Securitize has proposed using the BlackRock US dollar Institutional Digital Liquidity Fund (BUIDL) as collateral for the Frax USD stablecoin. This move aims to increase the stability and liquidity of Frax USD by leveraging the backing of BlackRock, the world's largest asset manager.

Benefits of Using BUIDL

The proposal emphasizes the potential benefits of using BUIDL, including:

• Yield opportunities
• Deeper liquidity
• Reduced counter-party risk

The proposal is currently awaiting a community vote to determine if BUIDL will be integrated as a reserve asset for Frax USD.

Tokenized Real-World Assets as Collateral

This proposal reflects the growing trend of using tokenized real-world assets as collateral for stablecoins. This combines traditional financial instruments with digital assets to offer cost efficiencies and unique yield opportunities.

Ethena Labs Launches USDtb Stablecoin

In a separate development, Ethena Labs has launched a BUIDL-backed stablecoin called USDtb. USDtb achieved a TVL of approximately $65 million on its first trading day. It is overcollateralized by cash and short-term U.S. government securities at a 1:1 ratio with U.S. dollars, providing a more secure backing mechanism. This introduction of USDtb marks a significant step in the evolution of stablecoins, offering a stable and reliable option for users.

BlackRock's Advocacy for BUIDL

BlackRock has been advocating for the use of BUIDL as collateral on crypto derivatives exchanges, signaling its intent to deepen its involvement in the digital asset ecosystem. By positioning BUIDL as a viable collateral option, BlackRock aims to enhance the liquidity and efficiency of crypto derivatives markets. The integration of a reputable asset like BUIDL could attract institutional investors who have been hesitant to engage with the crypto space. The collaboration between established players like BlackRock and innovative blockchain projects is likely to reshape the landscape of digital finance.

Yield-Bearing Stablecoins

The emergence of yield-bearing stablecoins, such as deUSD from the Elixir Protocol, highlights the evolving dynamics of the cryptocurrency market. Users can mint deUSD on the Curve decentralized exchange using BUIDL as backing collateral, enabling seamless exchange with other stablecoin assets in Curve's liquidity pools. This trend of utilizing tokenized real-world assets as collateral enhances liquidity and introduces new yield-bearing opportunities for investors. The integration of traditional financial assets into the crypto ecosystem is expected to foster greater trust and participation from a wider audience, positioning the cryptocurrency market for significant growth.