Tokenized US Treasury debt is seeing a boom in the market. For the first time, the market value of Treasury notes tokenized via public blockchains such as Ethereum, Polygon, Valanche, Stellar, and others has surpassed $1 billion, according to statistics monitored by Tom Wan, an analyst at 21.co.
Digital copies of US government bonds known as tokenized treasuries are exchangeable as tokens on blockchains. The market value has increased by almost ten times since January of last year and by eighteen percent since traditional financial behemoth BlackRock announced the launch of the Etheruem-based tokenized fund BUIDL on March 20.
At the time of writing, BUILD is the second-biggest fund of this type, with a tokenized value of $245 million. The largest fund, with $360.2 million in deposits, is Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX), of which one share is represented by the BENJI token.
“Just happened: US Treasury Tokens worth $1 billion were tokenized on public blockchains. In just one week, Blackrock’s BUIDL surged 400% from 40 million to 240 million units,” said Wan on X. Currently possessing 38% of the BUIDL supply, OndoFinance is the biggest holder. BUIDL now fully supports Ondo’s OUSG.”
The demand for their tokenized counterparts has increased due to the sharp increase in Treasury yields over the last two years. Since March 2022, the 10-year yield—also known as the “risk-free rate”—has increased from 1.69% to 4.22%, which has diminished the allure of lending and borrowing dollar-pegged stablecoins in the decentralised finance market.
Tokenized Treasury investments enable cryptocurrency investors to settle transactions on any given day and help diversify their portfolios. “The beauty of tokenization, [is] you can settle the transaction 24/7,” Wan stated.