On-chain activity hints at BlackRock’s BUIDL fund expansion onto Avalanche

The real-world assets (RWA) tokenization platform Securitize, in partnership with BlackRock, is set to launch its BUIDL tokenized fund on Avalanche. According to on-chain data, the contract for the fund has already been deployed and funded, showing that it is a concrete plan.

The move will expand access to BUIDL, a blockchain-based fund that invests in US Treasury bonds, repurchase agreements, and cash. BUIDL has already proven successful on Ethereum, with the fund having over $500 million in assets under management (AUM).

According to CryptoNoody on X, who first shared the information, the owner of the BUIDL contract on Ethereum also owns the contract on Avalanche. This owner address, “0xe01605f,” was funded with $1 million and has already interacted with the BUIDL contract. So far, one million BUIDL shares have been issued, although the fund has yet to start trading.

Meanwhile, neither Securitize nor BlackRock has officially announced the fund. CryptoNoody observed this, noting that this may not be the final contract and that the firm might be testing Avalanche’s suitability for its tokenized funds. Therefore, it could take months before the BUIDL fund starts trading on the Avalanche network. Securitize signed an integration agreement with Arbitrum Foundation six months ago but is yet to deploy tokenized securities on the Layer-2 network.

Avalanche could soon host multiple tokenized funds

With the new contract, the Avalanche network could soon host several tokenized RWA products, joining Ethereum and Stellar. Securitize is planning to issue another fund on the network, with digital assets manager ParaFi Capital picking Avalanche in September to tokenize a minority stake in its $1.2 billion fund. ParaFi is an investor in both Securitize and the Avalanche network, and Avalanche is already hosting Franklin Templeton, OpenEden, and Backed Finance funds.

At the time, ParaFi founder and managing partner Ben Forman noted that the firm wants to go beyond being a passive investor in blockchain technology and actively use it for its products.

He added:

“Tokenization of private market strategies can unlock streamlined settlement processes, reduce legal and administrative costs, and longer-term can unlock a broad range of benefits including liquidity, programmability, and cross-margining.”

The opportunity to provide access to traditional funds to a new category of investors has been the major factor driving interest in tokenization, and several TradFi firms have shown interest. However, Securitize remains one of the major players. Besides BlackRock, the firm has already tokenized funds with asset managers such as Hamilton Lane, KKR, and Tradeweb Markets.

Meanwhile, the value of tokenized government securities currently sits at $2.34 billion, according to 21co data in Dune Analytics, with a 4% growth in the last 30 days. Ethereum remains the preferred platform for issuing tokenized funds, but others such as Solana, Stellar, and Mantle also see some of the volume.

CZ is skeptical about RWAs due to limited volatility

Meanwhile, several experts believe there is a clear bullish case for tokenized securities, with Citi Bank forecasting the sector will be worth $5 trillion by 2030. Despite this bullishness, which has driven TradFi players, including Visa and SWIFT, to experiment with tokenization, former Binance CEO Changpeng Zhao is skeptical about the future of RWAs.

In an appearance at the Second Gulf Investment Forum in Bahrain, CZ acknowledged that RWAs have significant potential but noted that it is much less volatile than cryptocurrencies. Zhao believes the limited volatility could make it unattractive for traders in the secondary market, which could mean lower trading volume. Limited trading volume could translate into lower liquidity, affecting trading costs and discouraging investors.