Luisa Crawford
May 19, 2025 10:40
BounceBit unveils a novel trading strategy using BlackRock’s BUIDL, offering potential returns of 24% APY by integrating tokenized treasuries with traditional trading approaches.
BounceBit’s Strategic Innovation
BounceBit has successfully demonstrated a novel trading strategy by utilizing BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) as collateral, according to [BounceBit](https://medium.com/@bouncebit/bouncebit-demonstrates-buidl-powered-trading-strategy-2897b118041f). This strategy combines tokenized treasuries with traditional basis trading approaches, showcasing what is possible when leveraging blockchain technology in financial markets.
Key Components of the Strategy
The approach developed by BounceBit incorporates two main components. At the time of the trade, the BTC 3-month basis, collateralized with stablecoins, was trading at approximately 5% per annum. By using BUIDL as collateral and executing a BTC options strategy simultaneously, the trading activity generated around 20% APY.
An additional benefit of this method is that investors retain BUIDL’s U.S. dollar yield, potentially raising the total return to about 24% APY. This integrated approach surpasses traditional stablecoin-collateralized strategies, where the collateral itself does not generate extra yield.
Implications for Institutional Investors
“This innovative approach demonstrates what is possible when investors simultaneously capture both U.S. dollar yields and funding rate arbitrage returns, potentially creating opportunities for institutional investors seeking sustainable USD-denominated yield generation across market cycles,” stated Jack Lu, Founder & CEO of BounceBit.
This proof-of-concept indicates a new methodology where tokenized real-world assets like BUIDL can be utilized for multiple yield streams, unlike traditional stablecoin collateral where yield is typically captured by the issuer.
Technological Advancements
The initiative used BounceBit’s CeDeFi infrastructure technology to enable secure collateral mirroring between custodial services and trading venues. This strategic approach is built on BounceBit’s experience as a CeDeFi platform with approximately $490 million in Total Value Locked (TVL) as of May 19th, 2025. Though promising, the strategy is not yet available to the public.
About BounceBit
BounceBit is known for developing CeDeFi infrastructure, offering institutional-grade yield products, restaking use cases, and Real-World Asset (RWA) integration. The BounceBit chain operates as a dual-token Proof-of-Stake Layer 1, secured by Bitcoin and $BB, combining Bitcoin’s security with full Ethereum Virtual Machine (EVM) compatibility.Image source: Shutterstock
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