BlackRock Expands BUIDL Fund Across Five New Blockchains, Embracing Tokenization Trend

BlackRock is expanding its BUIDL fund to five new blockchains. This move aligns with a growing trend in the industry focused on tokenization.

The financial giant, known for launching Bitcoin ETFs earlier this year, has partnered with Securitize, a tokenization platform. Together, they announced that the USD Institutional Digital Liquidity Fund, or BUIDL, will now operate on Aptos, Arbitrum, Avalanche, Optimism, and Polygon.

Ethereum has long been the top choice for tokenized assets. This expansion shows BlackRock's confidence in blockchains beyond just Bitcoin and Ethereum. Securitize CEO Carlos Domingo noted, “With these new chains, we’ll start to see more investors looking to leverage the underlying technology to increase efficiencies on all the things that until now have been hard to do.”

So, what exactly is tokenization? It’s the process of creating a digital representation of an asset as a token on the blockchain. Supporters believe this will speed up the financial system, which often takes days to settle asset transfers, and improve capital efficiency.

BUIDL is a tokenized fund that invests in dollar-equivalent assets. This includes cash, U.S. Treasury bills, and repurchase agreements. Shares in BUIDL are pegged to the dollar and pay daily dividends to investors' wallets in the form of new tokens each month. Since its launch in March, BUIDL has reached a market value of $517 million and was previously only available on Ethereum.

This announcement is surprising because it explores blockchains that haven’t seen much real-world asset tokenization yet. Colin Butler, head of institutional capital at Polygon, previously mentioned that Ethereum is the preferred platform for asset tokenization due to its strong security guarantees. He cautioned, “If you’re not settling to Ethereum, then you’re taking a security risk that I wouldn’t recommend a firm like BlackRock take at scale.”

Currently, Ethereum hosts nearly $3 billion worth of tokenized assets, according to the data from rwa.xyz. Stellar, the second-largest blockchain for tokenization, holds just $387 million. Among the newly selected BUIDL blockchains, Arbitrum, Optimism, and Polygon rely partially on Ethereum for security, while Aptos and Avalanche are independent chains.

Not all blockchains chosen by BlackRock and Securitize will charge the same fees for BUIDL purchases. Investors on Ethereum, Arbitrum, and Optimism will pay a 0.5% fee to hold the fund. In contrast, the equivalent funds on Aptos, Avalanche, and Polygon will charge a lower fee of 0.2%. The release stated that the Aptos Foundation, Avalanche, Inc., and Polygon Labs BD Investments Ltd. have agreed to pay BlackRock a quarterly fee based on the average value of BUIDL shares on their respective blockchains.