Compound Founder Joins RWA Track, New Company "Superstate" Aims To Tokenize U.S. Treasury Bonds On Ethereum

Author: 0xmin


Stani Kulechov, the founder of AAVE, now emphasizes his new identity, the founder of the Web3 social protocol Lens Protocol.

Also as the top protocol of DeFi lending, Compound founder Robert Leshner seems unwilling to be lonely, and started a new entrepreneurial journey. He aimed at the current hot narrative-**Real World Asset Tokenization (RWA). **

On June 29, Robert Leshner announced the birth of his new company, Superstate, on Twitter.

"Today, I am pleased to announce the formation of a new company, Superstate, with a mission to create regulated financial products that bridge traditional markets and the blockchain ecosystem.

The main limiting factor of DeFi is that crypto-native assets are the only ones that are interoperable. But eventually, hundreds of trillions of assets “off-chain” will come to the blockchain, and we plan to facilitate this migration.

On Monday, we filed with the SEC a preliminary prospectus for the Superstate Short-Term Government Bond Fund, the first step in a long journey to upgrade financial markets. "

According to a filing with the U.S. Securities and Exchange Commission (SEC) on June 26, Superstate will use ethereum as a secondary record-keeping tool and create a short-term government bond fund that invests in “ultra-short-term government securities,” including U.S. Treasury bonds, government agency securities wait. In addition, the document also emphasizes that this fund will not directly or indirectly invest in any assets that rely on blockchain technology, such as cryptocurrencies. **

At present, Superstate has completed a $4 million seed round of financing, with investors including ParaFi Capital, 1kx, Cumberland Ventures and Distributed Global.

Simply summed up, **They are committed to buying short-term U.S. Treasury bonds and put them on the chain, use blockchains such as Ethereum to make secondary records, track the ownership share of the fund, and can directly trade on the chain . **

If Superstate’s product is approved, crypto billionaires and blockchain-native funds will be able to earn high returns on U.S. government bonds without changing the way they manage their portfolios. After all, the current risk-free U.S. Treasury yield It has been significantly higher than the rate of return of DeFi.

In a statement to the media, Superstate wrote, “Our vision is to create an SEC-registered investment product that, over time, will compete with stablecoins as a reserve asset and reserve asset for cryptocurrencies. Billing selection."

Starting from the tokenization of U.S. national debt, once this scenario is actually implemented and widely used, it will open up a road for tracking and trading real-world assets on the blockchain in the future, but this road is full of layers of supervision.

Founder Leshner also said that everyone who holds the asset must be whitelisted, and Superstate will not whitelist smart contracts such as Uniswap or Compound, so such DeFi applications cannot use it.

Can Superstate’s on-chain treasury bond product be approved by the SEC?

At present, the probability is quite high, and two similar products have been approved by US regulators.

“FOBXX” by Franklin Templeton: Debuting in 2021, the fund becomes the first U.S.-domiciled mutual fund to use blockchain to process transactions and record ownership.

“WTSIX” launched by WisdomTree: a short-term national debt digital fund launched in 2022, which invests in short-term US national debt and uses blockchain for secondary records.

Jarrett, president of WisdomTree, previously stated: “We expect all financial assets to eventually move to blockchain infrastructure, and this is an important step in that direction as our blockchain-backed funds and tokenized assets will be secured Bringing mainstream investments like income, stocks and commodities into the digital world.”

WTSIX was officially issued on January 18, 2023, with a fee rate of 0.41% and a starting investment of US$25, but the current total net value is only US$993,600.

In contrast, the advantage of Superstate is that the founders have enough rich resources in the encrypted world. **

In 2021, Compound Labs launched Compound Treasury, in partnership with Fireblocks and Circle, to allow institutional clients such as financial technology companies to convert U.S. dollars into USDC. These USDC tokens will be deployed on Compound at a guaranteed 4% interest rate. Much higher than U.S. Treasury yields.

In 2022, SCB 10X, the venture capital arm of Thailand’s Siam Commercial Bank, announced that it had deposited a sum of funds into Compound Treasury. However, in the first quarter of 2023, Compound Treasury announced its closure. After all, at this moment, DeFi returns are risky and low.

So the question is, if the United States cuts interest rates sharply, the yield of government bonds drops sharply, and the yield of DeFi rises sharply, then what is the narrative of Superstate?

In the past, Compound Treasury was to help traditional institutions under the chain to arbitrage and make money in the encrypted world; now, Superstate helps encrypted upstarts make profits in the fiat currency world, with different paths and the same goal.

From Compound Treasury to Superstate, Comrade Robert Leshner has not changed his original intention: **Help the rich make more money. **