BlackRock BUIDL Fund Depth Analysis: A Milestone for Institutional RWA

1. Overview of BUIDL Fund

The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) is the first blockchain tokenized fund launched by BlackRock, the world's largest asset management company, in March 2024. This fund combines traditional money market funds (MMF) with blockchain technology, providing qualified investors with a new type of investment tool.

The core features of BUIDL include:

• Fund Type: Regulated Traditional Money Market Fund
• Underlying assets: highly liquid, low-risk cash, U.S. Treasury bonds, and repurchase agreements
• Tokenization mechanism: Fund shares circulate in the form of BUIDL tokens on the public blockchain.
• Regulatory Compliance: Only for "Qualified Purchasers", strictly adhering to securities regulations.
• Profit Distribution: Daily interest calculation, airdropped to investors in the form of new tokens monthly.
• Multi-chain deployment: mainstream public chains such as Ethereum, Solana, Avalanche, Polygon, etc.

2. Operating Mechanism and Ecosystem

The successful operation of BUIDL relies on a carefully constructed ecosystem:

• BlackRock: Acting as asset manager, responsible for investment strategy
• Securitize: Provides tokenization, transfer agency, and investor access services
• Bank of New York Mellon: serves as the custodian and administrator of fund assets
• Circle: Provides instant redemption channel for USDC
• Wormhole: Achieving cross-chain interoperability

This "iron triangle" structure (BlackRock, Securitize, BNY Mellon) ensures the robustness of the fund's compliance, security, and scalability.

3. Investment Process

The investment process of BUIDL reflects the core idea of "licensed finance":

1. Admission: Investors must be "Qualified Purchasers" and pass Securitize's KYC/AML review.
2. Subscription: Investors wire USD, Securitize mints an equivalent amount of BUIDL tokens.
3. Transfer: Can only be made between whitelisted addresses.
4. Redemption:
   • Traditional Path: Apply through Securitize, subject to traditional financial settlement cycle constraints.
   • Instant Path: Achieve near-instant redemption through Circle's USDC smart contract.

4. Technical Architecture

• Core Contract: Customized ERC-20 tokens on Ethereum with built-in whitelist control
• Multi-chain expansion: Deployed on multiple public chains such as Solana, Avalanche, Polygon, etc.
• Cross-chain interoperability: Achieved through the Wormhole protocol
• Security: Although there is no public audit report, it relies on the brand reputation of the participants.

5. Market Performance and Impact

• Rapid Growth: AUM approaching $2.9 billion by mid-2025
• Market Position: The largest tokenized government bond fund in the world, occupying 34% of the segmented market share.
• Main users: DeFi protocols (such as Ondo Finance, Ethena Labs, Frax Finance) use it as reserve assets.
• Competitive Landscape: Quickly surpassing Franklin Templeton's BENJI fund to become the market leader.

6. Strategic Analysis and Future Outlook

• Risks: Technical risk, regulatory uncertainty, market risk, counterparty risk
• Core Trade-off: The balance between compliance and DeFi composability
• Future Development:
  • Expand to more asset classes (stocks, bonds, etc.)
  • Deepen DeFi integration
  • Establish industry standards

BUIDL represents a key milestone in the fusion of TradFi and DeFi, providing a viable blueprint for RWA tokenization. However, its long-term success depends on whether the crypto ecosystem will continue to prioritize compliance and returns over the pursuit of pure decentralization.