Aave Labs proposes integrating BlackRock’s BUIDL with the GHO Stability Module. The update aims to enhance capital efficiency and expand real-world asset yield. BUIDL integration allows 1:1 USDC swaps, monthly dividends, and seamless transactions.

In a move to enhance its stablecoin system, Aave Labs has introduced a new temperature check proposal to update the GHO Stability Module (GSM). This update aims to integrate BUIDL, a tokenized fund managed by BlackRock, into the GSM infrastructure. The proposal seeks to optimize capital efficiency and expand Aave’s yield sources by leveraging traditional financial assets through blockchain technology. Optimizing GHO stability with BUIDL integration The primary goal of Aave Labs’ proposal is to improve the capital efficiency of the GHO Stability Module (GSM) by integrating BlackRock’s BUIDL. Currently, the GSM ensures the stability of Aave’s native stablecoin, GHO, by maintaining a 1:1 convertibility with another asset, typically USD Coin (USDC). However, in the existing system, surplus USDC often remains idle. The proposed integration involves building a new instance of the GSM that supports external integrations and control mechanisms, specifically designed to incorporate BlackRock’s BUIDL, a tokenized fund deployed on the Ethereum network representing traditional financial assets like cash and US Treasury bills. By utilizing surplus USDC to mint BUIDL tokens, the updated GSM aims to enhance its efficiency while maintaining the high standards of backing provided by USDC. BUIDL offers several advantages, including on-chain access to traditional financial assets, managed by BlackRock Financial Management Inc., with BNY Mellon as custodian and PricewaterhouseCoopers LLP as the fund auditor. Priced at $1 per token, BUIDL pays daily accrued dividends to holders in the form of new tokens each month. This structure allows holders to earn yield while maintaining flexibility in custody options and the ability to transfer tokens 24 hours, seven days a week throughout the year. Future prospects and technical specifications of the integration The integration of BUIDL into the GSM could open new avenues for Aave DAO, potentially expanding yield sources into real-world assets (RWAs) and strengthening partnership opportunities with BlackRock. The proposal envisions enabling 1:1 fixed-ratio swaps between USDC and GHO, with the surplus USDC being used to mint BUIDL tokens. This setup is designed to provide a seamless experience similar to the existing GHO:USDC GSM, with swap fees accumulating in GHO and dividends paid in BUIDL.

Technical specifications for this integration include modifications to the GSM contract code to support GHO <> USDC conversions and dividend reception. Additionally, BUIDL holders must be registered or allowlisted, necessitating further adjustments to the GSM itself. A detailed specification will be provided during the ARFC phase, with the proposal currently in the community feedback stage. If consensus is reached, it will advance to the Snapshot stage and, if approved, the ARFC stage for final implementation. The proposal represents a significant step towards integrating traditional financial mechanisms with blockchain technology, potentially enhancing capital efficiency and expanding Aave’s strategic partnerships.

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Xapo Bank and Hilbert Group will launch a Bitcoin-denominated hedge fund. The BTC fund will receive an initial investment of $200 million from Xapo and other investors.

Xapo Bank is teaming up with Hilbert Group to launch a Bitcoin (BTC)-denominated hedge fund, according to a press release on Aug. 27. In the announcement, Hilbert Group said the strategic partnership will involve its asset management arm Hilbert Capital and see an initial investment of over $200 million from Xapo as well as other investors. “Over the last 12 months, we have developed a close and strategic partnership with Xapo Bank, a veteran in the Bitcoin space and a tier-one financial institution in the digital asset space,” Niclas Sandström, CEO of Hilbert Group, said. He added, “Given the investment opportunity and the quality and experience of the team, we anticipate that the Fund will grow meaningfully over the next year. Fund to offer exposure to Bitcoin The newly-established BTC-denominated hedge fund will launch in September, Hilbert Group revealed in the press release. Corporates, businesses and professional investors will leverage the new fund to generate returns in bitcoin. The fund will offer institutional-grade credit arrangements that investors don’t get through direct market participation. Notably, the BTC-denominated fund will have fees lower than the 2% and 20% Hilbert’s other hedge funds charge. “We believe that offering the right products for participants in the space who are aiming not only for exposure to the Bitcoin price, but also structured ways to grow the Bitcoin value of those investments is a natural evolution of the asset class,” Joey Garcia, director of Xapo Bank commented. Hilbert, founded in 2018, primarily focuses on asset management of algorithmic trading strategies. The company also invests in blockchain and crypto related projects. Investments in the space include crypto data platform Coin360, blockchain-based self-service SaaS tool CapChap and HAYVN, a digital assets trading and custody platform. Meanwhile, Xapo is the first Bitcoin-enabled bank that integrates fiat with crypto. It recently announced its entry into the UK.

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