Original Title: "In-Depth Research Report | BlackRock BUIDL Fund Deep Dive, How It Impacts the RWA Landscape"

Original Source: DePINone Labs

Abstract

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

This fund, in partnership with the Real World Assets (RWA) tokenization platform Securitize, aims to combine traditional finance's stable yield with blockchain technology's efficiency and accessibility, providing a new investment paradigm for eligible investors. This report will conduct a comprehensive and in-depth analysis of the BUIDL Fund, covering its operation mechanism, business logic, business processes, and technological path.

· Nature of the Product: BUIDL is fundamentally a regulated traditional money market fund (MMF) with underlying assets of highly liquid, low-risk cash, US Treasury bonds, and repurchase agreements. The innovation lies in tokenizing the fund's shares into BUIDL tokens that are tradable on a public blockchain, achieving on-chain ownership records, transfer, and revenue distribution.

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

· Business Process: The investment process embodies the core idea of "permissioned finance." Investors must be qualified purchasers defined by US securities law and undergo KYC/AML checks by Securitize, with their wallet addresses whitelisted in the smart contract. The subscription (token minting) and redemption (token burning) processes connect off-chain fiat circulation with on-chain token operations. The USDC instant redemption channel introduced by Circle is a key innovation, addressing the fundamental contradiction between the traditional financial settlement cycle and the 24/7 instant liquidity needs of the crypto world through a smart contract.

· Technical Architecture: BUIDL was initially launched on Ethereum as a custom ERC-20 token, with its core technological feature being a built-in whitelist transfer control mechanism. To expand its influence, the fund has quickly expanded to multiple mainstream blockchain networks such as Solana, Avalanche, Polygon, among others, and has 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 it has also played a significant catalytic and validating role in the entire RWA tokenization field. It rapidly surpassed early competitors to become the world's largest tokenized sovereign bond fund, with the growth of its assets under management (AUM) primarily being driven by B2B demand from native crypto protocols like Ondo Finance, Ethena, which use it as a reserve and collateral. This demonstrates that BUIDL's success is not from traditional investors but from its precise fulfillment of the DeFi ecosystem's urgent need for compliant, stable, interest-bearing on-chain dollar assets, thus positioning itself as a cornerstone of institutional-grade DeFi.

The BUIDL fund is not just a product but also a strategic industry benchmark. It has provided a replicable compliance blueprint for bringing traditional financial assets on-chain and has opened up a new track of "permissioned DeFi" running parallel to open DeFi. This report will elaborate on the points mentioned above in detail, providing an in-depth breakdown of the operational details of the BUIDL fund and its impact.

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 on-chain rather than a native crypto asset. We will explain the investors' actual ownership rights and how their returns are generated and delivered.

1.1 Fund Mission: A Regulated Money Market Fund on the Blockchain

The BlackRock Institutional Dollar Institutional Liquidity Fund (BUIDL) is BlackRock's first tokenized fund issued 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.

From a regulatory standpoint, the fund issues shares based on the 1933 Securities Act Rule 506(c) and the 1940 Investment Company Act Section 3(c). This means that its issuance is strictly limited to "Qualified Purchasers" and not retail investors. This "compliance-first" design enables it to attract and serve as a cornerstone for 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 goal of a traditional MMF, and the revolutionary aspect of BUIDL is that its vehicle for achieving this goal is blockchain technology.

1.2 Investment Strategy: Generating Stable Returns through Traditional Instruments

To achieve its investment objective, 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 well-recognized low-risk, high-liquidity instruments in the traditional financial markets and are the standard allocation for institutional MMFs.

By investing in these high-quality short-term debt instruments, the fund aims to provide investors with a low-risk way to earn USD returns, essentially bringing secure assets like U.S. Treasuries to on-chain investors in tokenized form. As revealed in the prospectuses of similar funds from BlackRock, while common market risks like interest rate risk exist, its primary objective is capital preservation.

1.3 BUIDL Token: Digital Representation of Fund Shares

The BUIDL token is not a standalone cryptocurrency but a digital representation of fund shares. Each share of the fund is represented by a BUIDL token. Therefore, holding BUIDL tokens implies ownership of a proportional share of the fund.

The fund aims to maintain the value of each BUIDL token at 1.00, aligning with the Net Asset Value (NAV) target of $1.00 per share of a traditional MMF. This value stability is not achieved through complex algorithms or collateral mechanisms but is entirely reliant on the full backing of its underlying assets managed traditionally.

In terms of legal structure, the fund entity is a limited company registered in the British Virgin Islands (BVI), a common offshore structure for international funds.

1.4 Earnings Mechanism: Daily Accrual, Monthly On-Chain Distribution

The earnings mechanism of BUIDL is a fundamental reflection of its on-chain nature. The fund generates interest daily from its underlying assets, realizing "daily accrued dividends."

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

This design choice holds significant strategic implications. By distributing profits through "re-basing" or token minting, it ensures that the face value of each BUIDL token always remains stable at $1.00. Having an asset with a constant price is ideal for DeFi protocols as collateral and a store of value. If profits were reflected through price appreciation, the value of BUIDL would fluctuate, introducing substantial liquidation risks and composability complexities when used as collateral.

Therefore, this profit distribution mechanism is a deliberate design by BlackRock and Securitize to mold BUIDL into a stable, composable "Lego brick" within the DeFi ecosystem. BUIDL is fundamentally a traditional financial product wrapped in Web3 technology, with its stability and profits stemming entirely from BlackRock's traditional off-chain asset management prowess, while blockchain and tokens provide an unprecedentedly efficient delivery mechanism.

2. Strategic Imperative: BlackRock's On-chain Financial Vision

This section will delve into the business motivations and strategic partnerships that drove the birth of BUIDL, elucidating why BlackRock took this step and analyzing the collaborative relationships underpinning its operation.

BlackRock's public aim in launching BUIDL is to develop solutions that address "real client problems." In contrast to traditional money market funds, BUIDL offers significant advantages through blockchain technology: instant and transparent settlement, 24/7/365 peer-to-peer transfer capabilities, and broader on-chain product access. These features tackle long-standing pain points in the traditional financial markets concerning operational hours, settlement efficiency, and counterparty risk.

Furthermore, BUIDL is the latest advancement in BlackRock's grand digitalization strategy. Executives, such as CEO Larry Fink, have unequivocally stated that "the future of securities is tokenized." BUIDL is the initial substantial realization of this strategic vision, aimed at enhancing market liquidity, transparency, and overall efficiency through tokenization.

2.1 BlackRock and Securitize's Symbiotic Partnership

The collaboration between BlackRock and Securitize is key to BUIDL's success, representing a deeply intertwined symbiotic relationship rather than a mere vendorship.

Securitize plays a key role in this ecosystem as the core technology and service hub, 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, acts as the fund's placement agent, responsible for promoting and selling the fund to eligible investors.

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

In terms of the business model, Securitize Markets, as the placement agent, receives compensation from BlackRock. This compensation includes a one-time upfront fee and ongoing quarterly fees, which are typically a percentage of the net asset value of the introduced investor's assets. This model creates a financial incentive for Securitize to continuously expand the fund's asset under management.

Furthermore, BlackRock has made a strategic investment in Securitize, and Joseph Chalom, Global Head of Strategic Ecosystem Collaboration at BlackRock, has also joined Securitize's board. This signifies a deep, long-term strategic alliance between the two parties, with BlackRock ensuring its reliance on Securitize's key technology layer and its ability to influence the future direction of RWA tokenization standards.

2.2 Ecosystem: BNY Mellon, Custodian, and Infrastructure Providers in New York

A successful tokenized fund requires a complete ecosystem that integrates traditional financial and crypto-native service providers. The BUIDL ecosystem exemplifies this integration.

· BNY Mellon: As a pillar of traditional finance, BNY Mellon's role is essential. It serves 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 of the fund between the digital world and traditional markets.

· Digital Asset Custodians: Investors holding BUIDL tokens have flexible custody options. Key digital asset custodians in the ecosystem include Anchorage Digital, BitGo, Copper, and Fireblocks, among others. Auditor: PricewaterhouseCoopers LLP (PwC) has been appointed as the fund's auditor, providing the product with a traditional finance-level credibility endorsement.

This "Iron Triangle" composed of BlackRock (Asset Management), Securitize (Technology and Compliance), and BNY Mellon (Custody and Administration) is at the core of the entire operation. Each of these three plays a specific role, and none can be missing: BlackRock brings unparalleled asset management capabilities and distribution network; Securitize provides the professional technology and licenses needed to compliantly bridge assets to the blockchain; and BNY Mellon offers the custody and administrative services necessary for institutional-grade fund operations.

2.3 Strategic Precedent: Setting Standards for RWA Tokenization

As the world's largest asset management company, BlackRock's entry into the field itself brought significant legitimacy and validation to the entire RWA sector. It sent a clear signal to other traditional financial institutions that asset tokenization is not only a feasible concept but also a strategic direction worth investing in with tremendous potential. The entire BUIDL framework, from its Rule 506(c)-based compliance framework to employing a transfer agent, and implementing on-chain whitelist controls, provided a clear, compliant blueprint for other TradFi institutions looking to bring assets onto the blockchain.

3. Investor Journey: From Subscription to Redemption

This section will detail the complete lifecycle of BUIDL investors, from initial accreditation and admission to final fund redemption. We will break down the process step by step, focusing on key control points and liquidity mechanisms.

3.1 Admission Threshold: Qualified Purchasers and Account Opening Process

BUIDL is not a retail product and has a very high admission threshold, reflecting its strict compliance positioning.

· Investor Eligibility: Only individuals or family offices meeting the U.S. Securities and Exchange Commission (SEC) definition of "Qualified Purchasers" are eligible to invest. This definition typically requires individuals or family offices to have at least $5 million in investable assets, a threshold much higher than that of "Accredited Investors." Minimum Investment: The Fund's initial minimum investment is $5 million.

· Account Opening Process: Potential investors must subscribe through the fund's distribution agent, Securitize Markets, LLC. This process involves rigorous "Know Your Customer" (KYC) and Anti-Money Laundering (AML) checks. Once approved, the investor's Ethereum wallet address will be added to the BUIDL smart contract's "whitelist," a prerequisite for participating in all subsequent on-chain activities.

3.2 Subscription (Minting): Converting Fiat to On-Chain BUIDL Tokens

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

The investor sends US dollars (USD) via wire transfer to the fund's administrator, The Bank of New York Mellon in New York. Upon receiving the funds, the fund manager, BlackRock, purchases the corresponding underlying assets (such as US Treasury bonds) in the traditional financial market. As the transfer agent, Securitize receives the subscription confirmation. Securitize then calls the minting function of the BUIDL smart contract, generates the corresponding amount of BUIDL tokens at a rate of 1 USD = 1 BUIDL, and sends them to the investor's whitelisted wallet address. This process leaves a verifiable record on the blockchain, and each successful subscription increases the total supply of BUIDL tokens, with this data being publicly accessible in a blockchain explorer.

3.3 Whitelisting Mechanism: Permissioned Peer-to-Peer Transfers

Whitelisting is a core technical mechanism for the compliant operation of BUIDL. The BUIDL smart contract contains a list of all approved investor wallet addresses. Any attempt to transfer BUIDL tokens to an address not on the whitelist is automatically rejected and fails. This mechanism aims to ensure that fund shares (i.e., BUIDL tokens) are only held by KYC/AML-approved eligible investors, meeting regulatory requirements for ownership tracking under securities laws.

However, within the compliant framework, BUIDL also offers significant flexibility. It allows approved investors to engage in round-the-clock (24/7/365) peer-to-peer (P2P) transfers. This is a significant efficiency improvement compared to traditional funds, which can only be transferred through intermediaries during market trading hours.

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

When an investor wishes to exit their investment, BUIDL offers two very different redemption pathways.

Pathway One: Traditional Redemption (via Securitize)

The investor initiates a redemption request through the Securitize platform. Securitize calls the smart contract's burn function 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. The Bank of New York Mellon returns the USD proceeds to the investor via wire transfer. This pathway is subject to the settlement cycle of traditional finance, such as T+1 or T+2.

Path Two: Instant Redemption (via Circle's USDC Smart Contract)

· Key Innovation: To address the timeliness issue of traditional redemptions, Circle partnered with BlackRock to introduce a dedicated smart contract, providing BUIDL holders with a near-instant, 24/7 on-chain redemption channel.

· Process: Whitelisted BUIDL holders can send their BUIDL tokens to this Circle smart contract. The contract will atomically (in the same transaction) return the equivalent value in USDC stablecoin to the user's wallet.

· Liquidity Provider Role: Upon receiving BUIDL tokens, Circle can independently redeem dollars from BlackRock via the traditional path mentioned above. Essentially, Circle acts as a liquidity provider, using its own USDC reserves to provide instant liquidity to the market, thus bridging the gap between the instant nature of the crypto world and the settlement delays of traditional finance.

· On-Chain Evidence: Data on Etherscan shows the existence of a specific contract address named "Circle: BUIDL Off-Ramp" (0x31d3f59ad4aac0eee2247c65ebe8bf6e9e470a53), with its Redeem function being frequently called, confirming its active usage as a liquidity exit.

This USDC redemption channel is the most crucial feature for BUIDL's widespread adoption in the native crypto world. It addresses the fundamental liquidity mismatch between the traditional financial settlement cycle and DeFi's demand for instant composability. Without this channel, BUIDL could have remained a niche product with limited liquidity; with it, BUIDL truly becomes a fully functional DeFi infrastructure.

However, while the whitelisting mechanism is a necessary compliance requirement, it has created a dilemma of "permissioned composability." The magic of DeFi lies in permissionless interoperability, where any protocol can interact with any other protocol. Yet, BUIDL's contract will only interact with whitelisted addresses, meaning it cannot be directly deposited into permissionless protocols like Aave or Uniswap. Any integration must be built through a trusted intermediary listed in the whitelist, such as Ondo Finance, to create "wrapped" products. This creates a "walled garden," a new compliant, institution-centric DeFi ecosystem that is isolated from the existing open DeFi world. This trade-off between compliance and openness is a necessary one made for compliance reasons.

4. Technology Stack: Bridging TradFi and DeFi

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

4.1 Core Architecture: ERC-20 Smart Contract on Ethereum

· Launch Network: BUIDL was initially introduced on the Ethereum network, showcasing BlackRock's recognition of Ethereum as a secure and stable institutional-grade application platform.

· Token Standard: The BUIDL token follows the ERC-20 standard, ensuring its basic compatibility with the Ethereum ecosystem (e.g., wallets, browsers). However, it is not a standard ERC-20; instead, it has been custom-tailored for compliance, with its most significant modification being the whitelist transfer restriction logic mentioned earlier.

· Smart Contract Addresses: Multiple Ethereum contracts 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 likely utilize a proxy pattern for deployment, which is a standard practice that allows contract logic upgrades without changing the contract address, crucial for iterative improvements and fixes in institutional-grade products.

· Security and Audit: Institutional-grade products have extremely high security requirements. While no publicly available research material provides an open audit report for the BUIDL core contract, creating a significant information gap, its security assurance is manifested across multiple levels. Firstly, as a compliance technology provider, Securitize highlights in its filings to the SEC that the characteristics of permissioned tokens (such as freeze, revoke, and re-mint) make them more secure than bearer assets, able to address errors or malicious transactions. Secondly, protocols deeply integrated with BUIDL like Ondo Finance indirectly assess the interaction security with BUIDL's contract through their own audit reports. Nevertheless, investors largely rely on trust in brands such as BlackRock and Securitize rather than independently verifiable code audits. This represents a hybrid application of the traditional finance "trust me" model to Web3's "verify me" technology.

4.2 Multi-Chain Expansion: Principles and Implementation

After a successful launch on Ethereum, BUIDL adopted an active multi-chain expansion strategy aimed at becoming a universal institution-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 Principles: This expansion aims to provide investors, Decentralized Autonomous Organizations (DAOs), and crypto-native companies with more choices and greater accessibility to enable them to use BUIDL within their preferred ecosystems. This strategy ensures that regardless of which blockchain ecosystem gains the most market share in the future, BUIDL can maintain its leading position.

· Network-Specific Advantages: For example, the decision to deploy on Solana clearly values its network's high speed, low cost, and active developer ecosystem, making it well-suited for high-frequency trading and large-scale adoption.

4.3 Interoperability Engine: The Key Role of Wormhole

To ensure BUIDL's consistency and fungibility in a multi-chain environment, the fund has adopted Wormhole as its cross-chain interoperability solution. Wormhole is a cross-chain message-passing protocol that allows the BUIDL token to seamlessly "teleport" or transfer across all supported blockchains. This is crucial as it ensures that BUIDL is an asset of equal value and fungibility across all networks, rather than fragmented isolated assets on different chains.

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

Circle's redemption contract is the crowning glory of the BUIDL tech stack.

· Functionality: This contract provides a unidirectional, 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 access their BUIDL tokens in their wallet through the approve function. Subsequently, the user calls the redeem function on the Circle contract. The contract's internal logic executes the necessary operations (such as burning or locking the user's BUIDL) and transfers an equivalent amount of USDC from its own liquidity pool to the user.

· On-chain Footprint: The transaction history of this contract on Etherscan shows frequent Redeem function calls, confirming its active use as a liquidity outflow.

The technical architecture of BUIDL demonstrates an intricate design: it adopts a "hub-and-spoke" model to manage compliance while employing a "mesh" model to construct liquidity. The whitelist managed by Securitize serves as the central hub for all compliance checks, requiring validation through this central entity regardless of the chain where the transaction occurs. The multi-chain deployment facilitated by Wormhole creates a mesh network, enabling BUIDL to freely move across supported chains.

Lastly, Circle's redemption channel provides a universal off-ramp for this network from the main hub (Ethereum) back to high liquidity USD Coin (USDC) native assets. This architecture ingeniously centralizes the non-negotiable compliance feature while decentralizing asset existence and liquidity pathways to maximize utility.

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

This section will quantify BUIDL's market performance and analyze its role as a catalyst for the entire RWA field, with a focus on DeFi protocol adoption and its position in the competitive landscape.

5.1 From Launch to Leadership: BUIDL's Asset Growth Trajectory

Since its inception, BUIDL has experienced explosive growth in assets under management (AUM), demonstrating strong market demand for its products.

· Rapid AUM Growth: The fund was launched in March 2024 and attracted $245 million in the first week. By July 2024, its AUM approached $500 million; by March 2025, it successfully surpassed the $1 billion mark; and by mid-2025, its size was close to $29 billion.

· Market Leadership: Within a few short months, BUIDL surpassed similar funds from Franklin Templeton to become the world's largest tokenized sovereign debt fund. As of March 2025, it held nearly a 34% share of this niche market, solidifying its leadership position.

5.2 New Collateral Type: How DeFi Protocols Utilize BUIDL

One core driver of BUIDL's growth is its adoption by numerous crypto-native protocols as a reserve and collateral asset. This reveals BUIDL's true Product-Market Fit—it doesn't serve traditional individual high-net-worth investors but has instead become the B2B infrastructure of the DeFi industry.

· Key Usecase: For DeFi protocols that need to hold a large amount of USD reserves, converting funds from non-interest-bearing stablecoins (such as USDC, USDT) to BUIDL, which can provide U.S. Treasury bond yields and is endorsed by BlackRock, is a financially savvy decision.

· Ondo Finance: The protocol moved a significant amount of assets (initially $95 million) behind its OUSG token to BUIDL to leverage its instant settlement benefits. Ondo's adoption was a significant part of BUIDL's early AUM.

· Ethena Labs: As the issuer of the stablecoin USDe, Ethena heavily allocated the reserve assets of its new stablecoin USDtb to BUIDL. Just this billion-dollar allocation was a key factor in propelling BUIDL's AUM past the $1 billion mark.

· Frax Finance: Introduced a stablecoin called frxUSD, structured to be backed by assets held in BUIDL, further validating BUIDL's utility as the foundational collateral layer in the DeFi world.

5.3 Competitive Landscape: BUIDL vs. Franklin D. Roosevelt's BENJI and Others

BUIDL's entry has fundamentally altered the competitive landscape of the tokenized treasury bond fund market.

· The Flippening Event: BUIDL rapidly surpassed early market leader Franklin D. Roosevelt's on-chain U.S. government currency fund (FOBXX, also known as BENJI), becoming the new market champion. Key competitors: Other major players in the tokenized treasury bond market include Hashnote (USYC) and Ondo Finance (USDY), among others.

BUIDL is able to surpass Franklin Templeton's fund not only because of BlackRock's brand effect, but more importantly due to its outstanding product design. BUIDL's multi-chain strategy (supported by Wormhole) and crucial Circle USDC instant redemption channel are both 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 less connection to the mainstream Ethereum DeFi ecosystem.

This demonstrates that even in the RWA field, features and integrations tailored to the crypto-native market are key determinants of adoption rates.

BUIDL's rapid rise and dominance in the market strongly validate that there is a significant 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 entire tokenized US Treasury market has exceeded $4.4 billion, and the broader RWA market (excluding stablecoins) has also grown to nearly $8 billion. BUIDL is undoubtedly the primary engine behind this growth trend.

6. Strategic Analysis and Future Outlook

This section will integrate the previous analysis, assess the risks faced by BUIDL, its core strategic trade-offs, and look ahead to its future development trajectory and the prospects of the institutional-grade RWA movement it represents.

6.1 Risk Assessment

Despite BUIDL's tremendous success, its operation still faces multi-dimensional risks.

Technical Risks

· Smart Contract Vulnerabilities: Any undiscovered vulnerabilities in BUIDL's core contract or third-party contracts it relies on (such as Wormhole, Circle redemption contract) could have catastrophic consequences. Despite audits of the related protocols, the risk remains.

· Underlying Blockchain Risks: The fund's operation relies on the various public blockchains it is deployed on. Major events on these chains, like 51% attacks, contentious hard forks, or prolonged network outages, could pose threats to the fund's normal operations.

Regulatory Risks

· Uncertainty: The global regulatory framework for tokenized securities is still evolving. Future regulations enacted by the SEC or other regulatory bodies could impact BUIDL's existing structure or legality.

· Cross-Border Complexity: The globalization and 24/7 nature of blockchain bring a jurisdictional complexity not present in traditional funds, especially when dealing with cross-border transactions.

Market Risk

· Liquidity Risk: Although Circle's USDC bridge significantly alleviates redemption liquidity issues, this real-time liquidity is highly dependent on a single partner. Secondary P2P market liquidity between whitelisted investors may be very limited.

· Counterparty Risk: BUIDL's operation relies on a complex chain of counterparties including BlackRock, Securitize, BNY Mellon, Circle, Wormhole, among others. Failure at any link in the chain could potentially impact the entire system.

· Underlying Asset Risk: While the risk is minimal, the fund is still exposed to market risk associated with the U.S. Treasury bonds and repurchase agreements it holds, and the fund itself does not guarantee that its NAV will always remain at $1.00.

6.2 Balancing 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 and acts as both a moat and a wall for the entire model. It ensures that only approved entities can hold the tokens, thereby meeting regulatory requirements. This centralized control mechanism prevents BUIDL from directly interacting with permissionless DeFi protocols (such as Aave, Uniswap), creating a "walled garden" or "permissioned DeFi" ecosystem. In pursuit of regulatory compliance, it sacrifices DeFi's core principle of open composability.

Securitize believes that this permissioned feature is an advantage rather than a flaw. It allows for remedies in case of errors or fraud (such as freezing, burning, token reissuance) and enables compliance with legal requirements such as OFAC sanctions, making it safer for institutions compared to anonymous, pseudonymous crypto assets.

The operational model of the entire BUIDL ecosystem is fundamentally a "trusted third-party" model, which goes against the original "trustless" spirit of cryptocurrency but aligns perfectly with institutional investors' needs. Investors must trust BlackRock to manage the assets properly, trust BNY Mellon to securely custody the assets, trust Securitize to manage the on-chain ledger and whitelist correctly, trust Circle to fulfill redemption obligations. It is a chain of multiple trusted intermediaries. Institutional operations rely on trust, regulation, and legal recourse, which is precisely what the BUIDL model provides.

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

6.3 Evolution of BUIDL and Institutional-grade RWA Products

BUIDL is merely the first step in BlackRock's grand blueprint.

· Asset Class Expansion: BlackRock's vision goes beyond the money market to extend to the tokenization of all securities, including stocks and bonds. BUIDL is the successful proof of concept of this broader strategy.

· Deepening DeFi Integration: Future developments may involve more complex, regulated "wrapped" solutions that can allow BUIDL's yield and collateral value to be more widely utilized by the DeFi ecosystem without disrupting the core whitelist mechanism.

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

The Foundation of Next-Generation Finance

BUIDL is not just a successful fund but also a strategic masterpiece in product-market fit. It precisely identified a core need of the DeFi ecosystem (stable, compliant, interest-bearing collateral) and built a perfect product to meet this need, 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 has established a viable, scalable, compliant blueprint for bringing real-world assets onto the blockchain. By becoming the foundational collateral layer of the crypto-native economy, BlackRock has not only entered this market but deeply embedded itself in the core of its financial structure, positioning itself as the cornerstone of the next generation of finance.

However, the deepest long-term risk faced by BUIDL may not be technological or market risk but rather stem from philosophical divergences within the cryptocurrency ecosystem.

The success of BUIDL is built on the foundation adopted by crypto-native protocols pursuing decentralization and censorship resistance. These protocols are building their applications on a centralized, permissioned, auditable (Securitize can freeze tokens as required by law) foundation. This dependency contradicts the core values cherished by many in the crypto community. As the ecosystem matures, there may be a movement towards a "decentralization escape," where protocols actively seek more censorship-resistant collateral, even if it means sacrificing some yield or the so-called "peace of mind."

Therefore, although BUIDL currently takes the lead, its long-term viability depends on whether the crypto ecosystem will continue to prioritize compliance and profitability over a purely decentralized ideological pursuit. This philosophical tension is the most profound and unquantifiable risk.

This article is contributed content and does not represent the views of BlockBeats.

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