BlackRock’s First Direct DeFi Protocol Integration: $2.87 Billion BUIDL Joins Euler on Avalanche

BlackRock, the world’s largest asset manager, has taken a groundbreaking step in bridging traditional finance (TradFi) with DeFi. Its $2.87 billion BlackRock USD Institutional Digital Liquidity Fund (BUIDL) has integrated its tokenized shares, sBUIDL, with Euler Finance on the Avalanche blockchain, marking its first direct DeFi protocol integration. This marks BlackRock’s first direct integration with a DeFi protocol and a significant milestone in institutional blockchain adoption.

A Milestone for Tokenized Assets

Launched in March 2024, BUIDL is the largest tokenized treasury fund globally, managing $2.87 billion in short-term U.S. Treasuries and repurchase agreements. Its tokenized shares, sBUIDL, are composable ERC-20 tokens developed by Securitize through its sToken framework. This framework enables tokenized products like BUIDL to expand their onchain utility while maintaining full redeemability for the underlying assets.

With Thursday’s integration, sBUIDL is now accepted as top-tier collateral on Euler Finance, a leading DeFi lending protocol. Users can borrow stablecoins such as USDC or AUSD with a loan-to-value (LTV) ratio of up to 92.5%. Additionally, users benefit from dual rewards: the underlying Treasury yield from BUIDL and AVAX incentives provided by Avalanche.

As Euler noted in its announcement, “It turns BUIDL into a composable ERC-20, enabling onchain utility without compromising redeemability.” This blend of TradFi stability and DeFi flexibility underscores the growing synergy between the two financial ecosystems.

Technical Backbone and Institutional Trust

According to Avalanche Blog, the integration leverages Avalanche’s high-performance blockchain infrastructure and Securitize’s sToken framework, which is built on the ERC-4626 standard for tokenized vaults. Euler Finance’s advanced risk management system, featuring tiered asset pools and dynamic LTV adjustments, meets BlackRock’s stringent security requirements.

Chainlink’s reliable data feeds ensure accurate pricing for sBUIDL transactions, while Re7 Labs played a pivotal role in developing the technical bridge. By utilizing Avalanche’s Evergreen subnets—designed specifically for institutional use—the integration provides a scalable and regulatory-compliant environment, further enhancing trust in blockchain-based financial solutions.

Market Impact and Industry Trends

The inclusion of sBUIDL as collateral on Euler Finance injects substantial liquidity potential into Avalanche’s DeFi ecosystem, granting access to nearly $3 billion in institutional-grade assets. This development aligns with the broader trend of real-world asset (RWA) adoption in DeFi, a market that has seen exponential growth in recent years.

Carlos Domingo, CEO of Securitize, commented on the broader implications: “This year was just the start for the RWA market, and we could see it top $50 billion in the next 12-18 months.” Analysts predict that other DeFi protocols like Aave may soon follow Euler’s lead in accepting sBUIDL, further accelerating the convergence of TradFi and DeFi.

A New Era for Institutional DeFi

BlackRock’s venture into DeFi represents a transformative moment for global finance. Carlos Domingo remarked, “This integration creates new yield opportunities for BUIDL holders while upholding the safety standards institutional investors demand.”

With BUIDL already operational on Aptos, Arbitrum, and Polygon, BlackRock’s multi-chain strategy underscores its leadership in asset tokenization. The sToken framework, combined with Avalanche’s robust blockchain technology, enhances the composability and utility of tokenized assets like sBUIDL. Users are now able to participate in DeFi while maintaining the redeemability and security standards expected in TradFi.

As regulatory clarity improves, evidenced by the SEC’s recent approval of spot Ethereum ETFs, this milestone paves the way for deeper TradFi-DeFi convergence.