In-Depth Analysis of BlackRock’s BUIDL Fund: How It Reshapes the RWA Landscape

The BlackRock USD Institutional Digital Liquidity Fund, with the token name BUIDL, is the first tokenized fund issued on a public blockchain by BlackRock, the world’s largest asset management company, launched in March 2024.

The fund collaborates with the real-world asset (RWA) tokenization platform Securitize, aiming to combine the stable returns of traditional finance (TradFi) with the efficiency and accessibility of blockchain technology, providing a new investment paradigm for qualified investors. This report will provide a comprehensive and in-depth analysis of the BUIDL fund, covering its operating mechanisms, business logic, business processes, and technological pathways.

· Product Essence: BUIDL is fundamentally a regulated traditional Money Market Fund (MMF), with underlying assets consisting of highly liquid, low-risk cash, US Treasury bonds, and repurchase agreements. Its innovation lies in tokenizing fund shares into BUIDL tokens that circulate on a public blockchain, achieving on-chain ownership records, transfers, and profit distribution.

· Operating Mechanism and Ecosystem: The successful operation of BUIDL relies on a meticulously constructed ecosystem that integrates the advantages of TradFi and Crypto. BlackRock serves as the asset manager, responsible for investment strategies; Securitize acts as the core technology and compliance partner, providing tokenization, transfer agency, and investor onboarding services; and Bank of New York Mellon (BNY Mellon) plays the role of the traditional financial cornerstone, serving as the custodian and administrative manager of the fund’s assets. This “iron triangle” structure ensures the fund’s robustness in compliance, security, and scalability.

· Business Process: The investment process reflects the core idea of “licensed finance.” Investors must be “qualified purchasers” as defined by U.S. securities law and pass Securitize’s KYC/AML review, with their wallet addresses included in the whitelist of the smart contract. The subscription (minting tokens) and redemption (burning tokens) processes connect the circulation of fiat currency off-chain with the operation of tokens on-chain. Among them, Circle’s USDC instant redemption channel is a key innovation that addresses the fundamental contradiction between the traditional financial settlement cycle and the 24/7 immediate liquidity needs of the crypto world through a smart contract.

· Technical Architecture: BUIDL was initially issued as a customized ERC-20 token on Ethereum, with its core technical feature being the built-in whitelist transfer control mechanism. To expand its influence, the fund has quickly extended to multiple mainstream blockchain networks such as Solana, Avalanche, and Polygon, and achieved cross-chain interoperability through the Wormhole protocol. This multi-chain deployment strategy aims to maximize its accessibility and utility across different ecosystems.

· Market Impact and Strategic Significance: The launch of BUIDL is not only a key step in BlackRock’s digital asset strategy but also plays a significant catalytic and validating role in the entire RWA tokenization field. It has quickly surpassed early competitors to become the world’s largest tokenized government bond fund, with its Assets Under Management (AUM) growth primarily driven by B2B demand from crypto-native protocols like Ondo Finance and Ethena using it as reserves and collateral. This indicates that the success of BUIDL does not stem from traditional investors, but rather from its precise meeting of the urgent demand within the DeFi ecosystem for compliant, stable, yield-generating on-chain dollar assets, thereby establishing itself as a cornerstone of institutional-grade DeFi.

The BUIDL Fund is not just a product; it is a strategic industry benchmark. It provides a replicable compliance blueprint for bringing traditional financial assets on-chain and has pioneered a new track of “permissioned DeFi” parallel to open DeFi. This report will elaborate on the above points in detail, offering an in-depth breakdown of the operational details and impacts of the BUIDL Fund.

1. Deconstructing BUIDL: A New Paradigm of Asset Management

This chapter aims to clarify the fundamental nature of BUIDL, defining it as a regulated financial instrument that brings assets onto the chain, rather than a native crypto asset. We will elucidate the rights actually held by investors and the manner in which their returns are generated and delivered.

1.1 Fund Mission: Regulated Money Market Fund on Blockchain

The BlackRock USD Institutional Digital Liquidity Fund (“BUIDL”) is the first tokenized fund issued by BlackRock on a public blockchain. Its core structure is a Money Market Fund (MMF). This positioning is crucial as it determines the fund’s investment strategy, risk profile, and regulatory framework.

At the regulatory level, the fund issues shares under Rule 506(c) of the Securities Act of 1933 and Section 3(c) of the Investment Company Act of 1940. This means that its issuance targets are strictly limited to “Qualified Purchasers” rather than ordinary retail investors. This “compliance-first” design is the cornerstone of its ability to attract and serve institutional clients.

The core objective of the fund is “to seek current income as is consistent with liquidity and stability of principal.” This is the standard objective of traditional MMFs, while the revolutionary aspect of BUIDL is that its vehicle for achieving this goal is blockchain technology.

1.2 Investment Strategy: Achieve Stable Returns through Traditional Tools

To achieve its investment objectives, the BUIDL fund will invest 100% of its total assets in a portfolio consisting of cash, U.S. Treasury bills, and repurchase agreements. These are all recognized low-risk, high-liquidity instruments in traditional financial markets and are standard allocations for institutional-level MMFs.

This fund aims to provide investors with a low-risk way to earn dollar returns by investing in these high-quality short-term debt instruments, essentially bringing safe assets like U.S. Treasury bonds to on-chain investors in the form of tokens. As revealed in the prospectus of other similar funds by BlackRock, while there are common market risks such as interest rate risk, its primary objective is capital preservation.

1.3 BUIDL Token: Digital Certificate of Fund Shares

BUIDL tokens are not an independent cryptocurrency, but rather a digital representation of shares in a fund. Each share of the fund is represented by one BUIDL token. Therefore, holding BUIDL tokens means owning a proportional share of that fund.

The fund aims to stabilize the value of each BUIDL token at 1.00, which aligns with the traditional MMF’s target net asset value (NAV) of 1.00 per share. This value stability is not achieved through complex algorithms or collateral mechanisms, but rather relies entirely on the support of adequately managed underlying assets.

Legally, the fund entity is a limited company registered in the British Virgin Islands (BVI), which is a commonly used offshore structure for international funds.

1.4 Revenue Mechanism: Daily interest calculation, monthly on-chain distribution

The yield mechanism of BUIDL is a core manifestation of its on-chain characteristics. The fund generates interest daily from its underlying assets, thus achieving “daily accrued dividends.”

However, the distribution method of the earnings is ingenious. These accumulated dividends are not paid in fiat currency, nor are they reflected by increasing the price of each BUIDL token. Instead, they are directly airdropped to investors’ wallets in the form of new BUIDL tokens on a monthly basis.

This design choice has far-reaching strategic significance. By distributing profits through “re-basing” or issuing additional tokens, it can ensure that the face value of each BUIDL token remains stable at $1.00. An asset with a constant price is an ideal collateral and value storage tool for DeFi protocols. If profits are reflected through price appreciation, the value of BUIDL will fluctuate continuously, which will greatly increase the liquidation risk and integration complexity when used as collateral.

Therefore, this revenue distribution mechanism is a well-thought-out design by BlackRock and Securitize to make BUIDL a stable and composable “Lego block” in the DeFi ecosystem. The essence of BUIDL is a traditional financial product encapsulated by Web3 technology, whose stability and returns completely stem from BlackRock’s traditional, off-chain asset management capabilities, while blockchain and tokens provide an unprecedented efficient delivery mechanism.

2. Strategic Priority: BlackRock’s On-Chain Financial Vision

This chapter will explore the business motivations and strategic partnerships driving the birth of BUIDL, answer why BlackRock has taken this step, and analyze the partnerships that support its operations.

BlackRock’s public goal for BUIDL is to develop solutions that can address “real problems for clients.” Compared to traditional money market funds, BUIDL offers significant advantages through blockchain technology: instantaneous and transparent settlement, 24/7/365 peer-to-peer transfer capabilities, and broader access to on-chain products. These features address the long-standing pain points of traditional financial markets in terms of operating hours, settlement efficiency, and counterparty risk.

Looking deeper, BUIDL is the latest advancement in BlackRock’s grand digital strategy. The company’s CEO Larry Fink and other executives have clearly stated that “the future of securities is tokenization.” BUIDL is the first significant practice of this strategic vision, aimed at enhancing the liquidity, transparency, and overall efficiency of the capital markets through tokenization.

2.1 The Symbiotic Partnership between BlackRock and Securitize

The collaboration between BlackRock and Securitize is key to the success of BUIDL, representing a deeply intertwined symbiotic relationship rather than a simple vendor relationship.

Securitize plays a central role as the core technology and service hub in this ecosystem, with responsibilities including:

· Tokenization Platform and Transfer Agent: Securitize is responsible for digitizing fund shares, managing the issuance, redemption, and dividend distribution of on-chain tokens, and recording ownership changes.

· Placement Agent: Its subsidiary Securitize Markets, LLC serves as the placement agent for the fund, responsible for promoting and selling the fund to qualified investors.

· Compliance Gateway: Securitize manages the critical investor onboarding process, including KYC/AML reviews, and maintains an on-chain whitelist of approved wallet addresses.

In terms of business model, Securitize Markets, acting as a placement agent, will receive compensation from BlackRock. This compensation includes a one-time upfront fee and ongoing quarterly fees, which are usually a percentage of the net asset value of the investors it brings in. This model creates a financial incentive for Securitize to continuously expand the asset management scale of the funds.

More importantly, BlackRock made a strategic investment in Securitize, and BlackRock’s Global Head of Strategic Ecosystem Partnerships, Joseph Chalom, has also joined the board of Securitize. This marks a deep and long-term strategic alliance between the two parties, as BlackRock ensures its reliance on this key technology layer of tokenization and is able to influence the future development direction of RWA tokenization standards.

2.2 Ecosystem: Bank of New York Mellon, Custodians and Infrastructure Providers

A successful tokenized fund requires a complete ecosystem that integrates traditional finance with crypto-native service providers. The BUIDL ecosystem showcases this model of integration.

· BNY Mellon: As a pillar of traditional finance, BNY Mellon plays an indispensable role. It acts as the custodian of the fund’s off-chain assets (cash and securities) and the fund administrator. BNY Mellon is a key bridge to ensure interoperability between funds in the digital world and traditional markets.

· Digital Asset Custodian: Investors have flexible custody options when holding BUIDL tokens. Key digital asset custodians in the ecosystem include Anchorage Digital, BitGo, Copper, and Fireblocks. Auditor: PricewaterhouseCoopers LLP (PwC) has been appointed as the fund’s auditor, providing traditional financial-level credibility endorsement for the product.

This “iron triangle” composed of BlackRock (asset management), Securitize (technology and compliance), and BNY Mellon (custody and administration) is the core of the entire operation. Each plays its role and is indispensable: BlackRock has unparalleled asset management capabilities and distribution networks; Securitize provides the specialized technology and licenses needed to compliantly bridge assets to the blockchain; while BNY Mellon offers the custody and administrative services necessary for institutional-level fund operations.

2.3 Strategic Precedents: Setting Standards for RWA Tokenization

As the world’s largest asset management company, BlackRock’s entry itself has brought tremendous legitimacy and validation effects to the entire RWA field. It has sent a clear signal to other traditional financial institutions: asset tokenization is not only a viable concept but also a strategic direction worth investing in, with immense potential. The entire architecture of BUIDL, from its compliance framework based on Rule 506(c), to hiring transfer agents, to implementing on-chain whitelist controls, provides a clear and compliant blueprint for other TradFi institutions looking to bring assets onto the blockchain.

3. Investor Path: From Subscription to Redemption

This chapter will detail the complete lifecycle of BUIDL investors, from initial qualification certification and access to final fund redemption. We will break down the process step by step and focus on analyzing the key control points and liquidity mechanisms.

3.1 Admission Threshold: Qualified Buyers and Account Opening Process

BUIDL is not a retail product aimed at the public, and its access threshold is extremely high, reflecting its strict compliance positioning.

· Investor Qualification: Only those who meet the definition of “Qualified Purchasers” as defined by the U.S. Securities and Exchange Commission (SEC) are eligible to invest. This definition typically requires individuals or family offices to have at least $5 million in investable assets, which is significantly higher than the threshold for “Accredited Investors.” Minimum Investment Amount: The initial minimum investment amount for the fund is $5 million.

· Account Opening Process: Potential investors must subscribe through the fund’s placement agent Securitize Markets, LLC. This process involves strict “Know Your Customer” (KYC) and “Anti-Money Laundering” (AML) reviews. Once the review is passed, the investor’s Ethereum wallet address will be added to the BUIDL smart contract’s “whitelist”, which is a prerequisite for participating in all subsequent on-chain activities.

3.2 Subscription (Minting): Converting fiat currency to on-chain BUIDL tokens

When a whitelist investor is ready to invest, the subscription process connects the off-chain fiat world with the on-chain token world:

Investors send US dollars (USD) via wire transfer to the fund’s administrator, BNY Mellon. After the fund administrator, BlackRock, receives the funds, they purchase the corresponding underlying assets (such as U.S. Treasury bonds) in the traditional financial market. Securitize, acting as the transfer agent, will receive the subscription confirmation notice. Securitize will then invoke the mint function of the BUIDL smart contract to generate the corresponding amount of BUIDL tokens at a ratio of 1 USD = 1 BUIDL, and send them to the investor’s whitelisted wallet address. This process leaves a verifiable record on the blockchain, with each successful subscription leading to an increase in the total supply of BUIDL tokens, and this data is publicly accessible in the on-chain browser.

3.3 Whitelist Mechanism: Permissioned Peer-to-Peer Transfers

The whitelist is the core technical mechanism for the compliant operation of BUIDL. The smart contract of BUIDL includes a list that records all approved investor wallet addresses. Any attempt to transfer BUIDL tokens to an address not on the whitelist will be automatically rejected and fail by the smart contract. The purpose of this mechanism is to ensure that fund shares (i.e., BUIDL tokens) are always held only by qualified investors who have passed KYC/AML checks, thereby meeting regulatory requirements for ownership tracking under securities law.

However, within a compliant framework, BUIDL also offers tremendous flexibility. It allows for 24/7/365 peer-to-peer (P2P) transfers between approved investors. This represents a significant efficiency improvement compared to traditional funds that can only be transferred through intermediaries during market trading hours.

3.4 Redemption (Burn): Securitize and Circle USDC Dual Path

When investors wish to exit their investment, BUIDL offers two completely different redemption paths.

Path One: Traditional Redemption (via Securitize)

Investors initiate redemption requests through the Securitize platform. Securitize calls the burn function of the smart contract to remove the corresponding amount of BUIDL tokens from the investor’s wallet. BlackRock sells the corresponding underlying assets in the traditional market in exchange for cash. Bank of New York Mellon returns the dollar proceeds to investors via wire transfer. This path is subject to the settlement cycles of traditional finance, such as T+1 or T+2.

Path 2: Instant Redemption (via Circle’s USDC smart contract)

· Key Innovation: To address the timeliness issues of traditional redemptions, Circle has partnered with BlackRock to launch a dedicated smart contract that provides BUIDL holders with an almost instant, around-the-clock on-chain redemption channel.

· Process: Whitelist holders of BUIDL can send their BUIDL tokens to this smart contract on Circle. The contract will atomically (in the same transaction) return an equivalent amount of USDC stablecoin to the user’s wallet.

· Role of Liquidity Providers: After receiving BUIDL tokens, Circle can redeem USD from BlackRock through the traditional path mentioned above. Essentially, Circle acts as a liquidity provider, offering instant liquidity to the market with its USDC reserves, thus bridging the gap between the immediacy of the crypto world and the delays in traditional financial settlements.

· On-chain evidence: Data on Etherscan shows that there is a specific contract address named “Circle: BUIDL Off-Ramp” (0x31d3f59ad4aac0eee2247c65ebe8bf6e9e470a53), and the Redeem function of this contract has been called frequently, confirming its active use as a liquidity exit.

The USDC redemption channel is the most critical feature for BUIDL to gain widespread application in the native crypto world. It addresses the fundamental liquidity mismatch between the traditional financial settlement cycles and the DeFi demand for instant composability. Without this channel, BUIDL might just be a niche product with limited liquidity; with it, BUIDL truly becomes a fully functional DeFi infrastructure.

However, although the whitelist mechanism is a necessary condition for compliance, it also creates a dilemma of “permissioned composability.” The magic of DeFi lies in permissionless interoperability, where any protocol can interact with any other protocol. But BUIDL contracts will only interact with whitelisted addresses, which means they cannot be directly deposited into permissionless protocols like Aave or Uniswap. Any integration must be built through trusted intermediaries like Ondo Finance, which itself is whitelisted, to create “wrapped” products. This creates a “walled garden,” a brand new, compliant, institution-centric DeFi ecosystem, but it is isolated from the existing open DeFi world. This is an inevitable trade-off of openness for compliance.

4. Tech Stack: The Bridge Connecting TradFi and DeFi

This chapter will provide a technical analysis of the on-chain components of BUIDL, from its core smart contract architecture to multi-chain deployment strategies, as well as the key interoperability and liquidity protocols that support its functionality.

4.1 Core Architecture: Permissioned ERC-20 Smart Contracts on Ethereum

· Initial Network: BUIDL was originally launched on the Ethereum network, indicating BlackRock’s recognition of Ethereum’s security and stability as an institutional-grade application platform.

· Token Standard: BUIDL tokens follow the ERC-20 standard, which ensures basic compatibility with the Ethereum ecosystem (such as wallets and browsers). However, it is not a standard ERC-20; it has been customized for compliance, with its core modification being the whitelist transfer restriction logic mentioned earlier.

· Smart Contract Address: Multiple Ethereum contract situations related to BUIDL can be seen on Etherscan. The main token contract address appears to be 0x7712c34205737192402172409a8f7ccef8aa2aec. Additionally, there is a token contract named BUIDL-I (0x6a9DA2D710BB9B700acde7Cb81F10F1fF8C89041) and Circle’s redemption contract (0x31d3f59ad4aac0eee2247c65ebe8bf6e9e470a53). These contracts are likely deployed using the Proxy Pattern, which is a standard practice that allows for upgrading contract logic without changing the contract address, crucial for institutional-level products that require iteration and fixes.

· Security and Auditing: Institutional-grade products have extremely high security requirements. While publicly available research materials do not provide a public audit report for the BUIDL core contract, this is a significant information gap, but its security assurances are reflected on multiple levels. First, Securitize, as a compliance technology provider, emphasizes in its documents submitted to the SEC that the characteristics of regulated tokens (such as being freezeable, burnable, and re-mintable) make them safer than bearer assets and capable of addressing errors or malicious transactions. Secondly, protocols like Ondo Finance, which deeply integrate BUIDL, have their own audit reports that indirectly assess the security of interactions with the BUIDL contract. Nevertheless, investors largely rely on the trust in the brands of participants like BlackRock and Securitize, rather than independently verifiable code audits. This represents a hybrid manifestation of applying the traditional finance “trust me” model to the Web3 “verify me” technology.

4.2 Multi-chain Expansion: Principles and Implementation

After successfully launching on Ethereum, BUIDL has adopted an aggressive multi-chain expansion strategy aimed at becoming a universal institutional-grade RWA across ecosystems.

· Deployed Networks: BUIDL has expanded to include multiple mainstream blockchain networks such as Solana, Avalanche, Polygon, Arbitrum, Optimism, and Aptos.

· Strategic Principle: This expansion aims to provide more choices and greater access convenience for investors, decentralized autonomous organizations (DAOs), and crypto-native companies, allowing them to use BUIDL in their preferred ecosystems. This strategy ensures that regardless of which blockchain ecosystem gains the largest market share in the future, BUIDL can maintain its dominance.

· Network-specific advantages: For example, choosing to deploy on Solana is a clear acknowledgment of its network’s high speed, low cost, and active developer ecosystem, all of which are very suitable for high-frequency trading and large-scale adoption.

4.3 Interoperability Engine: The Key Role of Wormhole

To ensure that BUIDL remains unified and liquid in a multi-chain environment, the fund has adopted Wormhole as its cross-chain interoperability solution. Wormhole is a cross-chain messaging protocol that allows BUIDL tokens to be seamlessly “teleported” or transferred across all supported blockchains. This is crucial as it ensures that BUIDL is an asset with equal value and interchangeability across all networks, rather than being fragmented into isolated assets on various chains.

4.4 Liquidity Engine: Circle BUIDL-to-USDC Smart Contract Technology Analysis

The redemption contract of Circle is the highlight of the BUIDL tech stack.

· Function: This contract provides a one-way, 1:1 instant exchange from BUIDL to USDC. It is essentially an automated, permissioned redemption pool.

· Technical Implementation: This is a dedicated smart contract deployed on Ethereum (address 0x31d…a53). A BUIDL holder first needs to authorize the Circle contract to use the BUIDL tokens in their wallet through the approve function. Then, the user calls the redeem function on the Circle contract. The internal logic of the contract will execute the corresponding operations (such as destroying or locking the user’s BUIDL) and transfer an equivalent amount of USDC to the user from its own fund pool.

· On-chain footprint: The transaction history of the contract on Etherscan shows frequent calls to the Redeem function, confirming its active use as a liquidity exit.

The technical architecture of BUIDL showcases a sophisticated design: it employs a “hub-and-spoke” model to manage compliance while using a “mesh” model to build liquidity. The whitelist managed by Securitize serves as the central hub for all compliance checks, and transactions must be validated through this center regardless of which chain they occur on. The multi-chain deployment enabled by Wormhole creates a mesh network, allowing BUIDL to flow freely between the supported chains.

Finally, Circle’s redemption channel provides a universal exit for this network to return to high liquidity dollar-native assets (USDC) from the main hub (Ethereum). This architecture cleverly centralizes uncompromising compliance functions while decentralizing the existence of assets and liquidity paths to maximize utility.

5. Market Catalysts: The Impact of BUIDL on the RWA Ecosystem

This chapter will quantify the market performance of BUIDL and analyze its role as a catalyst in the entire RWA field, with a focus on the adoption of DeFi protocols and its position in the competitive landscape.

5.1 From Launch to Leadership: The Asset Growth Trajectory of BUIDL

Since its launch, BUIDL has experienced explosive growth in its assets under management (AUM), which fully demonstrates the strong market demand for its products.

· Rapid AUM Growth: The fund was launched in March 2024 and attracted $245 million in funds within the first week. By July 2024, its AUM was approaching $500 million; by March 2025, it successfully broke through the $1 billion mark; and by mid-2025, its scale was nearing $2.9 billion.

· Market Dominance: In just a few months, BUIDL has surpassed similar funds from Franklin Templeton to become the world’s largest tokenized government bond fund. As of March 2025, it holds nearly 34% of the market share in this segment, establishing its leadership position.

5.2 New Types of Collateral: How DeFi Protocols Utilize BUIDL

A core driver of BUIDL’s growth is its adoption as a reserve and collateral asset by numerous crypto-native protocols. This reveals BUIDL’s true product-market fit — it does not serve traditional high-net-worth individual investors but has become the B2B infrastructure of the DeFi industry.

· Main Use Case: For DeFi protocols that require holding a large amount of dollar reserves, converting funds from non-interest-bearing stablecoins (such as USDC, USDT) to BUIDL, which offers the yield from U.S. Treasury bonds and is backed by BlackRock, is a financially wise decision.

· Ondo Finance: The protocol transfers a large amount of assets backing its OUSG token (initially $95 million) to BUIDL to leverage the instant settlement advantages it offers. Ondo’s adoption is a significant component of the early AUM of BUIDL.

· Ethena Labs: As the issuer of the stablecoin USDe, Ethena has allocated a significant portion of its new stablecoin USDtb’s reserve assets to BUIDL. This allocation of hundreds of millions of dollars is a key factor in driving BUIDL’s AUM to surpass the $1 billion mark.

· Frax Finance: Launched a stablecoin called frxUSD, which is designed to be backed by assets held by BUIDL, further validating BUIDL’s utility as the foundational collateral layer in the DeFi world.

5.3 Competitive Landscape: BUIDL vs. Franklin Templeton BENJI and Others

The entry of BUIDL has completely changed the competitive landscape of the tokenized government bond fund market.

· The “Flippening” event: BUIDL quickly surpassed the early market leader - Franklin Templeton’s on-chain U.S. government money fund (FOBXX, also known as BENJI), becoming the new market champion. Main competitors: Major participants in the tokenized treasury market also include Hashnote (USYC) and Ondo Finance (USDY).

BUIDL is able to surpass Franklin Templeton’s funds not just because of BlackRock’s brand effect, but more importantly due to its outstanding product design. BUIDL’s multi-chain strategy (supported by Wormhole) and the crucial Circle USDC instant redemption channel are specifically designed to meet the liquidity and interoperability needs of its core clients—DeFi protocols. In contrast, Franklin’s fund was initially deployed on the Stellar chain, which has little connection to the mainstream Ethereum DeFi ecosystem.

This indicates that even in the RWA space, features and integrations tailored for the crypto-native market are key to adoption rates.

The rapid rise of BUIDL and its dominance in the market strongly validate that there is a huge demand from institutions and the crypto-native market for highly compliant, deep liquidity, and yield-generating RWA products from top-tier issuers. Driven by BUIDL, the scale of the entire tokenized U.S. Treasury market has exceeded $4.4 billion, while the broader RWA market (excluding stablecoins) has also grown to nearly $8 billion. BUIDL is undoubtedly the main engine of this growth trend.

6. Strategic Analysis and Future Outlook

This chapter will synthesize the previous analysis, evaluate the risks faced by BUIDL, its core strategic trade-offs, and look forward to its future development trajectory as well as the prospects of the institutional-level RWA movement it represents.

6.1 Risk Assessment

Despite the tremendous success of BUIDL, its operations still face multidimensional risks.

Technical Risk

· Smart Contract Vulnerabilities: Any undiscovered vulnerabilities in the core contracts of BUIDL or its dependent third-party contracts (such as Wormhole, Circle redemption contracts) could lead to catastrophic consequences. Despite audits of the relevant protocols, risks still exist.

· Underlying Blockchain Risks: The operation of the fund relies on the various public blockchains it is deployed on. Significant events occurring on these chains, such as 51% attacks, hard fork disputes, or prolonged network outages, may pose a threat to the normal functioning of the fund.

Regulatory Risk

· Uncertainty: The global regulatory framework for tokenized securities is still evolving. Future regulations introduced by the SEC or other regulatory bodies may affect the existing structure or legality of BUIDL.

· Cross-border Complexity: The globalization and 24/7 nature of blockchain brings about jurisdictional complexities that traditional funds do not encounter, especially when dealing with cross-border transactions.

Market risk

· Liquidity Risk: Although Circle’s USDC channel has greatly alleviated redemption liquidity issues, this instant liquidity is highly dependent on a single partner. The liquidity in the secondary P2P market among whitelisted investors may be very limited.

· Counterparty Risk: The operation of BUIDL relies on a complex chain of counterparties composed of BlackRock, Securitize, BNY Mellon, Circle, Wormhole, and others. A failure at any link in the chain could impact the entire system.

· Underlying asset risk: Although the risk is very low, the fund is still affected by the market risks of the U.S. Treasury securities and repurchase agreements it holds, and the fund itself does not guarantee that its NAV will always remain at $1.00.

6.2 The trade-off between compliance and DeFi composability

The core design of BUIDL reflects a profound strategic trade-off. The whitelist managed by Securitize is the cornerstone of BUIDL’s compliance, serving as a moat and a wall for the entire model. It ensures that only approved entities can hold tokens, thus meeting the requirements of securities regulation. This centralized control mechanism prevents BUIDL from directly interacting with permissionless DeFi protocols (such as Aave and Uniswap), creating a “walled garden” or “permissioned DeFi” ecosystem. In order to comply with regulatory requirements, it sacrifices the most fundamental principle of DeFi: open composability.

Securitize believes that this characteristic of being permissioned is an advantage rather than a flaw. It allows for remedies in the event of errors or fraud (such as freezing, burning, or reissuing tokens), and can enforce legal requirements such as OFAC sanctions, making it safer for institutions compared to anonymous, unregistered crypto assets.

The operational model of the entire BUIDL ecosystem is fundamentally a “trusted third-party” model, which is contrary to the original “trustless” spirit of cryptocurrencies but perfectly aligns with the needs of institutional investors. Investors must trust BlackRock to manage assets properly, trust BNY Mellon to safely custody assets, trust Securitize to correctly manage on-chain ledgers and whitelists, and trust Circle to fulfill redemption obligations. This is a chain composed of multiple trusted intermediaries. The operations of institutions rely on trust, regulation, and legal recourse, which is exactly what the BUIDL model provides.

Therefore, BUIDL is not the evolution of open DeFi, but rather the beginning of a parallel, permissioned, institutional-grade DeFi. In this new ecosystem, trust in well-known brands is the primary security model, while blockchain technology provides efficiency gains.

6.3 The Evolution of BUIDL and Institutional RWA Products

BUIDL is just the first step in BlackRock’s grand blueprint.

· Expand Asset Classes: BlackRock’s vision goes beyond the money market and extends to the tokenization of all securities, including stocks and bonds. BUIDL is a successful proof of concept for this broader strategy.

· Deepen DeFi integration: Future developments may involve more complex, regulated “packaged” solutions that allow the benefits and collateral value of BUIDL to be more widely utilized by the DeFi ecosystem without undermining the core whitelisting mechanism.

· Establishing industry standards: The success of BUIDL will drive the standardization of RWA tokenization technology and legal frameworks, and BlackRock is currently in the best position to influence this process.

The foundational layer of the next generation of finance

BUIDL is not just a successful fund; it is also a strategic masterpiece in terms of product market fit. It precisely identifies a core need of the DeFi ecosystem (stable, compliant, yield-generating collateral) and builds the perfect product to meet this need, fully leveraging the dual advantages of traditional finance (trust, scale, asset management) and Web3 (efficiency, speed, programmability).

BUIDL represents a key moment in the convergence of TradFi and DeFi. It establishes a viable, scalable, and compliant blueprint for bringing real-world assets onto the chain. By becoming the foundational collateral layer of the crypto-native economy, BlackRock has not only entered this market but has also embedded itself deeply into the core of its financial structure, positioning itself as a cornerstone of the next generation of finance.

However, the deepest long-term risk that BUIDL faces may not be technological or market risks, but rather stem from philosophical differences within the cryptocurrency ecosystem.

The success of BUIDL is built on the foundation of being adopted by decentralized and censorship-resistant native crypto protocols. These protocols are building their applications on a centralized, permissioned, and censorable basis (Securitize can freeze tokens as required by law). This dependency contradicts the core values cherished by many members of the crypto community. As the ecosystem matures, a movement of “escaping to decentralization” may emerge, where protocols actively seek more censorship-resistant collateral, even if it means sacrificing some yield or the so-called “sense of security.”

Therefore, although BUIDL currently dominates, its long-term viability depends on whether the crypto ecosystem will continue to prioritize compliance and profitability over the ideological pursuit of pure decentralization. This philosophical tension represents its most profound and unquantifiable risk.

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