BlackRock's BUIDL: A Benchmark for On-Chain Finance

Biggest Asset Manager Goes On-Chain

In March 2024, BlackRock launched BUIDL—a tokenized money market fund on Ethereum. Within its first week, it hit $245 million in assets. Eighteen months later, it peaked at $2.9 billion [1].

No, you can't buy the token on Uniswap. And retail investors aren't exactly lining up to buy BUIDL—they can't. The minimum is $5 million, and you need to go through a full TradFi onboarding process with Securitize to get whitelisted [2].

So what's actually happening here? BlackRock found a gap in crypto infrastructure: billions of dollars sitting as dead collateral on exchanges, earning nothing. BUIDL monetizes that idle capital. It's B2B infrastructure for the crypto industry, not a consumer product.

But the collateral use case is just the entry point. What BUIDL actually represents is something DeFi has never had: a TradFi-approved "risk-free" rate, anchored to US Treasuries, with real capital behind it.

And it might be the most important piece of financial infrastructure to land on-chain so far.

What BUIDL Actually Is

BUIDL is a tokenized money market fund. It's a permissioned ERC-20 token—shares represented on-chain—backed by short-term U.S. Treasuries. It seeks current income while maintaining liquidity and stability of principal, investing in cash, U.S. Treasury bills, and repos, with dividends accruing daily and distributed to investors’ wallets as additional tokens each month. As of January 2026, it pays out approximately 4% yield to holders [3].

Sounds like a stablecoin, right? It's not.

Here's the key distinction: when you put $1,000 into USDC, Circle invests that money in government bonds and keeps the income. You get a stable dollar. Circle keeps the yield.

When you put $1,000 into BUIDL, BlackRock manages it, and you get the investment returns—roughly 4% currently [3].

The trade-off is flexibility. Stablecoins have no native yield, but you can do whatever you want with them on-chain—DeFi, lending, liquidity provision. BUIDL pays yield, but it's permissioned: whitelist controls are baked into the token contract. You can't just send it anywhere. Transactions to non-whitelisted addresses simply fail [2].

Use Case: Yield-Bearing Collateral

You're a hedge fund or institutional investor. You want to trade Bitcoin futures or options on a crypto exchange. The exchange needs you to post collateral—money they can seize if your trade goes bad.

Traditionally, you'd post cash or stablecoins like USDC. That capital sits there, earning nothing, while you wait for your positions to settle or close.

With BUIDL, you post the same collateral, but it pays out Treasury yields while it sits there. For institutions moving billions, that's real money [3].

Deribit began accepting BUIDL as collateral in June 2025 [14]. Coinbase completed its $2.9 billion acquisition of the derivatives platform two months later [12]. Binance followed in November 2025 [4]. Two of the largest exchanges in crypto, both integrating the same infrastructure. The pitch is simple: park your collateral here, earn Treasury yields while you wait.

BUIDL's AUM has been volatile—peaking near $2.9 billion in mid-2025, dropping to $1.74 billion by early 2026, roughly correlated with crypto trading activity [1]. But the scale speaks for itself: nearly $2 billion in institutional capital parked in a single tokenized fund.

BUIDL is about capital efficiency for institutional trading desks. BlackRock found a gap—billions sitting as dead collateral on exchanges—and they're monetizing it.

On-Chain Rate Curve

The collateral use case explains why institutions care about BUIDL. But it doesn't explain why BUIDL might be the most important piece of infrastructure to land on-chain.

Here's the bigger picture: DeFi has never had a risk-free rate.

In TradFi, everything is priced relative to Treasuries. Corporate bonds, mortgages, loans—they're all expressed as a spread over the "risk-free" baseline of US government debt. That benchmark anchors fixed income—and ultimately, all capital markets, since the cost of capital itself derives from the risk-free rate.

DeFi has been building financial products for years without that anchor. The industry knew it was a problem. As Pyth Network, a major blockchain oracle provider, put it: "While DeFi has revolutionized finance as we know it, it's still missing one of TradFi's most fundamental building blocks: fixed-income rates. Without access to reliable yield benchmarks, on-chain offerings struggle to compete with traditional markets" [13].

Before BUIDL, you had a few options as a proxy for "risk-free rate" on-chain:

Take DeFi risk. Lend stablecoins on Aave or Compound and earn 3-8%. Your principal is dollar-denominated, but your yield depends on borrower demand and protocol solvency. If the protocol fails, you can lose everything. The yield comes from borrowers paying interest, mediated by protocols that can fail.

USDC alone is stable and dollar-denominated, but earns nothing. Circle invests those reserves in Treasuries and keeps the ~4-5% yield. You get stability. They get the income.

Take price risk. Stake ETH and earn 2.5-4%. The yield comes from protocol issuance, not DeFi lending. But your principal is denominated in ETH, which can drop 50% in a week. You're earning 3% on something that might be worth half as much next month.

BUIDL threads the needle: yield that comes directly from Treasuries, on principal that's denominated in dollars. No DeFi lending risk. No asset volatility. The only risks are the ones inherent to Treasuries themselves (US default—the definition of "risk-free" in TradFi), plus counterparty risk with BlackRock/Securitize and smart contract risk on the token layer.

This enables something DeFi hasn't had: a proper foundation for building a yield curve on-chain. Risk-free rate at the bottom, everything else priced as a spread on top.

The caveat: BUIDL is permissioned. It's not a universal DeFi primitive—it's a Treasury benchmark for whitelisted institutional capital. But that constraint is by design, and as we'll see, it creates a foundation that others can build on.

Execution Advantage

BlackRock didn't invent tokenized Treasuries—Franklin Templeton's BENJI launched earlier [5]. But BlackRock executed better. Three factors stand out:

Multi-chain distribution. BUIDL launched on Ethereum in March 2024 and expanded aggressively—Aptos, Avalanche, Arbitrum, Optimism, Polygon by November 2024, Solana by March 2025, BNB Chain by November 2025. Eight blockchains total, connected via Wormhole protocol [6].

As of January 5, 2026, BUIDL's $1.74 billion is distributed across chains [1]:

That's a capital access multiplier: if your asset lives across multiple chains, more capital can flow into it.

Instant liquidity. Circle partnered with BlackRock to create a dedicated smart contract for near-instant, 24/7 redemptions. Whitelisted BUIDL holders send tokens to Circle's contract and atomically receive USDC in the same transaction [7][8]. Without this, BUIDL would be stuck in T+1 or T+2 TradFi settlement—which defeats the purpose of using it as collateral on crypto exchanges.

Chains paying BlackRock. Here's a detail that shows how valuable this infrastructure is: Aptos, Avalanche, and Polygon are paying BlackRock quarterly fees to have BUIDL deployed on their chains [6]. The chains are subsidizing the asset, not the other way around. That's a power dynamic shift worth noting.

Distribution Stack

Behind BUIDL is a layered infrastructure stack that bridges TradFi and crypto:

Securitize plays multiple roles [2]: tokenization platform (issuing fund shares as ERC-20 tokens), SEC-registered transfer agent (managing subscriptions, redemptions, and reporting), sole placement agent (all investor onboarding goes through Securitize Markets, LLC), and compliance gateway (KYC/AML verification and whitelist controls). BlackRock made a strategic investment in Securitize and appointed Joseph Chalom, BlackRock's Global Head of Strategic Ecosystem Partnerships, to Securitize's board [2].

Circle provides the liquidity layer. Their instant redemption contract enables 24/7/365 atomic swaps from BUIDL to USDC [7]. This is what makes BUIDL usable as collateral—you can exit to dollars instantly without waiting for traditional settlement.

BNY Mellon provides custody. Your BUIDL tokens represent claims on Treasuries held at one of the world's largest custodians—not in a DeFi multisig [2].

The entire system is permissioned at the contract level. BUIDL cannot directly integrate with open DeFi protocols like Aave or Uniswap [2]. But that's by design—it creates a foundation for others to build on.

From Institutions to Retail

Whitelisted intermediaries can wrap BUIDL into products with broader reach.

Ondo Finance—as of early 2026, the largest BUIDL holder—is the clearest example [9][10][4]. OUSG is backed by BUIDL in Ondo's treasury, but offered with different terms: $100,000 minimum instead of $5 million, lighter KYC, instant redemptions.

As of January 5, 2026, OUSG has $824 million in TVL, yields 3.54%, and is available on Ethereum, Solana, Polygon, and XRP Ledger [11].

The flow: You buy OUSG from Ondo. Ondo holds BUIDL. BUIDL holds Treasuries.

Ethena (USDtb) and Frax (frxUSD) follow the same model—whitelisted intermediaries creating wrapped products with broader distribution [4].

BlackRock stays institutional and compliant. Intermediaries handle retail distribution risk. And the Treasury yield flows down the stack.

Conclusion

The collateral use case drives adoption, adoption creates a benchmark, and the benchmark creates a foundation for the entire on-chain rate curve.

The distribution stack is already forming. BUIDL at the base—institutional, permissioned, compliant. Wrapped products like OUSG one layer up—lower minimums, broader access. Theoretically opening up the doors to DeFi.

How far that distribution extends remains to be seen. But the rails are being laid. For the first time, DeFi has a yield curve with a real foundation—and everything builds from there.

Sources

[1] RWA.xyz: BUIDL Fund Data

[2] BusinessWire: BlackRock Launches BUIDL on Ethereum

[3] Yahoo Finance: BlackRock $2.5 Billion Tokenized Fund

[4] PR Newswire: BUIDL Accepted as Collateral on Binance

[5] DIA Data: RWA Landscape Analysis

[6] PR Newswire: BUIDL Multi-Chain Expansion

[7] BusinessWire: Circle USDC Smart Contract for BUIDL

[8] Blockworks: BlackRock Tokenized Fund Trading with Circle USDC

[9] CoinDesk: Ondo Finance Moves $95M to BlackRock's BUIDL

[10] Ondo Finance: Building on BUIDL

[11] Ondo Finance: OUSG

[12] The Block: Coinbase Completes $2.9 Billion Acquisition of Deribit

[13] Markets Media: Pyth Brings US Treasury Rates Data Onchain

[14] PR Newswire: BUIDL Accepted as Collateral on Crypto.com and Deribit