In-depth analysis of BlackRock BUIDL Fund: How will the entry of Wall Street giants affect the RWA landscape?

Author: DePINone Labs

summary

The BlackRock USD Institutional Digital Liquidity Fund, whose token name is BUIDL, is the first tokenized fund issued on a public blockchain, launched by BlackRock, the world's largest asset management company, in March 2024.

The fund, in partnership with Securitize, a real-world asset (RWA) tokenization platform, aims to combine the stable returns of traditional finance (TradFi) with the efficiency and accessibility of blockchain technology to provide a completely new investment paradigm for qualified investors.

This report will provide a comprehensive and in-depth analysis of the BUIDL Fund, covering its operating mechanism, business logic, business processes and technical paths.

• Product essence: BUIDL is fundamentally a regulated traditional money market fund (MMF), whose underlying assets are highly liquid, low-risk cash, U.S. Treasury bonds and repurchase agreements. Its innovation lies in tokenizing fund shares into BUIDL tokens that circulate on the public blockchain, realizing the on-chain recording, transfer and income distribution of ownership.
• Operational Mechanism and Ecosystem: The successful operation of BUIDL relies on a carefully constructed ecosystem that combines the advantages of TradFi and Crypto. BlackRock serves as an asset manager and is responsible for investment strategy; Securitize, as a core technology and compliance partner, provides tokenization, transfer agency and investor access services; and BNY Mellon plays the role of a traditional financial cornerstone, serving as the custodian and administrator of fund assets. This "iron triangle" structure ensures the robustness of the fund in terms of compliance, security and scale operation.
• Business process: The investment process reflects the core idea of "licensed finance". Investors must be "qualified purchasers" as defined by U.S. securities laws and pass Securitize's KYC/AML audit, and their wallet addresses are included in the whitelist of smart contracts. The subscription (minting tokens) and redemption (destroying tokens) processes connect the off-chain fiat currency circulation with on-chain token operations. Among them, the USDC instant redemption channel launched by Circle is a key innovation. It solves the fundamental contradiction between the traditional financial settlement cycle and the 24/7 instant liquidity demand of the crypto world through a smart contract.
• Technical Architecture: BUIDL was originally issued as a customized ERC-20 token on Ethereum, with a core technical feature being a built-in whitelist transfer control mechanism. To expand its influence, the fund has rapidly expanded to multiple mainstream blockchain networks such as Solana, Avalanche, Polygon, and achieved cross-chain interoperability through the Wormhole protocol. This multi-chain deployment strategy aims to maximize its accessibility and practicality in 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 plays a huge catalytic and validation role in the entire RWA tokenization field. It quickly surpassed early competitors and became the world's largest tokenized treasury fund. The growth of its asset management scale (AUM) was mainly driven by B2B demand for crypto-native protocols such as Ondo Finance and Ethena to use it as reserves and collateral. This shows that BUIDL's success does not come from traditional investors, but it accurately meets the DeFi ecosystem's urgent need for compliant, stable, and interest-bearing on-chain US dollar assets, thereby building itself into the cornerstone of institutional-level DeFi.

The BUIDL Fund is not only a product, but also a strategic industry benchmark. It provides a replicable compliance blueprint for traditional financial assets to be put on the chain, and creates a new track of "permissioned DeFi" parallel to open DeFi.

This report will elaborate on the above points and provide an in-depth analysis of the details of BUIDL fund operations and their impact.

Special statement: All articles of DePINone Labs are for information and knowledge purposes only and do not constitute any investment advice.

This report is produced by DePINone Labs. Please contact us for reprinting.

1. Deconstructing BUIDL: A new paradigm for asset management

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

1.1 Fund Mission: Regulated Money Market Fund on the Blockchain

BlackRock USD Institutional Digital Liquidity Fund ("BUIDL") is the first tokenized fund issued by BlackRock on a public blockchain. Its core structure is a money market fund (MMF). This positioning is critical because it determines the fund's investment strategy, risk profile and regulatory framework.

On the regulatory level, the fund issues shares in accordance with 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 targets are 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 core goal of the fund is to "seek current income as is consistent with liquidity and stability of principal." This is the standard goal of traditional MMFs, but BUIDL is revolutionary in that it uses blockchain technology to achieve this goal.

1.2 Investment strategy: obtaining stable returns through traditional tools

To achieve its investment objectives, BUIDL invests 100% of its total assets in a portfolio consisting of cash, US Treasury bills and repurchase agreements, which are recognized as low-risk, highly liquid instruments in traditional financial markets and are standard configurations for institutional-level MMFs.

By investing in these high-quality short-term debt instruments, the fund aims to provide investors with a low-risk way to earn US dollar returns, essentially bringing safe assets such as US Treasury bonds to on-chain investors in the form of tokens. As revealed in the prospectus of other similar funds of BlackRock, although there are common market risks such as interest rate risk, its primary goal is to preserve capital.

1.3 BUIDL Token: Digital Certificate of Fund Shares

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

The fund is committed to stabilizing the value of each BUIDL token at 1.00, which is consistent with the traditional MMF's net asset value (NAV) target of 1.00 per share. This value stability is not achieved through complex algorithms or mortgage mechanisms, but is entirely dependent on the support of the underlying assets behind it that are traditionally managed and sufficient.

In terms of legal structure, the fund entity is a limited company registered in the British Virgin Islands (BVI), which is an offshore structure commonly used by international funds.

1.4 Income mechanism: daily interest calculation and monthly distribution on the chain

BUIDL's revenue mechanism is the core embodiment of its on-chain characteristics. The fund generates interest on a daily basis through the underlying assets it holds, which is called "daily accrued dividends".

However, the way the proceeds are distributed is ingenious. These accumulated dividends are not paid out in fiat currency, nor are they reflected by increasing the price of each BUIDL token. Instead, they are airdropped directly into investors' wallets on a monthly basis in the form of new BUIDL tokens.

This design choice has far-reaching strategic implications. Distributing revenue through “re-basing” or issuing additional tokens ensures that the par value of each BUIDL token remains stable at $1.00. An asset with a constant price is an ideal collateral and value storage tool for DeFi protocols. If revenue is reflected through price increases, the value of BUIDL will continue to fluctuate, which will greatly increase its liquidation risk and integration complexity when used as collateral.

Therefore, this profit distribution mechanism is a well-thought-out design made by BlackRock and Securitize to make BUIDL a stable and composable "Lego building block" in the DeFi ecosystem.

The essence of BUIDL is a traditional financial product encapsulated by Web3 technology. Its stability and returns are entirely derived from BlackRock's traditional, off-chain asset management capabilities, while blockchain and tokens provide it with an unprecedented efficient delivery mechanism.

2. Strategic imperative: BlackRock’s vision for on-chain finance

This chapter will explore the business motivations and strategic partnerships that drove the birth of BUIDL, answer why BlackRock took this step, and analyze the partnerships that support its operation.

BlackRock’s stated goal in launching BUIDL is to develop solutions that solve “real client problems.”

Compared with traditional money market funds, BUIDL provides significant advantages through blockchain technology: instant and transparent settlement, 24/7/365 peer-to-peer transfer capabilities, and access to a wider range of on-chain products. These features solve the long-standing pain points of traditional financial markets in terms of operating time, settlement efficiency, and counterparty risk.

Looking deeper, BUIDL is the latest development in BlackRock's grand digital strategy. The company's CEO Larry Fink and other executives have made it clear that "the future of securities is tokenization." BUIDL is the first important practice of this strategic vision, aiming to improve the liquidity, transparency and overall efficiency of the capital market through tokenization.

2.1 Symbiotic partnership between BlackRock and Securitize

BlackRock's collaboration with Securitize is key to BUIDL's success. It is a deeply binding symbiotic relationship rather than a simple supplier relationship.

Securitize plays the role of core technology and service center in this ecosystem. Its responsibilities include:

• Tokenization Platform and Transfer Agent: Securitize is responsible for digitizing fund shares, managing the issuance, redemption and dividend distribution of tokens on the chain, and recording changes in ownership.
• Placement Agent: Its subsidiary, Securitize Markets, LLC, serves as the fund's placement agent and is responsible for promoting and selling the fund to qualified investors.
• Compliance Gateway: Securitize manages the critical investor onboarding process, including KYC/AML checks, and maintains an on-chain whitelist of approved wallet addresses.

In terms of the business model, Securitize Markets, as a placement agent, receives compensation from BlackRock. This compensation includes a one-time upfront fee and ongoing quarterly fees, which are usually a percentage of the net asset value of the investors it introduces. This model creates a financial incentive for Securitize to continuously expand the fund's asset management scale.

More importantly, BlackRock has made a strategic investment in Securitize, and Joseph Chalom, BlackRock's global head of strategic ecosystem partnerships, has joined Securitize's board of directors. This marks a deep and long-term strategic alliance between the two parties. Through this move, BlackRock has ensured its reliance on the key technical layer of tokenization and will be able to influence the development direction of future RWA tokenization standards.

2.2 Ecosystem: BNY Mellon, Custodians, and Infrastructure Providers

A successful tokenized fund requires a complete ecosystem that combines traditional finance with crypto-native service providers. BUIDL’s ecosystem is a great example of this integration.

• BNY Mellon: As a pillar of traditional finance, BNY Mellon plays an indispensable role. It serves as the custodian of the fund's off-chain assets (cash and securities) and the fund administrator. BNY Mellon is a key bridge to ensure the interoperability of funds between the digital world and traditional markets.
• Digital asset custodians: Investors have flexible custody options when holding BUIDL tokens. Key digital asset custodians in the ecosystem include Anchorage Digital, BitGo, Copper, and Fireblocks.
• Auditor: PricewaterhouseCoopers LLP (PwC) was appointed as the auditor of the fund, providing the product with a traditional financial-level credibility endorsement.

This “iron triangle” of BlackRock (asset management), Securitize (technology and compliance) and BNY Mellon (custody and administration) is at the heart of the entire operation.

Each of the three parties has its own role and is indispensable: BlackRock has unparalleled asset management capabilities and distribution networks; Securitize provides the expertise and licenses required to bridge assets to the blockchain in a compliant manner; and BNY Mellon provides the custody and administrative services necessary for institutional-level fund operations.

2.3 Strategic Precedent: Setting the Standard for RWA Tokenization

As the world's largest asset management company, BlackRock's entry itself has brought huge legitimacy and verification effects to the entire RWA field.

It sends a clear signal to other traditional financial institutions that asset tokenization is not only a viable concept, but also a strategic direction worth investing in with great potential. The entire architecture of BUIDL, from its compliance framework based on Rule 506(c) to the employment of transfer agents to the implementation of on-chain whitelist controls, provides a clear and compliant blueprint for other TradFi institutions that want to bring assets to the blockchain.

3. Investor Path: From Subscription to Redemption

This section will detail the complete life cycle of a BUIDL investor, from initial qualification and admission to final redemption of funds. We will break down the process step by step and focus on the key control points and liquidity mechanisms.

3.1 Entry threshold: qualified buyers and account opening process

BUIDL is not a retail product for the public and has an extremely high entry threshold, which reflects its strict compliance positioning.

• Investor Qualification: Only “Qualified Purchasers” as defined by the U.S. Securities and Exchange Commission (SEC) are eligible to invest. This definition usually requires individuals or family offices to have at least $5 million in investable assets, which is much higher than the threshold for “Accredited Investors”.
• Minimum Investment: The initial minimum investment in the Fund is $5 million.
• Account opening process: Potential investors must apply for subscription through the fund's placement agent, Securitize Markets, LLC. The process involves strict "Know Your Customer" (KYC) and "Anti-Money Laundering" (AML) review. Once the review is passed, the investor's Ethereum wallet address will be added to the "whitelist" of the BUIDL smart contract, which is a prerequisite for participating in all subsequent on-chain activities.

3.2 Purchase (minting): converting fiat currency into BUIDL tokens on the chain

When a whitelisted investor is ready to invest, the subscription process connects the off-chain fiat world with the on-chain token world:

• Investors send U.S. dollars (USD) via wire transfer to the fund's administrator, Bank of New York Mellon.
• After receiving the funds, the fund manager BlackRock purchases the corresponding underlying assets (such as U.S. Treasury bonds) in the traditional financial market.
• Securitize, as the transfer agent, will receive a subscription confirmation notification.
• Securitize will then call the mint function of the BUIDL smart contract to generate the corresponding number of BUIDL tokens at a ratio of 1 USD = 1 BUIDL and send them to the investor’s whitelisted wallet address.

This process leaves a verifiable record on the blockchain, and each successful subscription will increase the total supply of BUIDL tokens, which are publicly available in the on-chain browser.

3.3 Whitelist mechanism: permissioned peer-to-peer transfer

Whitelist is the core technical mechanism for BUIDL compliance operations.

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 screening, thereby meeting the regulatory requirements of securities laws for ownership tracking.

However, within the framework of compliance, BUIDL also provides tremendous flexibility. It allows peer-to-peer (P2P) transfers between approved investors 24/7/365. This is a major efficiency improvement compared to traditional funds that can only be transferred through intermediaries during market trading hours.

3.4 Redemption (destruction): Securitize and Circle USDC dual paths

When investors wish to exit their investment, BUIDL offers two distinct redemption paths.

?Path 1: Traditional Redemption (via Securitize)

• Investors initiate redemption requests through the Securitize platform.
• Securitize calls the smart contract’s burn function to remove the corresponding number of BUIDL tokens from the investor’s wallet.
• BlackRock sells the corresponding underlying assets in the traditional market in exchange for cash.
• BNY Mellon returns the dollar proceeds to investors via wire transfers.
• This path is subject to the settlement cycle of traditional finance, such as T+1 or T+2.

?Path 2: Instant Redemption (via Circle’s USDC smart contract)

• Key innovation: To address the timeliness issue of traditional redemptions, Circle worked with BlackRock to launch a dedicated smart contract that provides BUIDL holders with a near-instant, 24/7 on-chain redemption channel.
• How it works: Whitelisted BUIDL holders can send their BUIDL tokens to this Circle smart contract, which will atomically (in the same transaction) return an equivalent amount of USDC stablecoins to the user’s wallet.
• Liquidity provider role: After Circle receives BUIDL tokens, it can redeem U.S. dollars from BlackRock through the traditional path mentioned above. In essence, Circle acts as a liquidity provider, providing instant liquidity to the market with its own USDC reserves, thus bridging the gap between the immediacy of the crypto world and the delay of traditional financial settlement.
• On-chain evidence: Data on Etherscan shows that there is a specific contract address called "Circle: BUIDL Off-Ramp" (0x31d3f59ad4aac0eee2247c65ebe8bf6e9e470a53). The Redeem function of this contract is frequently called, confirming its active use as a liquidity exit.

This USDC redemption channel is the most critical feature for BUIDL to gain widespread adoption in the crypto-native world. It solves the fundamental liquidity mismatch between the traditional financial settlement cycle and DeFi's demand for instant composability. Without this channel, BUIDL may be just a niche product with limited liquidity; with it, BUIDL has truly become a fully functional DeFi infrastructure.

However, while the whitelisting 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 contract will only interact with whitelisted addresses, which means it cannot be directly deposited into permissionless protocols such as Aave or Uniswap. Any integration must be built through a trusted intermediary like Ondo Finance, which is itself whitelisted, to build a "wrapped" product. This creates a "walled garden", a new, compliant, institution-centric DeFi ecosystem, but it is isolated from the existing open DeFi world. This is an inevitable trade-off for openness in order to comply with regulations.

4. Technology stack: a bridge between TradFi and DeFi

This section will provide a technical analysis of BUIDL’s on-chain components, from its core smart contract architecture, to its multi-chain deployment strategy, and the key interoperability and liquidity protocols that underpin its functionality.

4.1 Core Architecture: Permissioned ERC-20 Smart Contracts on Ethereum

• First Launch Network: BUIDL was initially launched on the Ethereum network, demonstrating BlackRock’s recognition of the security and stability of Ethereum as an institutional-grade application platform.
• Token standard: BUIDL tokens follow the ERC-20 standard, which ensures its basic compatibility with the Ethereum ecosystem (such as wallets and browsers). However, it is not a standard ERC-20, but has been customized for compliance. The core modification is the whitelist transfer restriction logic mentioned above.
• Smart contract address: Multiple Ethereum contracts related to BUIDL can be seen in Etherscan. The main token contract address seems to be 0x7712c34205737192402172409a8f7ccef8aa2aec. In addition, there is a token contract called BUIDL-I (0x6a9DA2D710BB9B700acde7Cb81F10F1fF8C89041) and Circle's redemption contract (0x31d3f59ad4aac0eee2247c65ebe8bf6e9e470a53). These contracts are likely deployed using the Proxy Pattern, a standard practice that allows contract logic to be upgraded without changing the contract address, which is critical for institutional-level products that require iteration and repair.
• Security and Audit: Institutional-grade products have extremely high security requirements. Although there is no public audit report on the core contract of BUIDL in the public research materials, which is a significant information gap, its security assurance is reflected in multiple levels. First, Securitize, as a compliance technology provider, emphasized in its filing with the SEC that the characteristics of licensed tokens (such as being freezable, destructible, and recast) make them safer than bearer assets and can cope with erroneous or malicious transactions. Secondly, protocols such as Ondo Finance that deeply integrate BUIDL also indirectly assess the security of interactions with BUIDL contracts through their own audit reports. Despite this, investors are largely based on trust in the brands of participants such as BlackRock and Securitize, rather than independently verifiable code audits. This is a hybrid embodiment of applying the "trust me" model of traditional finance to the "verify me" technology of Web3.

4.2 Multi-chain expansion: principles and implementation

After a successful launch on Ethereum, BUIDL has adopted an aggressive multi-chain expansion strategy, aiming to become a universal institutional-grade RWA across ecosystems.

• Deployed networks: BUIDL has expanded to multiple mainstream blockchain networks including Solana, Avalanche, Polygon, Arbitrum, Optimism, and Aptos.
• Strategic Rationale: The expansion is designed to provide investors, decentralized autonomous organizations (DAOs), and crypto-native companies with more choice and greater access to use BUIDL in their preferred ecosystem. This strategy ensures that BUIDL will maintain its dominance no matter which blockchain ecosystem gains the largest market share in the future.
• Network-specific advantages: For example, the choice to deploy on Solana is clearly based on its high speed, low cost, and active developer ecosystem, which are very suitable for high-frequency trading and large-scale adoption.

4.3 Interoperability Engine: The Key Role of Wormhole

To ensure that BUIDL remains unified and fluid in a multi-chain environment, the fund has adopted Wormhole as its cross-chain interoperability solution. Wormhole is a cross-chain messaging protocol that allows BUIDL tokens to be seamlessly "teleported" or transferred between all supported blockchains. This is critical, as it ensures that BUIDL is an asset with equal value and fungibility across all networks, rather than an isolated asset that is fragmented across chains.

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

Circle’s redemption contract is the finishing touch in the BUIDL technology stack.

• Function: 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 the BUIDL tokens in his wallet through the approve function. Then, the user calls the redeem function on the Circle contract. The internal logic of the contract will perform the corresponding operations (such as destroying or locking the user's BUIDL) and transfer the same amount of USDC from its own fund pool to the user.
• On-chain footprint: The transaction history of the contract on Etherscan shows frequent Redeem function calls, confirming that it is actively used as a liquidity exit.

BUIDL's technical architecture exhibits an ingenious design: it uses a "hub-and-spoke" model to manage compliance, while using a "mesh" model to build liquidity.

The whitelist managed by Securitize is the central hub for all compliance checks, and all transactions must be verified by this hub regardless of which chain they occur on. Multi-chain deployment through Wormhole creates a mesh network that allows BUIDL to flow freely between supported chains.

Finally, Circle’s redemption channel provides the network with a universal exit from the main hub (Ethereum) back to the highly liquid USD native asset (USDC). This architecture cleverly centralizes non-negotiable compliance functions while decentralizing the existence of assets and liquidity paths to maximize utility.

5. Market Catalyst: Impact of BUIDL on the RWA Ecosystem

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

5.1 From startup to leadership: BUIDL’s asset growth trajectory

Since its launch, BUIDL has experienced explosive growth in its assets under management (AUM), which fully demonstrates the strong market demand for its products.

• Rapid AUM growth: The fund was launched in March 2024 and attracted $245 million in the first week. By July 2024, its AUM was close to $500 million. By March 2025, it successfully broke the $1 billion mark. By mid-2025, its size was close to $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 holds nearly 34% of the market 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 many crypto-native protocols.

This reveals BUIDL’s true product-market fit — instead of serving traditional individual high-net-worth investors, it has become the B2B infrastructure for the DeFi industry.

• Primary use case: For DeFi protocols that need to hold large amounts of USD reserves, converting funds from non-interest bearing stablecoins (e.g. USDC, USDT) to BUIDL, which provides U.S. Treasury yields and is backed by BlackRock, is a financially wise decision.
• Ondo Finance: The protocol is moving a significant portion of the assets behind its OUSG token ($95 million initially) into BUIDL to take advantage of the instant settlement it provides. Ondo adoption is a significant component of BUIDL’s early AUM.
• Ethena Labs: As the issuer of the stablecoin USDe, Ethena has allocated a large amount of its new stablecoin USDtb's reserve assets to BUIDL. This allocation of hundreds of millions of dollars alone is the key factor in pushing BUIDL's AUM to exceed the $1 billion mark.
• Frax Finance: launched a stablecoin called frxUSD, which is structured to be backed by assets held by BUIDL, further validating the utility of BUIDL as a base collateral layer in the DeFi world.

5.3 Competition Landscape: BUIDL vs. Franklin Templeton BENJI and Others

The entry of BUIDL has completely changed the competitive landscape of the tokenized treasury fund market.

• The Flippening: BUIDL quickly surpassed the early market leader, Franklin Templeton’s On-Chain U.S. Government Money Fund (FOBXX, aka BENJI), to become the new market champion.
• Major competitors: Other major players in the tokenized treasury market include Hashnote (USYC) and Ondo Finance (USDY), among others.

BUIDL was able to surpass Franklin Templeton's funds not only because of BlackRock's brand effect, but more importantly because of its excellent product design.

BUIDL's multi-chain strategy (powered by Wormhole) and the crucial Circle USDC instant redemption channel are designed specifically to meet the liquidity and interoperability needs of its core customers - DeFi protocols. In contrast, Franklin's fund was initially deployed on the Stellar chain, which has less connection with the mainstream Ethereum DeFi ecosystem.

This shows that even in the RWA space, features and integrations tailored for crypto-native markets are key to determining adoption.

BUIDL’s rapid rise and market dominance are strong evidence that there is a huge demand in the institutional and crypto-native markets for highly compliant, deeply liquid, and yield-generating RWA products from top issuers.

Driven by BUIDL, the entire tokenized US Treasury market has grown to over $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 prospects

This chapter will synthesize the preceding analysis, assess the risks facing BUIDL, its core strategic trade-offs, and look ahead to its future trajectory and the prospects for the institutional-level RWA movement it represents.

6.1 Risk Assessment

Although BUIDL has achieved great success, its operations still face multi-dimensional risks.

Technical risks

• Smart contract vulnerabilities: Any undiscovered vulnerabilities in BUIDL's core contracts or in the third-party contracts it relies on (such as Wormhole, Circle redemption contracts) could lead to catastrophic consequences. Despite the audit of the relevant protocols, the risk still exists.
• Underlying blockchain risks: The operation of the fund depends on the public blockchains it deploys. Major events on these chains, such as 51% attacks, hard fork disputes, or long-term network downtime, may pose a threat to the normal operation of the fund.

Regulatory risks

• Uncertainty: The global regulatory framework for tokenized securities is still evolving. New regulations from the SEC or other regulators in the future may have an impact on the existing structure or legality of BUIDL.
• Cross-border complexity: The global, 24/7 nature of blockchain introduces jurisdictional complexities that traditional funds do not have, especially when dealing with cross-border transactions.

Market Risk

• Liquidity risk: Although Circle’s USDC channel greatly alleviates the redemption liquidity problem, this instant liquidity is highly dependent on a single partner. Secondary P2P market liquidity between whitelisted investors may be very limited.
• Counterparty risk: BUIDL's operation relies on a complex counterparty chain consisting of BlackRock, Securitize, BNY Mellon, Circle, Wormhole, etc. The failure of any link in the chain may have an impact on the entire system.
• Underlying Asset Risk: Although the risk is extremely low, the fund is still subject to the market risk of its holdings of U.S. Treasury securities and repurchase agreements, and the fund itself does not guarantee that its NAV will always remain at $1.00.

6.2 The trade-off between compliance and DeFi composability

The core design of BUIDL reflects a profound strategic trade-off.

The whitelist managed by Securitize is the cornerstone of BUIDL's compliance and the moat and wall of the entire model. It ensures that only approved entities can hold tokens, thus meeting the requirements of securities regulation.

This centralized control mechanism makes it impossible for BUIDL to interact directly with permissionless DeFi protocols (such as Aave and Uniswap), thus forming a "walled garden" or "permissioned DeFi" ecosystem. In order to comply with regulations, it sacrifices the core principle of open composability of DeFi.

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

The entire BUIDL ecosystem operates on a fundamentally “trusted third party” model, which runs counter to the original “trustless” spirit of cryptocurrency, but perfectly fits the needs of institutional investors. Investors must trust BlackRock to properly manage assets, BNY Mellon to safely custody assets, Securitize to properly manage on-chain ledgers and whitelists, and Circle to fulfill redemption obligations. This is a chain of multiple trusted intermediaries. Institutions operate on trust, regulation, and legal recourse, which is exactly what the BUIDL model provides.

Therefore, BUIDL is not the evolution of open DeFi, but the beginning of a parallel, permissioned, institutional-level DeFi. In this new ecosystem, trust in well-known brands is the primary security model, and blockchain technology provides efficiency gains.

6.3 BUIDL and the Evolution of Institutional RWA Products

BUIDL is just the first step in BlackRock's grand blueprint.

• Expanding asset classes: BlackRock’s vision extends beyond currency markets to 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 sophisticated, regulated “wrapper” solutions that make BUIDL earnings and collateral value more widely available to the DeFi ecosystem without disrupting the core whitelisting mechanism.
• Setting Industry Standards: The success of BUIDL will drive the industry toward standardization of RWA tokenization technology and legal frameworks, and BlackRock is currently in the best position to influence this process.

The foundational layer of next-generation finance

BUIDL is not just a successful fund, but also a strategic masterpiece in product-market fit.

It accurately identified a core need of the DeFi ecosystem (stable, compliant, interest-bearing collateral) and built a perfect product to meet this need, leveraging the dual advantages of traditional finance (trust, scale, asset management) and Web3 (efficiency, speed, programmability).

BUIDL represents a critical 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 base collateral layer of the crypto-native economy, BlackRock is not only entering this market, but also deeply embedding itself into the core of its financial structure, thereby positioning itself as the cornerstone of the next generation of finance.

However, the deepest long-term risks facing BUIDL may not be technical or market risks, but rather stem from philosophical divisions within the crypto ecosystem.

BUIDL’s success is built on adoption by crypto-native protocols that seek decentralization and censorship resistance. These protocols are building their applications on a centralized, permissioned, auditable (Securitize can freeze tokens upon legal request) foundation. This dependency is contrary to the core values held dear by many members of the crypto community. As the ecosystem matures, there may be a “flight to decentralization” movement, where protocols actively seek more censorship-resistant collateral, even if it means sacrificing some of their returns or so-called “security.”

Therefore, despite BUIDL’s current dominance, its long-term vitality depends on whether the crypto ecosystem continues to prioritize compliance and profitability over the ideological pursuit of pure decentralization.

This philosophical tension is its most profound and unquantifiable risk.