Joerg Hiller
Sep 05, 2024 07:51
Injective (INJ)introduces the first-ever tokenized index for BlackRock’s BUIDL Fund, offering innovative on-chain financial instruments to users.
Injective (INJ)has announced the launch of a tokenized index for BlackRock’s BUIDL Fund, marking the first time users can access the fund through innovative on-chain financial instruments. This new development represents a significant milestone in the integration of traditional finance with decentralized finance (DeFi).
Background on BUIDL
BUIDL, also known as the BlackRock USD Institutional Digital Liquidity Fund, is BlackRock’s first tokenized fund issued on a public blockchain. This fund offers institutional investors yield on assets such as U.S. treasuries. Each BUIDL token maintains a stable value of $1 and provides a daily accruing dividend paid monthly. According to Injective Blog, the BUIDL fund has accrued over $500 million in assets under management, making it the largest tokenized fund to date.
The fund is managed by BlackRock, with blockchain firm Securitize overseeing the tokenized shares and reporting on fund activities. Other initial participants include prominent crypto firms like Coinbase and Injective’s institutional partners such as BitGo and Fireblocks.
Under the Hood: How the BUIDL Index Works
The BUIDL Index introduces the world’s first perpetual market for BlackRock’s BUIDL Fund, allowing users to access tokenized assets like U.S. treasuries with leverage. This index was created in collaboration with Stork, a decentralized price feed provider, and leverages ultra-fast WebSockets for real-time data availability.
Unlike traditional asset tracking, this index perpetual market tracks the underlying supply of the BUIDL fund itself. This approach responds to the growing demand for tracking inflows and outflows from the BUIDL Fund, which has become a barometer for institutional interest in crypto.
Eric Chen, co-founder and CEO of Injective Labs, stated, “The launch of the BUIDL Index showcases the sheer potential of Injective’s infrastructure in being able to truly bring traditional finance onto fully decentralized rails. For the first time, institutions and retail users alike can gain direct access to a novel RWA offering that tracks the actual fund spearheaded by BlackRock.”
The index operates based on the fund’s mark price, fluctuating intraday with supply changes. Users can take long or short positions on the index, and the market uses a 1-hour Time-Weighted Average Price (TWAP) to mitigate short-term volatility.
Expanding RWA Tokenization on Injective
The introduction of the BUIDL Index is a significant step in Injective’s expanding role in the asset tokenization space. The platform continues to bridge traditional and on-chain finance, positioning itself as a primary Layer 1 (L1) blockchain for novel asset offerings.
Injective’s technical advancements, such as the release of the first-ever Real World Asset (RWA) module and an RWA-specific oracle, have facilitated the creation of the BUIDL Index. This development democratizes access to the BUIDL fund, previously restricted to institutions with a minimum investment of $5 million. Now, global users can trade the BUIDL index perpetual market with as little as $1.
As the first blockchain built specifically for finance, Injective is paving the way towards a new era of capital-efficient finance, where traditional and on-chain financial systems converge.
Image source: Shutterstock
