focused on tokenized money market funds.
Chief investment officer Samara Cohen recently stated that the company is not looking to create funds based on other cryptocurrencies.
The growing tokenized asset market still operates in a regulatory gray area, which can pose risks and legal challenges for investors.
Also, their performance depends on the performance of the backing currency.
The biggest issue it is while tokenized Treasury bills are considered relatively safe, their value can be affected by changes in interest rates.
Have you read it yet? Market in red, but XRP showing strenght, what happens?
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