Securitize and Elixir are looking to boost the fusion between DeFi and TradFi by allowing BlackRock BUIDL holders to enjoy DeFi Vaults to participate in decentralized finance.
Securitize and Elixir have announced the launch of DeFi Vaults for BlackRock’s BUIDL institutional tokenization platform. This move revolutionizes the way investors can access liquidity for their assets in the world of decentralized finance (DeFi), while maintaining the yield of the underlying assets. With this innovation, BlackRock BUIDL holders can create sBUIDL and use it to access DeFi via deUSD, a decentralized dollar token, while continuing to earn the yield generated by their investments.
DeFi Vaults are smart contracts that allow users to deposit their tokens and earn yield through various financial strategies. In this case, Securitize and Elixir have developed a new token architecture based on the DeFi standard. ERC-4626, known as sToken. This standard allows for the creation of vaults that represent a shared interest in yield-bearing tokens.
So when a BUIDL holder deposits their tokens into an sBUIDL vault, they receive a synthetic token called deUSD in return. This deUSD is a decentralized dollar token that can be used on the DeFi network for various operations such as lending, borrowing, and other financial activities. Most importantly, as long as the user uses deUSD in DeFi, they continue to receive the yield generated by their original BUIDL.
BlackRock BUIDL and the impact of unlocked liquidity
The launch of these DeFi vaults for BlackRock BUIDL unlocks a significant amount of liquidity in the real-world asset (RWA) market. It is estimated that over $1 billion in RWA liquidity has been unlocked with this innovation.
This is especially relevant because real-world assets, such as the short-term Treasury securities backing BUIDL, are typically less liquid and harder to trade compared to digital assets. But it is also relevant because of the impact on the RWA sector itself, which at the time of writing is worth over $13,2 billion.
Additional liquidity not only benefits BlackRock BUIDL holders, but also has a positive impact on the DeFi ecosystem at large. With more liquidity available, DeFi protocols can offer better rates of return and more opportunities for investors. Furthermore, unlocked liquidity can attract new participants to the market, contributing to its growth and development.
The collaboration between Securitize and Elixir
The collaboration between Securitize and Elixir is fundamental to the success of this project. Securitize, a leading platform for tokenizing real-world assets, has developed the technology and infrastructure required to issue and manage sBUIDL tokens. Elixir, for its part, is the creator of deUSD, a decentralized dollar token that enables interoperability and composability in the DeFi ecosystem.
The combination of Securitize’s expertise in asset tokenization and Elixir’s technology in creating synthetic tokens has resulted in an innovative solution that addresses one of the biggest challenges in the RWA market: the lack of liquidity and the difficulty in integrating these assets into the DeFi ecosystem.
More benefits for institutional investors
The deUSD RWA Institutional Program is initially targeted at accredited investors holding BlackRock’s BUIDL token. BUIDL is a digital money market fund backed by short-term Treasury securities, and is the largest digital money market fund with over $520 million in assets.
For institutional investors, this innovation offers several advantages:
- Improved liquidity: Investors can access real-world liquidity in their assets without having to sell them, allowing them to maintain their exposure to the underlying returns.
- Additional performance opportunities: By using deUSD in DeFi, investors can take advantage of new yield opportunities, such as lending and borrowing, that were not previously available.
- Composability: sBUIDL and USD tokens are composable, meaning they can be used across multiple DeFi protocols, expanding investment and portfolio management possibilities.
- Regulatory compliance: Securitize and Elixir’s solution is designed to meet regulatory requirements, providing institutional investors with the confidence to participate in the DeFi ecosystem.
The future of tokenization and DeFi
The launch of DeFi vaults for BlackRock BUIDL is just the beginning of a new era in the tokenization of real-world assets and their integration into the DeFi ecosystem. Securitize and Elixir have plans to expand their program to other assets and protocols, which could open up new opportunities for a wide range of investors.
As more financial institutions and investment funds adopt tokenization and blockchain technology, we are likely to see a significant increase in the liquidity and composability of real-world assets. This will not only benefit institutional investors, but will also democratize access to these assets for a broader audience.
