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

Original Source: DePINone Labs

Abstract

The BlackRock USD Institutional Digital Liquidity Fund, 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.

This 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 operational mechanisms, business logic, processes, and technological pathways.

· Product Nature: BUIDL is fundamentally a regulated traditional money market fund (MMF), with underlying assets consisting of highly liquid, low-risk cash, U.S. Treasury securities, 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 distributions.

· Operational 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 strategies; Securitize acts as the core technology and compliance partner, providing tokenization, transfer agency, and investor access services; and BNY Mellon plays a foundational role in traditional finance, 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 scalable operations.

· Business Process: The investment process embodies 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 whitelisted in the smart contract. The subscription (minting tokens) and redemption (burning tokens) processes connect off-chain fiat currency circulation with on-chain token operations. Among these, Circle's USDC instant redemption channel is a key innovation, resolving the fundamental contradiction between traditional financial settlement cycles and the 24/7 instant liquidity demands of the crypto world.

· Technical Architecture: BUIDL was initially issued as a customized ERC-20 token on Ethereum, featuring a built-in whitelist transfer control mechanism. To expand its influence, the fund has rapidly extended to multiple mainstream blockchain networks such as Solana, Avalanche, and Polygon, achieving 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 serves as a significant catalyst and validation for the entire RWA tokenization field. It quickly surpassed early competitors to become the world's largest tokenized treasury 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 BUIDL's success is not derived from traditional investors but rather from its precise fulfillment of the DeFi ecosystem's urgent need for compliant, stable, income-generating on-chain dollar assets, establishing itself as a cornerstone of institutional-grade DeFi.

The BUIDL fund is not just a product but a strategic industry benchmark. It provides a replicable compliance blueprint for bringing traditional financial assets on-chain and opens a new track of "licensed DeFi" parallel to open DeFi. This report will elaborate on the above points, providing an in-depth breakdown of the operational details and impacts of the BUIDL fund.

1. Deconstructing BUIDL: A New Paradigm in Asset Management

This section aims to clarify the fundamental nature of BUIDL, defining it as a regulated financial instrument that brings assets on-chain, rather than a crypto-native asset. We will elucidate the rights that investors actually hold and how their returns are generated and delivered.

1.1 Fund Mission: A 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 that of a money market fund (Money Market Fund, MMF). This positioning is crucial as it determines the fund's investment strategy, risk profile, and regulatory framework.

From a regulatory perspective, 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 is 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 fund's primary objective is "to seek current income as is consistent with liquidity and stability of principal." This is the standard goal of traditional MMFs, and BUIDL's revolutionary aspect lies in the fact that its vehicle for achieving this goal is blockchain technology.

1.2 Investment Strategy: Achieving Stable Returns Through Traditional Instruments

To achieve its investment objectives, the BUIDL fund invests 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 the traditional financial market, standard allocations for institutional-grade MMFs.

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

1.3 BUIDL Token: A Digital Certificate of Fund Shares

The BUIDL token is not an independent cryptocurrency but a digital representation of fund shares. Each share of the fund is represented by one BUIDL token. Therefore, holding a BUIDL token means owning a corresponding proportion of the fund.

The fund aims to stabilize the value of each BUIDL token at $1.00, consistent 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 relies entirely on the backing of adequately managed traditional underlying assets.

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

1.4 Revenue Mechanism: Daily Interest Accrual, Monthly On-Chain Distribution

The revenue mechanism of BUIDL is a core reflection of its on-chain characteristics. The fund generates interest daily from its underlying assets, achieving "daily accrued dividends."

However, the method of distributing these earnings is unique. The 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 profound strategic significance. By distributing earnings through "re-basing" or token issuance, it ensures that the face value of each BUIDL token remains stable at $1.00. An asset with a constant price is ideal for DeFi protocols as collateral and a store of value. If earnings were reflected through price increases, the value of BUIDL would fluctuate continuously, significantly increasing its liquidation risk and integration complexity as collateral.

Thus, this revenue distribution mechanism is a well-considered design by BlackRock and Securitize to position BUIDL as a stable, composable "Lego block" within the DeFi ecosystem. The essence of BUIDL is a traditional financial product encapsulated by Web3 technology, with its stability and returns entirely stemming from BlackRock's traditional, off-chain asset management capabilities, while blockchain and tokens provide an unprecedented efficient delivery mechanism.

2. Strategic Imperatives: BlackRock's On-Chain Financial Vision

This section will explore the business motivations and strategic partnerships driving the birth of BUIDL, answering why BlackRock took this step and analyzing the partnerships that support its operation.

BlackRock's public goal in launching BUIDL is to develop solutions that address "real customer problems." Compared to traditional money market funds, BUIDL offers significant advantages through blockchain technology: instant and transparent settlement, 24/7 peer-to-peer transfer capabilities, and broader access to on-chain products. These features address long-standing pain points in traditional financial markets regarding operating hours, settlement efficiency, and counterparty risk.

On a deeper level, BUIDL represents the latest advancement in BlackRock's grand digital strategy. Company CEO Larry Fink and other executives have made it clear that "the future of securities is tokenization." BUIDL is the first significant practice of this strategic vision, aiming to enhance the liquidity, transparency, and overall efficiency of capital markets 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 integrated symbiotic relationship rather than a simple vendor relationship.

Securitize plays a central 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 qualified investors.

· Compliance Gateway: Securitize manages the critical investor access process, including KYC/AML reviews, 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 investors it brings in. This model creates financial incentives for Securitize to continuously expand the fund's assets under management.

More importantly, BlackRock has made a strategic investment in Securitize, and Joseph Chalom, the global head of BlackRock's strategic ecosystem partnerships, has joined Securitize's board. This signifies a deep, long-term strategic alliance between the two, ensuring BlackRock's reliance on this key technological layer of tokenization and its ability to influence the future development of RWA tokenization standards.

2.2 Ecosystem: BNY Mellon, Custodian, and Infrastructure Providers

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

· BNY Mellon: As a pillar of traditional finance, BNY Mellon's role is indispensable. It serves as the custodian of the fund's off-chain assets (cash and securities) and as the fund's administrative manager. BNY Mellon is a key bridge ensuring interoperability between the fund in 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. Auditors: PricewaterhouseCoopers LLP (PwC) has been appointed as the fund's auditor, providing traditional financial-level credibility.

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 party plays its role, and none can be omitted: BlackRock possesses unparalleled asset management capabilities and distribution networks; Securitize provides the necessary expertise and licenses to bridge assets compliantly to the blockchain; while BNY Mellon offers the custodial and administrative services essential 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 itself brings significant legitimacy and validation to the entire RWA field. It sends 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 the hiring of transfer agents and the implementation of on-chain whitelist controls, provides a clear and compliant blueprint for other TradFi institutions looking to bring assets onto the blockchain.

3. Investor Pathway: From Subscription to Redemption

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

3.1 Access Threshold: Qualified Purchasers and Account Opening Process

BUIDL is not a publicly available retail product; 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, a threshold significantly higher than that of "Accredited Investors." Minimum Investment: The fund's initial minimum investment amount 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 approved, 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 whitelisted investor is ready to invest, the subscription process connects the off-chain fiat world with the on-chain token world:

The investor wires U.S. dollars (USD) to the fund's administrative manager, BNY Mellon. Once the fund manager, BlackRock, receives the funds, it purchases the corresponding underlying assets (such as U.S. Treasury securities) in the traditional financial market. As the transfer agent, Securitize receives a subscription confirmation. Securitize then calls the minting function of the BUIDL smart contract, generating the corresponding number of BUIDL tokens at a ratio of $1 = 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 publicly accessible on blockchain explorers.

3.3 Whitelist Mechanism: Permissioned Peer-to-Peer Transfers

The whitelist is the core technical mechanism for BUIDL's compliant operation. 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 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 undergone KYC/AML reviews, thereby meeting regulatory requirements for ownership tracking under securities law.

However, within the compliance framework, BUIDL also offers significant flexibility. It allows approved investors to conduct peer-to-peer (P2P) transfers 24/7/365. This represents a significant efficiency improvement compared to traditional funds, which can only transfer through intermediaries during market trading hours.

3.4 Redemption (Burning): Dual Pathways with Securitize and Circle USDC

When investors wish to exit their investment, BUIDL offers two distinctly different redemption pathways.

Path One: Traditional Redemption (via Securitize)

Investors initiate a redemption request through the Securitize platform. Securitize calls the burn function of the smart contract to remove the corresponding number of BUIDL tokens from the investor's wallet. BlackRock sells the corresponding underlying assets in the traditional market for cash. BNY Mellon wires the dollar proceeds back to the investor. This pathway is subject to traditional financial settlement cycles, such as T+1 or T+2.

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

· Key Innovation: To address the timeliness issues of traditional redemptions, Circle partnered with BlackRock to launch a dedicated smart contract that provides BUIDL holders with an almost instant, 24/7 on-chain redemption channel.

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

· Role of Liquidity Provider: After receiving BUIDL tokens, Circle can redeem dollars from BlackRock through the aforementioned traditional pathway. Essentially, Circle acts as a liquidity provider, using its USDC reserves to provide instant liquidity to the market, bridging the gap between the immediacy of the crypto world and the delays of traditional financial settlements.

· On-Chain Evidence: Data on Etherscan shows a specific contract address named "Circle: BUIDL Off-Ramp" (0x31d3f59ad4aac0eee2247c65ebe8bf6e9e470a53), whose Redeem function is frequently called, confirming its active use as a liquidity outlet.

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

However, while 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's contracts will only interact with whitelisted addresses, meaning it cannot be directly deposited into permissionless protocols like Aave or Uniswap. Any integration must be constructed through trusted intermediaries like Ondo Finance, which itself is whitelisted, to create "wrapped" products. This creates a "walled garden," a new, compliant, institution-centered DeFi ecosystem that is isolated from the existing open DeFi world. This is a necessary trade-off for compliance at the expense of openness.

4. Technical Stack: A Bridge Connecting TradFi and DeFi

This section will provide a technical analysis of the on-chain components of BUIDL, 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: Permissioned ERC-20 Smart Contract on Ethereum

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

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

· Smart Contract Address: 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 employ a Proxy Pattern for deployment, a standard practice that allows for upgrading contract logic without changing the contract address, which is crucial for institutional-grade products that require iteration and fixes.

· Security and Auditing: Institutional-grade products have very high security requirements. Although publicly available research materials do not provide a public audit report for BUIDL's core contracts, which is a significant information gap, its security is assured on multiple levels. First, Securitize, as a compliance technology provider, emphasizes in its filings to the SEC that the characteristics of permissioned tokens (such as being freezeable, burnable, and re-mintable) make them safer than bearer assets and capable of addressing erroneous or malicious transactions. Second, protocols like Ondo Finance, which deeply integrate BUIDL, have their own audit reports that indirectly assess the security of interactions with BUIDL contracts. Nevertheless, investors largely rely on the trust in the brands of participants like BlackRock and Securitize rather than independently verifiable code audits. This reflects a hybrid application of the traditional finance "trust me" model to the Web3 "verify me" technology.

4.2 Multi-Chain Expansion: Principles and Implementation

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

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

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

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

4.3 Interoperability Engine: The Key Role of Wormhole

To ensure BUIDL maintains unity and liquidity in a multi-chain environment, the fund employs 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 fungibility across all networks, rather than being isolated assets fragmented across different chains.

4.4 Liquidity Engine: Technical Analysis of Circle's BUIDL-to-USDC Smart Contract

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

· Functionality: 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 Circle's contract to use their 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 burning or locking the user's BUIDL) and transfer 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 calls to the Redeem function, confirming its active use as a liquidity outlet.

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, ensuring that regardless of which chain the transaction occurs on, it must pass through this central verification. Meanwhile, the multi-chain deployment enabled by Wormhole creates a mesh network, allowing BUIDL to flow freely between all supported chains.

Finally, Circle's redemption channel provides a universal exit from the main hub (Ethereum) back to the highly liquid dollar-native asset (USDC). This architecture cleverly centralizes the uncompromising compliance functionality while decentralizing the existence and liquidity pathways of the assets to maximize utility.

5. Market Catalysts: BUIDL's Impact on the RWA Ecosystem

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

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

Since its launch, BUIDL's assets under management (AUM) have experienced explosive growth, demonstrating strong market demand for its product.

· Rapid AUM Growth: The fund launched in March 2024 and attracted $245 million in funding within 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 nearing $2.9 billion.

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

5.2 New 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.

· Key Use Cases: For DeFi protocols that need to hold large dollar reserves, converting funds from non-yielding stablecoins (like USDC, USDT) to BUIDL, which provides U.S. Treasury yields and is backed by BlackRock, is a financially wise decision.

· Ondo Finance: This protocol transferred a significant amount of assets (initially $95 million) backing its OUSG token into BUIDL to leverage its instant settlement advantages. Ondo's adoption was a crucial component of BUIDL's early AUM.

· Ethena Labs: As the issuer of the stablecoin USDe, Ethena allocated a large portion of its reserve assets for its new stablecoin USDtb into BUIDL. This multi-hundred-million-dollar allocation was a key factor in driving BUIDL's AUM past the $1 billion mark.

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

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

BUIDL's entry has completely transformed the competitive landscape of the tokenized treasury fund market.

· The Flippening Event: BUIDL quickly surpassed the early market leader—Franklin Templeton's on-chain U.S. government money market fund (FOBXX, also known as BENJI)—to become the new market champion. Major competitors: Other key players in the tokenized treasury market include Hashnote (USYC) and Ondo Finance (USDY).

BUIDL's ability to surpass Franklin Templeton's fund is not only due to BlackRock's brand effect but, more importantly, 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 determinants of adoption rates.

BUIDL's rapid rise and market dominance strongly validate the significant demand from institutional and crypto-native markets for highly compliant, deeply liquid, and yield-generating RWA products from top issuers. Under the influence of BUIDL, the entire tokenized U.S. Treasury market has exceeded $4.4 billion, while the broader RWA market (excluding stablecoins) has grown to nearly $8 billion. BUIDL is undoubtedly the main engine of this growth trend.

6. Strategic Analysis and Future Outlook

This section will synthesize 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 operations still face multidimensional risks.

Technical Risks

· Smart Contract Vulnerabilities: Any undiscovered vulnerabilities in BUIDL's core contracts or the third-party contracts it relies on (such as Wormhole and Circle's redemption contract) could lead to catastrophic consequences. Although there are audits of the relevant protocols, risks still exist.

· Underlying Blockchain Risks: The fund's operations depend on the various public blockchains on which it is deployed. Significant events occurring on these chains, such as 51% attacks, hard fork disputes, or prolonged network outages, could threaten the normal operation of the fund.

Regulatory Risks

· Uncertainty: The global regulatory framework for tokenized securities is still evolving. New regulations introduced by the SEC or other regulatory bodies in the future may impact BUIDL's existing structure or legality.

· Cross-Border Complexity: The globalization and around-the-clock nature of blockchain introduce jurisdictional complexities that traditional funds do not face, especially when dealing with cross-border transactions.

Market Risks

· Liquidity Risks: Although Circle's USDC channel greatly alleviates redemption liquidity issues, this instant liquidity is highly dependent on a single partner. The secondary P2P market liquidity among whitelisted investors may be very limited.

· Counterparty Risks: BUIDL's operations rely on a complex chain of counterparties, including BlackRock, Securitize, BNY Mellon, Circle, and Wormhole. A failure at any link in this chain could impact the entire system.

· Underlying Asset Risks: Although the risks are very low, the fund is still affected by the market risks of the U.S. Treasuries and repurchase agreements it holds, and the fund itself does not guarantee that its NAV will always maintain at $1.00.

6.2 Trade-offs Between Compliance and DeFi Composability

BUIDL's core design reflects a profound strategic trade-off. The whitelist managed by Securitize is the cornerstone of BUIDL's compliance, serving as both a moat and a wall for the entire model. It ensures that only approved entities can hold the tokens, thereby meeting securities regulatory requirements. 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 achieve regulatory compliance, it sacrifices the core principle of open composability that DeFi embodies.

Securitize believes that this permissioned characteristic is an advantage rather than a flaw. It allows for remediation in the event of errors or fraud (such as freezing, burning, or re-minting tokens) and can enforce legal requirements like OFAC sanctions, making it safer for institutions than anonymous, bearer crypto assets.

The operational model of the entire BUIDL ecosystem fundamentally represents a "trusted third-party" model, which is contrary to the original "trustless" spirit of cryptocurrency but perfectly aligns with the needs of institutional investors. Investors must trust that BlackRock will manage the assets properly, that BNY Mellon will safely custody the assets, that Securitize will correctly manage the on-chain ledger and whitelist, and that Circle will fulfill redemption obligations. This is a chain composed 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 an 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-Grade RWA Products

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

· Expanding Asset Classes: BlackRock's vision extends far beyond money markets to encompass the tokenization of all securities, including stocks and bonds. BUIDL is a successful proof of concept for this broader strategy.

· Deepening DeFi Integration: Future developments may involve more complex, regulated "packaged" solutions that allow BUIDL's yields and collateral value to be more widely utilized within the DeFi ecosystem without undermining the core whitelist mechanism.

· Setting Industry Standards: The success of BUIDL will drive the industry toward the standardization of RWA tokenization technologies and legal frameworks, and BlackRock is currently in the best position to influence this process.

The Next Generation of Financial Infrastructure

BUIDL is not just a successful fund; it is a strategic masterpiece in product-market fit. It accurately identifies a core need within the DeFi ecosystem (stable, compliant, yield-generating collateral) and builds a perfect product to meet that 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 on-chain. By becoming the foundational collateral layer of the crypto-native economy, BlackRock not only enters this market but embeds itself deeply within the core of its financial structure, positioning itself as a cornerstone of the next generation of finance.

However, the most profound long-term risk that BUIDL faces may not be technical or market risks, but rather stem from philosophical divides within the crypto ecosystem.

BUIDL's success is built on the adoption by crypto-native protocols that pursue decentralization and censorship resistance. These protocols are constructing their applications on a centralized, permissioned, and potentially censorable foundation (Securitize can freeze tokens at the request of the law). This dependency contradicts the core values cherished by many members of the crypto community. As the ecosystem matures, there may emerge a movement of "escaping to decentralization," where protocols actively seek more censorship-resistant collateral, even if it means sacrificing some yield or the so-called "sense of security."

Thus, while BUIDL currently holds a dominant position, its long-term viability depends on whether the crypto ecosystem continues to prioritize compliance and yield over the ideological pursuit of pure decentralization. This philosophical tension represents its most profound and unquantifiable risk.

This article is from a submission and does not represent the views of BlockBeats.

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