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. BlackRock’s BUIDL product, which is only six weeks old, now has a market capitalization of $375 million, exceeding Franklin Templeton’s BENJI fund, which has been in existence for 12 months and has a market capitalization of $368 million, according to Dune Analytics. Last week, BUIDL attracted $70 million in investments, including $50 million from Ondo Finance’s OUSG token. In contrast, BENJI’s assets under management decreased by around 3.7% during the same period.
The tokenization of real-world assets using blockchain technology has gained significant attention recently, with BlackRock CEO Larry Fink suggesting that capital markets could benefit from moving on-chain to improve efficiency. While treasuries are currently being tokenized, other assets such as stocks and real estate can also be tokenized. However, the demand for these tokenized products is currently low due to “thin liquidity,” according to 21.co research strategist Tom Wan. This lack of demand creates a challenge for issuers who struggle to see the benefits of tokenizing assets on-chain. Wan predicts that as demand increases, it will be easier to find end investors who are willing to switch over to tokenized assets.
Currently, tokenized government securities account for 1.4% of all assets tokenized on-chain, a significant increase from 0.1% at the beginning of 2023. Wan expects this market dominance to further increase to 10% in the future. He believes that mid to late-stage private equity firms have the most potential for growth in the tokenization space. Wan also anticipates that other ETF issuers will follow in the footsteps of BlackRock and Franklin Templeton by tokenizing real-world assets on-chain.
According to Boston Consulting Group, the blockchain-based tokenization market is estimated to reach $16 trillion by 2030. This suggests significant potential for growth and highlights various alternatives for blockchain fundraising, including ICO alternatives such as crypto airdrops and IDOs.