The tokenized money market fund BlackRock USD Institutional Digital Liquidity Fund (BUIDL) by asset management titan BlackRock is looking to secure an investment from Ethena Labs’ tokenized fund.
On July 16, Ethena Labs created a forum thread for allocations of its $45.4 million reserve fund that currently has $235 million in Tether (USDT) backing its USDe stablecoin. The post also laid out plans to allocate part of the fund to yield-generating, real-world asset products.
The announcement follows Ethena (ENA) implementing a 50% lock-up requirement for its fund last month. The change was met with scorn by the community and was followed by a decrease in its token price.
One application has already arrived from a very well-known name: BlackRock’s BUIDL fund distributor, Securitize Markets. The firm pitched the fund as having a yield of about 4.88% that accrues to the holder of record every calendar day.
The assets contained in the BUIDL fund are cash, United States Treasury bills, notes, or other obligations that mature in three months or less. The fund will also invest in government money market funds.
BUIDL managers may also invest in variable and floating rate instruments, transact in securities on a when-issued, delayed delivery or forward commitment basis. Still, only minimal credit-risk securities will be considered.
The asset manager explained that its BUIDL fund reached over half a billion dollars of assets under management in under four months—being one of the fastest-growing funds of its kind and attracting $245 million in its first week. The company claims that it can enable Ethena to invest in treasury-backed products for low-risk diversification purposes while holding onto the efficiencies of blockchain-based reserves.
The application was penned by Jonathan Espinosa, director at real-world asset tokenization firm Securitize. The company served as the tokenization partner for BlackRock’s BUIDL fund back in March.
Not the only applicant
Steakhouse Financial also applied for a reserve fund allocation with its USD Coin (USDC) lending vault with a much more variable accrued percentage yield, predicted to be between 0.91% and 31.19%. The fund has $50 million of underlying assets, those being USDC loans overcollateralized by Wrapped Bitcoin (WBTC), Wrapped Stacked Ethereum (WSTETH), and treasury bills.
Similarly, Mountain Protocol founder Martin Carrica also expressed interest in landing a reserve fund allocation.
While the protocol has not yet provided a formal application compliant with the template and providing all the required information, Carrica lauded the initiative and announced that an application will be submitted soon.
“This is a great move to increase the capital efficiency of Ethena and, ultimately, provide more value to USDe and ENA holders,” he wrote. “Mountain Protocol will be presenting a proposal in the coming days.”
Edited by Stacy Elliott.