As an experienced analyst, I see the recent development in the digital asset market, particularly in the treasury fund segment, as an exciting trend that could potentially revolutionize the way we manage and trade financial assets. The surpassing of Franklin Templeton’s product by BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) on Ethereum, Polygon, Solana, and other blockchains, marks a significant milestone in the tokenization of real-world assets.
As a financial analyst, I can tell you that the BlackRock USD Institutional Digital Liquidity Fund has recently taken the lead as the largest treasury fund tokenized on a blockchain, surpassing Franklin Templeton’s offering this week.
BlackRock’s six-week-old product, labeled BUIDL, boasts a market capitalization of $375 million, outpacing Franklin OnChain US Government Money Fund (BENJI), which was established twelve months ago and currently stands at $368 million, as per the latest data from Dune Analytics.
Last week, BUIDL secured $70 million in investments, with $50 million originating from Ondo Finance, a recognized firm specializing in tokenizing real-world assets, through their OUSG token.
Meanwhile, BENJI’s AUM shrunk around 3.7% over the same timeframe.
Over 1.2 billion dollars’ worth of U.S. Treasuries are now present on Ethereum, Polygon, Solana, and other blockchain networks.
Real-world asset tokenization using blockchain technology is gaining significant attention nowadays. Notably, Larry Fink, the CEO of BlackRock, has expressed his belief that capital markets could be optimized by transferring their operations onto the blockchain.
As a cryptocurrency investor, I understand that Treasury bonds are just one component of a diverse investment portfolio. There are numerous other assets, such as stocks and real estate, that can also be tokenized and invested in using digital currencies or blockchain technology. Expanding my portfolio to include these alternatives may provide me with more opportunities for growth and risk management.
Based on my analysis as a research strategist at 21.co, I’ve discovered that investor interest in these tokenized products is currently limited. One reason for this is the “thin liquidity” issue. In simpler terms, there aren’t enough buyers and sellers actively trading in these markets to facilitate larger transactions smoothly.
As a crypto investor, I’ve come across this dilemma myself: the struggle for asset issuers to justify the benefits of on-chain tokenization with minimal market demand, as Wan explained in his April 30 X post.
Industry players in the $140 billion stablecoin market have shown existing demand for U.S. Treasuries.
When the demand increases, it will become simpler for Wan to attract end investors who are willing to make the switch.
Approximately 1.4% of the overall tokenized assets on the blockchain currently consist of government securities, marking a significant growth from the mere 0.1% share at the beginning of 2023. According to Wan’s predictions, this sector is expected to expand its market influence, potentially reaching a 10% share in the future.
Based on the Boston Consulting Group’s projections, the market value for blockchain tokenization is projected to reach an astounding $16 trillion by the year 2030.
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2024-05-01 02:51