Ethena, the issuer of the USDe stablecoin, plans to invest some of its reserves into tokenized US Treasuries. In a governance update on July 16, Ethena revealed its intention to allocate $235 million in USDT stablecoin and $45 million from its Reserve Fund to real-world asset (RWA) products.
This strategy is part of a growing trend among DeFi protocols that invest in stable and easily accessible tokenized RWAs. Several funds are already seeking a share of this allocation.
Ethena Reserve Fund Allocation Sparks Interest from Major Funds
Following Ethena’s governance post on July 16, which announced plans to invest $235 million in USDT stablecoin and $45 million from its Reserve Fund into real-world assets (RWAs), several funds have applied for a share of the allocation. Among the applicants are BlackRock and the tokenized fund BUIDL, which has requested $34 million from the Reserve Fund.
BlackRock BUIDL’s Supply (Source: Dune Analytics)
BUIDL, an Ethereum-based money market fund, offers an annual percentage yield (APY) of approximately 4.88% with a 0.50% annual fee. Despite being launched less than five months ago, BUIDL has quickly become a leading RWA project, managing over $500 million in assets and controlling over 28% of the market.
However, BUIDL faces competition from other funds, including Steakhouse Financial, which has applied for an allocation to its Steakhouse USDC on Morpho Blue, and is overcollateralized with products like wrapped BTC and tokenized Treasury Bills. Additionally, Mountain Protocol, known for its yield-bearing stablecoin USDM, plans to submit its proposal soon, though details about its application are not yet available.
DeFi Protocols Shift Toward Tokenized Real-World Assets
Ethena’s decision to invest in tokenized real-world assets (RWAs) is part of a growing trend among DeFi protocols. Following this move, MakerDAO announced a bid to invest $1 billion DAI into tokenized treasury products, while Arbitrum DAO previously invested around 35 million ARB into RWAs. This shift has significantly boosted the tokenized treasuries market, which recently surpassed $1.8 billion in assets under management (AUM), a dramatic increase from $100 million at the beginning of 2023.
Top 5 Tokenization Projects (Source: Dune Analytics)
Ethereum remains the dominant platform in this space, holding a 72.5% market share, while Stellar Network captures 21.7%. This asset class is drawing interest from both crypto-native and traditional financial institutions, as it serves as a bridge between DeFi and traditional finance (TradFi). Observers, including crypto podcaster Marty Party, view tokenized RWAs on networks like Solana and Ethereum as the next major trend in the crypto industry.
Important:Â Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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