Real-world asset tokenization platform Ondo Finance’s governance token (ONDO) saw a significant 8% spike on Friday following reports of asset manager BlackRock’s efforts to list its tokenized money market fund BUIDL as collateral on major derivatives exchanges. According to Bloomberg, BlackRock and Securitize are in early discussions with top crypto exchanges like Binance, Deribit, and OKX to accept BUIDL as margin for trading derivatives.
The news caused ONDO’s token price to surge to 79 cents, marking an 8% increase within an hour before slightly dropping. Despite the dip, the token remained up nearly 9% over the past 24 hours, outperforming the broader CoinDesk 20 Index’s daily gain of 2.2%.
Although the exact impact of this development on the Ondo platform is uncertain, its governance token has become a popular choice for crypto traders looking to capitalize on BlackRock’s move towards tokenization. Notably, ONDO’s price surged by as much as 20% when it was reported that BlackRock and Securitize were working on the BUIDL offering. Furthermore, Ondo began using BUIDL as the underlying asset for its retail-focused money market fund token (OUSG), enabling instant redemptions and conversions for Circle’s USDC stablecoin.
BUIDL, valued at over $550 million, is currently the largest tokenized offering in the market. Priced at $1, it provides investors with money market yield while operating within blockchain networks. It is available to institutional investors and protocols for investment or as a reserve asset, with a minimum investment threshold of $5 million.
The use of tokenized collateral, such as BUIDL, has gained traction within the crypto space as it allows traders to continue earning a yield while utilizing them as margin for trades, as opposed to relying on stablecoins as collateral. For instance, Hashnote’s $320 million USYC money market fund token was recently listed on Deribit as a cross-margin collateral option. Institutional trading services like FalconX and Hidden Road already accept BUIDL as collateral.
Looking ahead, the growth potential for tokenized collateral assets is substantial. Donna Milrod, Chief Product Officer at State Street, highlighted the benefits of collateral tokens in traditional finance, suggesting they could help mitigate liquidity stress during financial crises. For example, pension funds could use money market tokens for margin calls without needing to sell underlying assets to raise cash.
As the adoption of tokenized assets and collateral continues to expand, the financial landscape is poised for significant transformations. The intersection of traditional finance and blockchain technology presents new opportunities for investors, traders, and institutions alike. The ongoing developments in the crypto space signal a shift towards a more interconnected and efficient financial ecosystem, driven by innovation and digitization.
