BlackRock’s BUIDL Eyes Major Investment from Ethena Labs

BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) is seeking a major investment from Ethena Labs, the issuer of USDe, the fifth-largest stablecoin by market capitalization.

Ethena Labs revealed on Monday that it is exploring new avenues to invest some of its reserves in real-world assets (RWAs). To this end, Ethena has launched a formal Request for Proposals (RFP) to evaluate where to deploy part of its $45.4 million Reserve Fund and approximately $235 million in USDT backing USDe.

Securitize, the distributor for BlackRock’s BUIDL fund, is the first to submit a proposal. Jonathan Espinosa from Securitize has proposed that Ethena allocate $34 million of its Reserve Fund to BUIDL.

The BUIDL fund primarily invests in short-term U.S. Treasury bills and notes that mature in three months or less, targeting a yield of around 4.88% after fees.

“The yield will accrue to the holder of record every calendar day, as of 3:00 PM, and will be distributed monthly in-kind directly to the investor’s blockchain address,” Espinosa explained.

He emphasized that BUIDL could enable Ethena’s reserve fund to invest in a “treasury-backed product as a low-risk diversification play,” meaning Ethena can secure a stable yield while minimizing exposure to volatile assets.

Recently, BUIDL achieved a $500 million market cap, making it the first product of its kind to reach this milestone. BUIDL holds $502.8 million worth of tokenized Treasuries, according to Ethereum block explorer Etherscan.

RWA Boom

Other companies like Steakhouse Financial and Mountain Protocol have also shown interest in Ethena’s RFP.

Steakhouse Financial has proposed allocating part of Ethena’s Reserve Fund to its Steakhouse USDC MetaMorpho Vault. This vault uses blue-chip collateral such as wrapped Bitcoin (wBTC), wrapped staked Ether (wstETH), and tokenized U.S. Treasury bills. It aims to offer diversification and generate stable yields, with recent returns of around 5.5%.

The vault includes an Aragon DAO Guardian, which has a seven-day time lock for any changes. This system gives lenders full control, allowing them to veto any critical actions for added security. Additionally, the vault is permissionless, meaning anyone can supply USDC and participate.

Ethena’s Risk Committee will review all proposals and announce its decisions publicly within two weeks of submission.

Major projects like MakerDAO and Arbitrum are also exploring RWA investments. On July 12, MakerDAO unveiled the Spark Tokenization Grand Prix, a contest aimed at onboarding $1 billion of tokenized real-world assets. This initiative has attracted major financial players, including BlackRock, Superstate, and Ondo Finance.