Superstate Debuts Tokenized Short-Term Treasury Fund on Ethereum to Compete for Zero-Yield Stablecoins

Blockchain-based asset-management firm Superstate debuted its first tokenized U.S. Treasury fund offering on the Ethereum (ETH) blockchain, the company said Thursday in a press release. Superstate created its own private fund to directly hold short duration Treasury bills, and is targeting returns in line with the federal funds rate. Investors may make deposits in U.S. dollars or Circle’s USDC stablecoin, and receive USTB tokens that represent their investment in the fund. Users may self-custody the tokens or opt for the custody services of Superstate partners Anchorage Digital and BitGo.

The USTB token aims to offer an alternative to stablecoins for U.S. institutional investors – venture capital funds, hedge funds, digital asset firms – to park their on-chain cash and earn a yield, Robert Leshner, founder and CEO of Superstate, said in an interview with CoinDesk.

“USTB is an opportunity to pilot Superstate’s fund tokenization platform, and is the first of many steps to develop regulated investment tokens,” Leshner said. Looking forward, the company will listen to market feedback about what types of investment strategies will tokenize next.

“Some types of funds that we are considering [to tokenize] could be Nasdaq, S&P 500 or gold-targeting funds, but we haven’t made a determination what specific strategy will be the next,” Leshner added.

Superstate’s offering comes as placing traditional financial instruments such as government on blockchain rails – also known as tokenization of real-world assets (RWA) – has become a key trend in the industry, with crypto firms and global banks exploring possibilities to use blockchain technology.

U.S. Treasuries are a gateway for tokenization efforts as a low-risk, well-known instrument where investors can park excess on-chain cash and earn stable yield without leaving the blockchain ecosystem.

The tokenized Treasury market has grown fast, mushrooming to $862 million from $117 million over the past year, with asset management giant Franklin Templeton being the largest player but newcomers Ondo Finance and Mountain Protocol closing in, rwa.xyz data shows.

Currently, Superstate’s USTB has $10 million of assets under management, according to Superstate’s website. This came from seed investments before opening the fund for the public, Leshner explained.

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2024-02-01 18:14