In recent times, the concept of tokenized real-world assets (RWAs) has gained significant attention in the cryptocurrency space. Specifically, RWAs are being explored as potential collateral-backing and reserve assets for stablecoins. This trend is driven by cost efficiencies, fast finality times, and the potential to introduce unique, high-yield bearing opportunities for holders.
Frax Improvement Proposal: Adding BUIDL as Collateral
Securitize, the brokerage firm behind the tokenized BlackRock US dollar Institutional Digital Liquidity Fund (BUIDL), has submitted a Frax improvement proposal to add BUIDL as backing collateral for the Frax USD stablecoin. This move is aimed at providing yield opportunities, deeper liquidity and transfer options, and reduced counter-party risk due to the backing of the world’s largest asset manager, BlackRock.
The proposal highlights several benefits of using BUIDL as a collateral reserve asset:
- Yield Opportunities: By leveraging BUIDL as collateral, users can access high-yielding assets, thereby generating additional revenue streams.
- Deeper Liquidity and Transfer Options: The integration of BUIDL as collateral will enhance liquidity and provide users with more flexible transfer options.
- Reduced Counter-Party Risk: As a tokenized fund backed by the world’s largest asset manager, BlackRock, BUIDL offers reduced counter-party risk, providing an added layer of security for users.
The proposal is still subject to a community vote before BUIDL can be added as a reserve asset for the proposed Frax USD stablecoin. This emphasizes the importance of community involvement and oversight in the development of new assets and features within the Frax ecosystem.
Tokenized Real-World Assets: A Growing Trend
Tokenized real-world assets (RWAs) are gaining popularity as collateral-backing and reserve assets for stablecoins due to their cost efficiencies, fast finality times, and potential to introduce unique high-yield bearing opportunities. This trend is driven by the increasing demand for decentralized, transparent, and secure financial instruments.
Statistics and Metrics: BUIDL
- Source: RWA.XYZ
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Optimism High for Ethena’s USDtb Stablecoin as it Clocks $65M TVL on Day 1
Ethena Labs, the developer behind Ethena, responsible for the USDe synthetic dollar, announced the development of a BUIDL-backed stablecoin in September 2024. The BUIDL-backed stablecoin, dubbed USDtb, is a separate product offering from Ethena’s USDe and went live on Dec. 16.
BUIDL Eyes Collateral Markets
In October 2024, BlackRock began pushing for BUIDL as collateral on crypto derivatives exchanges. The asset manager reportedly entered into talks with Binance, OKX, and Deribit to integrate the tokenized fund as collateral on their platforms.
Integrating BUIDL as collateral for crypto derivatives trading would challenge the dominance of incumbent stablecoin issuers like Tether and Circle, which currently dominate collateral reserves for digital asset derivatives trading.
Elixir Protocol’s deUSD Yield-Bearing Stablecoin
As of November 2024, the Elixir Protocol’s deUSD yield-bearing stablecoin can be minted on the Curve decentralized exchange using BUIDL as backing collateral and is exchangeable with other stablecoin assets in Curve’s liquidity pools.
