The BlackRock USD Institutional Digital Liquidity Fund is now the largest treasury fund tokenized on a blockchain after it surpassing Franklin Templeton’s product this week.

BlackRock’s six-week old product, tickered BUIDL, has notchemarket cap of $375 million, surpassing the 12-month-old Franklin OnChain U.S. Government Money Fund (BENJI), which sits at $368 million, according to a Dune Analytics dashboard.

It comes as BUIDL took in $70 million in the last week, including $50 million from real-world asset tokenization firm Ondo Finance's OUSG token.

Meanwhile, BENJI’s AUM shrunk around 3.7% over the same timeframe.

More than $1.2 billion worth of U.S. Treasurys now exist across Ethereum, Polygon, Solana and other blockchains.

Blockchain-based tokenization of real-world assets has become a hot topic lately, with BlackRock’s CEO Larry Fink recently voicing that capital markets could be made more efficient by moving onchain.

Treasurys are only one piece of the pie — stocks, real estate and many other assets can also be tokenized.

However, investor demand for these tokenized products is low at the moment, according to 21.co research strategist Tom Wan, citing “thin liquidity” as one of the primary reasons.

This creates a “chicken and egg problem,” as issuers are struggling to see a clear benefit in tokenizing assets onchain with low demand, Wan said in an April 30 X post.

The good news is that demand for U.S. Treasurys already exist from industry players in the $140 billion stablecoin market.

Therefore, “it will be easier to find end investors to switch over,” when demand picks up, Wan explained.

Tokenized government securities currently account for 1.4% of the total assets tokenized onchain — up from 0.1% at the start of 2023. However, Wan predicts this market dominance will increase to 10% in the future.

Boston Consulting Group estimates blockchain-based tokenization will become a $16 trillion market by 2030.