The BlackRock USD Institutional Digital Liquidity Fund has achieved a significant milestone by becoming the largest treasury fund tokenized on a blockchain, surpassing Franklin Templeton’s product. In just six weeks, BlackRock’s BUIDL product has amassed a market capitalization of $375 million, outpacing Franklin Templeton’s BENJI fund, which has been in existence for 12 months and currently stands at $368 million, according to Dune Analytics.
This achievement was fueled by BlackRock’s recent influx of $70 million, with $50 million coming from Ondo Finance’s OUSG token, a real-world asset tokenization firm. In contrast, BENJI’s assets under management experienced a 3.7% decrease during the same period.
The tokenization of real-world assets has gained significant attention, with BlackRock CEO Larry Fink expressing his belief that capital markets can benefit from moving on-chain. While Treasurys are a prominent asset class in this regard, other assets such as stocks and real estate can also be tokenized.
However, despite the potential benefits, there is currently low investor demand for tokenized products, primarily due to “thin liquidity,” according to research strategist Tom Wan. This presents a challenge for issuers who may not see the clear advantages of tokenizing assets on-chain. Wan predicts that as demand grows, it will be easier to find end investors willing to transition to tokenized assets. Currently, tokenized government securities represent only 1.4% of the total assets tokenized on-chain, but Wan anticipates this market dominance will increase to 10% in the future.
Wan identifies mid to late-stage private equity firms as having the most potential for growth in the tokenization space. Additionally, he expects other ETF issuers to follow the lead of BlackRock and Franklin Templeton by tokenizing real-world assets on-chain.
Boston Consulting Group estimates that blockchain-based tokenization will become a $16 trillion market by 2030, further highlighting the potential growth and impact of this technology.
Overall, the tokenization of assets on the blockchain is gaining traction, with BlackRock’s BUIDL fund leading the way as the largest treasury fund tokenized on a blockchain.