BounceBit, a dynamic player in the crypto infrastructure realm, has stirred the financial waters with its latest bitcoin (BTC) derivatives trading strategy. This innovative approach, leveraging BlackRock’s tokenized money market fund BUIDL as collateral, aims to enhance yield returns for both institutional and retail investors. The rollout, which took place in May 2025, showcases a blend of traditional and novel financial mechanisms to boost profitability.
A New Frontier in Crypto Trading
The strategy comprises two primary elements: a bitcoin basis trade and a short position in BTC put options, both backed by BUIDL tokens. The basis trade, a classic cash and carry arbitrage, involves going long on the spot market while simultaneously shorting futures, netting an annualized yield of 4.7%. Meanwhile, the put options writing adds another 15% to the pot. When combined with the 4.25% return from the BUIDL tokens used as collateral, the aggregate yield balloons to over 24%. Quite the haul.
Jack Lu, BounceBit’s founder and CEO, shared his thoughts in a press release exclusive to CoinDesk. He noted, “This strategy allows investors to capture both Treasury Bill yields and funding rate arbitrage returns.” Lu further emphasized the strategic role of BounceBit as a bridge between Western real-world asset issuers and Asian crypto trading infrastructure, offering fresh yield generation avenues. This follows a pattern of institutional adoption, which we detailed in Franklin Templeton Backs Bitcoin DeFi Push, Citing ‘New Utility’ for Investors.
The Role of BUIDL in Yield Enhancement
BUIDL, conceived in March 2024 through a collaboration between Securitize and BlackRock, serves as a cornerstone of this trading strategy. Operating across various blockchains like Ethereum, Aptos, and Polygon, the token is anchored by short-term U.S. government bonds, maintaining a stable value of one dollar per token. With a market cap soaring to $2.88 billion, BUIDL stands as a formidable player in the tokenized asset landscape.
Integrating BUIDL as collateral has proven advantageous, generating higher returns than strategies reliant on stablecoins, which typically offer no yield. This aspect alone could entice a wave of investors seeking more lucrative opportunities in the crypto space. A similar approach was highlighted in Tokenized Apollo Credit Fund Makes DeFi Debut With Levered-Yield Strategy by Securitize, Gauntlet, showcasing the growing trend of leveraging tokenized assets for enhanced yields.
Market Implications and Future Prospects
BounceBit’s strategy isn’t just a flash in the pan—it’s a proof of concept for their burgeoning product line, BB Prime, set to be available to both retail and institutional users. According to a BounceBit spokesperson, “The successful pilot is a proof of concept to our new product line BB Prime, which will be available to both retail and institutional users.” BB Prime is poised to redefine CeDeFi applications, expanding beyond the conventional role of holding for Treasury bill yields, a limitation that has long hindered widespread adoption.
The implications of this development are considerable. By marrying the reliability of traditional financial instruments with the agility of crypto assets, BounceBit is setting a precedent for future financial innovations. Yet, questions linger—will this model sustain its high yield over time? And how will market fluctuations impact the strategy’s efficacy?
As cryptocurrencies continue to weave into the fabric of modern finance, BounceBit’s trailblazing approach could signal a shift in how digital assets are leveraged for maximum return. With over $500 million in cryptocurrencies already locked in BounceBit, the market will be watching closely to see how this strategy unfolds and whether it can herald a new era of crypto-financial integration. The coming months promise to be a fascinating period for both the company and the broader crypto ecosystem.
Source
This article is based on: BounceBit Pilots Bitcoin Trading Strategy Using BlackRock’s BUIDL as Collateral
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
