According to CoinDesk, the market value of tokenized US Treasury notes has crossed the $1 billion mark for the first time. Data tracked by 21.co reveals that $1.08 billion in Treasury notes has been tokenized through public blockchains such as Ethereum, Polygon, Valanche, Stellar, and others. The market value has increased nearly 10-fold since January 2023, driven by rising interest rates worldwide.
BlackRock's Ethereum-based tokenized fund BUIDL has contributed to this growth, with its tokenized value increasing by 400% from $40 million to $240 million in just one week. BUIDL is currently the second-largest fund of its kind, trailing only Franklin Templeton's Franklin OnChain U.S. Government Money Fund (FOBXX), which has $360.2 million in deposits. OndoFinance is now the largest holder of BUIDL, holding 38% of the total supply.
The rapid rise in Treasury yields over the past two years has fueled demand for tokenized versions of these securities. The 10-year yield, known as the risk-free rate, has increased to 4.22% from 1.69% since March 2022. This has diminished the appeal of lending and borrowing dollar-pegged stablecoins in the decentralized finance market. Investing in tokenized Treasuries allows crypto investors to diversify their portfolios and settle transactions on any given day. According to Tom Wan, an analyst at 21.co, the advantage of tokenization is the ability to settle transactions 24/7.