Author
Superstate Inc., the Investment Manager on behalf of Superstate Short Duration US Government Securities Fund (USTB)
Superstate, led by Robert Leshner, is an asset management firm modernizing investing through tokenized financial products. We offer investment products that benefit from the speed, programmability, and compliance advantages of blockchain tokenization. Superstate’s suite of products currently includes a tokenized T-Bill fund (USTB) , and a tokenized crypto cash and carry fund (USCC) collectively Superstate Funds. Learn more about Superstate here.
Summary
This proposal seeks to introduces USTB, Superstate’s Short Duration US Government Securities Fund, delivering stability, liquidity, and Treasury Bill yield as reserves behind the stablecoin.
USTB is a tokenized (ERC-20) fund offering investors access to short-duration U.S. Treasury Bills. USTB’s investment objective is to seek current income as is consistent with liquidity and stability of principal, targeting returns in line with the federal funds rate.
USTB has daily liquidity, low management fees, no performance fee, transparent holdings, institutional custody, bankruptcy-remote structure, and crypto-native features that make it appealing as an asset behind Frax USD.
This proposal looks to introduce USTB as a collateral asset with an initial cap of $100mm.
Background and Motivation
Frax USD (frxUSD) seeks to onboard billions of dollars as a fully collateralized, fiat-interchangeable asset backed by various stable and yielding assets that can be rebalanced based on the optimal asset allocation by the protocol, depending on the market environment.
As Frax looks to provide savings products for investors, Superstate can provide exposure to various yield opportunities, allowing Frax to optimize exposure regardless of the rate environment.
Superstate, led by Robert Leshner, brings deep crypto-native expertise and highly institutional products to help the Frax ecosystem scale frxUSD with various yield-bearing products that help diversify the stablecoins assets to maximize stability and yield regardless of the market environment.
In addition to Superstate’s USCC (backed by crypto carry trades) proposal, this proposal seeks to introduce USTB as a reserve and backing for frxUSD.
USTB Overview
USTB delivers T-Bill exposure for Frax by investing in short-duration U.S. Treasury Bills and targets return in line with the federal funds rate. Ownership in the Fund is issued as a yield-bearing ERC-20 token, USTB, or in the book-entry form. USTB is freely transferable between Ethereum addresses on the Allowlist. Purchases and redemptions are facilitated through USD or USDC, with liquidity each market day.
USTB has been selected through robust and rigorous RFP processes to provide compliant asset management solutions for crypto-native stablecoins and projects. Leveraging Superstate’s team’s deep expertise in DeFi, we have developed compliant asset management products that make managing and issuing digital assets secure and easy. To date, USTB is used to power the following projects:
- Mountain’s USDM
- M^0 “M” Stablecoin
- Ethena’s USDe Reserve Fund
- Arbitrum’s Treasury
Beyond this, USTB is currently being evaluated as a yield source for Polygon’s PoS Bridge Assets and for reserves of Sky’s USDS. Additionally, USTB supports digital asset teams in many capacities such as a cash management tool or treasury assets.
Investment Mandate
USTB’s investment mandate ensures at least 95% of the portfolio is invested in short-duration U.S. Treasury Bills. Up to 5% of the portfolio at any time can be held in cash to facilitate liquidity; however, given the highly liquid nature of the portfolio, cash positions are kept at a minimum at all times. Additionally, USTB’s mandate is to maintain an average portfolio duration of one year or less.
The Fund is sub-advised by [Federated Hermes , an ~$800B AUM asset manager. The majority of the assets they manage are deployed in Money Market strategies. Susan Hill, CFA is the Portfolio Manager responsible for executing the Fund’s mandate. She brings three decades of investing experience managing assets for institutions and is specifically responsible for overseeing ~$300B in fixed-income assets.
Detailed Holdings
As of December 13, 2024, the table below outlines the current holdings. Full details are available for review on USTB’s landing page.
| Security Name | Par | Base Value/Cost | Eff. Mat | Maturity | Current Yld | % of Fund | |
|---|---|---|---|---|---|---|---|
| U.S. Treasury Bill 12/17/2024 | 13,250,000 | 13,243,310 | 17-Dec-2024 | 17-Dec-2024 | 4.6421 | 8.30 | |
| U.S. Treasury Bill 12/24/2024 | 30,925,000 | 30,882,250 | 24-Dec-2024 | 24-Dec-2024 | 4.6158 | 19.35 | |
| U.S. Treasury Bill 12/26/2024 | 7,500,000 | 7,487,680 | 26-Dec-2024 | 26-Dec-2024 | 4.6611 | 4.69 | |
| U.S. Treasury Bill 12/31/2024 | 8,000,000 | 7,981,635 | 31-Dec-2024 | 31-Dec-2024 | 4.6964 | 5.00 | |
| U.S. Treasury Bill 01/02/2025 | 7,950,000 | 7,930,169 | 02-Jan-2025 | 02-Jan-2025 | 4.5993 | 4.97 | |
| U.S. Treasury Bill 01/07/2025 | 17,000,000 | 16,947,583 | 07-Jan-2025 | 07-Jan-2025 | 4.5360 | 10.62 | |
| U.S. Treasury Bill 01/09/2025 | 10,550,000 | 10,514,222 | 09-Jan-2025 | 09-Jan-2025 | 4.6265 | 6.59 | |
| U.S. Treasury Bill 01/14/2025 | 11,300,000 | 11,259,371 | 14-Jan-2025 | 14-Jan-2025 | 4.4749 | 7.06 | |
| U.S. Treasury Bill 01/16/2025 | 4,100,000 | 4,082,745 | 16-Jan-2025 | 16-Jan-2025 | 4.5680 | 2.56 | |
| U.S. Treasury Bill 01/21/2025 | 3,100,000 | 3,084,760 | 21-Jan-2025 | 21-Jan-2025 | 4.6593 | 1.93 | |
| U.S. Treasury Bill, 01/23/2025 | 11,600,000 | 11,541,684 | 23-Jan-2025 | 23-Jan-2025 | 4.5252 | 7.23 | |
| U.S. Treasury Bill 01/28/2025 | 4,600,000 | 4,573,639 | 28-Jan-2025 | 28-Jan-2025 | 4.5993 | 2.87 | |
| U.S. Treasury Bill 02/04/2025 | 8,000,000 | 7,948,678 | 04-Feb-2025 | 04-Feb-2025 | 4.4648 | 4.98 | |
| U.S. Treasury Bill 02/11/2025 | 6,000,000 | 5,959,483 | 11-Feb-2025 | 11-Feb-2025 | 4.3950 | 3.73 | |
| U.S. Treasury Bill 02/13/2025 | 2,000,000 | 1,984,776 | 13-Feb-2025 | 13-Feb-2025 | 4.5444 | 1.24 | |
| U.S. Treasury Bill 02/18/2025 | 2,000,000 | 1,983,548 | 18-Feb-2025 | 18-Feb-2025 | 4.5603 | 1.24 | |
| U.S. Treasury Bill 02/20/2025 | 6,000,000 | 5,948,595 | 20-Feb-2025 | 20-Feb-2025 | 4.6063 | 3.73 | |
| U.S. Treasury Bill 02/25/2025 | 2,000,000 | 1,981,726 | 25-Feb-2025 | 25-Feb-2025 | 4.5865 | 1.24 | |
| U.S. Treasury Bill 02/27/2025 | 3,300,000 | 3,269,242 | 27-Feb-2025 | 27-Feb-2025 | 4.5387 | 2.05 | |
| U.S. Treasury Bill 03/04/2025 | 1,000,000 | 990,033 | 04-Mar-2025 | 04-Mar-2025 | 4.5708 | 0.62 | |
| U.S. Treasury Bill 03/06/2025 | 3,000,000 | 2,969,567 | 06-Mar-2025 | 06-Mar-2025 | 4.5237 | 1.86 | |
| U.S. Treasury Bill 03/11/2025 | 1,000,000 | 989,220 | 11-Mar-2025 | 11-Mar-2025 | 4.5498 | 0.62 | |
| U.S. Treasury Bill 03/13/2025 | 2,000,000 | 1,978,500 | 13-Mar-2025 | 13-Mar-2025 | 4.4197 | 1.24 | |
| U.S. Treasury Bill 03/18/2025 | 1,000,000 | 988,468 | 18-Mar-2025 | 18-Mar-2025 | 4.5080 | 0.62 | |
| U.S. Treasury Bill 03/25/2025 | 1,000,000 | 987,590 | 25-Mar-2025 | 25-Mar-2025 | 4.5184 | 0.62 | |
| U.S. Treasury Bill 04/01/2025 | 1,000,000 | 986,708 | 01-Apr-2025 | 01-Apr-2025 | 4.5289 | 0.62 | |
| U.S. Treasury Bill 04/08/2025 | 2,000,000 | 1,972,192 | 08-Apr-2025 | 08-Apr-2025 | 4.4504 | 1.24 | |
| U.S. Treasury Bill 04/15/2025 | 1,500,000 | 1,478,977 | 15-Apr-2025 | 15-Apr-2025 | 4.3719 | 0.93 | |
| U.S. Treasury Bill 06/05/2025 | 1,000,000 | 979,192 | 05-Jun-2025 | 05-Jun-2025 | 4.4741 | 0.61 |
Income
USTB generates income through 24/7/365 interest accrual via Continuous Pricing, ensuring Frax begins earning interest immediately and continues accruing until redemption. This method allows interest to accumulate 24/7 and provides real-time, on-chain visibility of the stablecoin’s backing value, offering a more crypto-friendly alternative to monthly dividends.
Income is realized through USTB shares, issued as a yield-bearing ERC-20 token, USTB token, or Book Entry shares. Each USTB token represents one share in USTB, with the number of shares minted based on the Purchase Amount divided by the Net Asset Value per share (NAV/S) on Market Days.
The NAV/S starts at $10 and increases continuously, reflecting the Fund’s accruing interest. NAV/S is calculated by the reputable third-party, NAV Fund Services. Investors can redeem USTB for USDC or its USD equivalent based on the current NAV/S value.
USTB Investor Eligibility
USTB is only open to Qualified Purchasers who must be KYC’d. Finres has already been deemed eligible to invest in this fund.
KYC/AML Compliance and Whitelist
The Fund and USTB tokens are available to “whitelisted” (aka Allowlist) investors who have passed checks for the suitability, AML/KYC verification, and register their corresponding addresses. Only the whitelisted users can subscribe for or acquire tokens on the secondary market. The Allowlist address check is part of the USTB token’s code and occurs each time a transaction is attempted. If the receiving or sending address is not present on the Allowlist, the transaction will fail.
Tokens
Ownership in the Fund are issued as a yield-bearing ERC-20 token, USTB, on Ethereum or in Book Entry (not tokenized) form. USTB is freely transferable between Ethereum addresses on the Allowlist. Purchases and redemptions are facilitated through USD or USDC, with liquidity each market day.
Legal / Operational Details
Legal Structure
USTB is a separate series of Superstate Asset Trust (a Delaware Statutory Trust). USTB is a private fund pursuant to Section 3(c)(7) of the Investment Company Act. USTB is only available to a limited subset of potential investors that meet the criteria outlined in the Private Placement Memorandum. Investors must undergo AML, KYC, and sanctions compliance checks.
USTB is bankruptcy-remote from Superstate Inc. as a separate Series of Superstate Asset Trust, a Delaware Statutory Trust under the Delaware Statutory Trust Act (“DSTA”). This structure ensures that shareholders’ investments are both separate from Superstate Inc.'s balance sheet and are siloed from other series.
Fund Mechanics
Investors may purchase Shares of USTB via USDC or USD (“cash”) which may be issued in the form of ERC-20 tokens. This tokenized ownership is composable and transferable where one Share is represented by one USTB token on Ethereum. Transferring the USTB token effectively transfers ownership of the underlying share of the Fund. Investors who complete onboarding may identify Ethereum addresses to an AllowList, a smart contract managed by Superstate Inc. that approves KYC’d entities to interact with USTB tokens.
NAV/S per second (also available onchain via Chainlink), transparent holdings, yield, and more are available via the Investor Portal or by visiting USTB’s Fund page.
Purcahses and Redemptions
Purchases
Investors can purchase USTB by either transferring USDC to a client-specific USTB Purchase Address (which is a Circle deposit address) or by initiating a bank wire to USTB’s custodian with a unique memo attributing the purchase to the investor.
USTB purchase transactions will use the Continuous NAV/S, at the time they are received, eliminating the need to wait for the next business day. In addition, token minting now occurs on demand.
Purchases are viewable in the Investor Portal, and you will receive confirmation emails when a purchase has been initiated and completed. Gas fees to transfer USDC or bank fees to wire U.S. Dollars for purchases are the responsibility of the investor.
Redemptions
Investors can redeem from USTB by either transferring USTB to the token contract, via the Investor Portal, or by calling the burn() function on the token.
Proceeds from a redemption may be delivered as USDC on Ethereum, USDC on Solana, or U.S. Dollars. There is no minimum redemption amount, and you can redeem the full amount of your holdings at any time.
Redemptions may be requested 24/7 and investors may access a $10,000,00 facility to redeem on-demand to USDC, using a Continuous NAV/S .
Redemptions are viewable in the Investor Portal, and you will receive confirmation emails when a redemption has been initiated and completed. Gas fees to transfer USTB to the token contract address are the responsibility of the investor.
Liquidity
USTB launched multiple liquidity features designed to meet investors’ needs, especially stable coin issuers.
- [Continuous Pricing:] 24/7/365 NAV to ensure Frax starts earning interest immediately and up to the second redemption. Accrue more interest across a wider period; It also allows for real-time on-chain reward accrual and no need for monthly dividends.
- [Protocol Mint & Redeem]: An onchain instant redemption facility with $10mm USDC, available for Frax to redeem atomically (same block) to USDC. This facility will refill twice a day and is free to use.
- 2x Execution Windows: In partnership with the Fund’s Sub-Adviser, Federated Hermes, USTB has introduced 2x execution Windows for the Buying and Selling of Treasury Securities. This allows USTB to be 2x as efficient and we’ll improve this over time with secondary markets integration for Frax.
- Secondary Markets: USTB is transferable
- Flexible Subscription / Redemption Amounts: There are no minimums for subscribing/redeeming to USTB, delivering ultimate flexibility to Frax. This allows Frax to more easily manage the reserves of frxUSD.
USTB is designed to enable Frax to subscribe or redeem with USDC anytime (24/7/365) with zero redemption fees. This ensures maximum yield at the moment of redemption, providing unparalleled flexibility and peace of mind. To date, USTB has processed approximately $262 million in redemptions at T+0 or T+1 speeds.
Fees
Superstate Inc. has waived all fees until the USTB’s asset under management (AUM) exceeds $200M. Key highlights include:
- Superstate Inc. does not charge any subscription or “minting” fees
- Superstate Inc. does not charge any fees for redeeming from the fund
- There are no fees for redeeming Book Entry shares
When the fee waiver expires, USTB’s fees include 1) Management Fee, 2) Fund Operating Expenses, and 3) Other Fees.
Note: These fees and expenses are outlined explicitly in the Fund’s Private Placement Memorandum and Investor Agreement.
- Superstate Inc.’s standard fees include a 0.15% management fee for providing investment management services.
- Fund Operating Expenses include but are not limited to, administrative, audit, custody, financial statement preparation, and Circle Internet Financial fees
- Other Fees include any expenses not expressly the responsibility of the Investment Manager.
a) Superstate Inc. does not charge any subscription or “minting” fees
b) Investors are responsible for paying gas fees when “burning” USTB tokens.
c) Superstate Inc. does not charge any fees for redeeming from the fund
d) There are no fees for redeeming Book Entry shares
Superstate Inc. executed an Expense Limitation Agreement (“ELA”) between Superstate Inc. and USTB. In the ELA, Superstate Inc. has agreed to waive or pay for certain expenses on behalf of the Fund. Superstate Inc. (not shareholders) shall continue to be responsible for paying new and/or ongoing expenses related to:
(a) the offering and organization of the Trust and the Series,
(b) Sub-Advisor fees
(c) insurance costs and expenses (e.g., for the assets of the Fund, D&O, E&O),
(d) expenses in connection with the tokenization of the Shares
Investor Portal
Our easy-to-use Investor Portal helps you track and manage your investments in Superstate Funds. The Investor Portal has three sections:
- Portfolio: View your holdings, purchase and redeem instructions, and your transactions.
- Documents: View key Superstate Funds documents.
- Settings: Manage your Organization and Entity settings. Your organizational settings include your team, while each Investing Entity includes a section for applications, purchase destination, payout destination, and address.
Service Providers Overview:
Investment Adviser: Superstate, Inc.
Superstate Inc., the Fund’s Investment Adviser, is currently an Exempt Reporting Adviser (“ERA”) with the U.S. Securities and Exchange Commission (“SEC”) in reliance on the private fund adviser exemption under the Investment Advisers Act of 1940 (“Advisers Act”). Information about Superstate Inc. can be found by visiting the SEC website and searching for our firm name.
Superstate Inc. also develops proprietary technology (both onchain and off-chain) for the Fund.
Sub-Advisor: Federated Hermes
Federated Hermes, contracted by Superstate Inc., is the Fund’s Sub-Advisor to ensure investors’ assets are managed by professional and experienced Portfolio Managers.
[Federated Hermes] is a leading fixed-income asset management firm that was founded in 1955 with over ~$800B in AUM – it is a publicly traded company (NYSE: FHI) that adheres to strict reporting and audit standards.
[Susan Hill, CFA], Senior Vice Portfolio Manager and Head of Government Liquidity Group at Federated Hermes, is the portfolio manager responsible for executing the investment mandate for the Fund and has 30+ years of experience, directly responsible for managing ~$300B+ AUM across multiple funds.
Custodian: UMB Bank, N.A.
All underlying securities (U.S. Treasury Bills) in the Fund are held in a segregated custodial account in the name of USTB at UMB Bank, N.A., USTB’s Custodian. Assets are held in a custody account at UMB that are segregated consistent with the Customer Protection Rule and are not rehypothecated, lent against, or otherwise encumbered. This means USTB’s assets are securely held at UMB and if there is an unlikely credit or stress event, USTB’s assets will remain protected and available for withdrawal.
UMB Bank, N.A., is a U.S.-based, OCC-chartered bank (charter #23920). It has provided comprehensive business banking services and asset management for more than a century and now custodies $44B+ in assets.
If investors choose to purchase shares in the USTB using fiat (USD), client-specific wire instructions will be provided to directly send to USTB’s UMB bank account.
NAV Calculation Agent: NAV Fund Services
Based on USTB’s holdings, trading activity, and inflows/outflows, NAV Fund Services calculates the Fund’s Net Asset Value (“NAV”) each Market Day. The NAV is delivered daily to Superstate via API which is then displayed on our website and used to determine the price for purchases and redemptions. NAV Fund Services is committed to rapid data delivery and offers overnight fund administration, with over $300B in assets under administration (“AUA”) across hundreds of other asset managers.
Auditor: Ernst & Young LLP
Superstate has contracted with a top-tier audit firm to provide independent annual assessments of the Fund’s financial statements and added transparency for our investors.
Ernst & Young LLP (“EY”) is one of the world’s largest accounting firms and is considered one of the ‘The Big 4’, providing global tax, audit, and advisory services to thousands of clients. EY audits USTB annually to ensure accurate financial reporting.
USDC Services: Circle Internet Financial
Investors can choose to purchase shares with USDC. To facilitate this service, Superstate Asset Trust has contracted with Circle Internet Financial (“Circle) to perform USDC mint/burn services as a convenience to shareholders.
Circle will convert USDC to US Dollars (“USD”), and vice versa, for purchases and redemptions into and out of the Fund.
About Superstate
Superstate is an asset management firm modernizing investing through tokenized financial products. We offer investment products that benefit from the speed, programmability, and compliance advantages of blockchain tokenization. Superstate’s suite of products currently includes a tokenized T-Bill fund (USTB), and a tokenized crypto cash and carry fund (USCC) collectively Superstate Funds.
We’re a team of crypto-natives redefining traditional finance with products that move at the speed of DeFi. Backed by talent from Uniswap, Scroll, Coinbase, and Avalanche, we’re thrilled to deliver innovative, flexible solutions to Frax and beyond.
Key Personnel Biographies
Robert Leshner, CFA Co-founder and CEO
Robert is a serial entrepreneur and previously co-founded Compound Labs. Robert has been directly responsible for designing smart contracts such as Governor Bravo and the ERC-7246 token standard, Encumber. Robert is the former chair of the San Francisco Revenue Bond Oversight Committee and is a Chartered Financial Analyst. Additionally, he is a venture investor at Robot Ventures and co-hosts The Chopping Block, a crypto-native podcast.
Reid Cuming, Co-founder and COO
Previously, Reid was the VP and GM of Compound Treasury. Before Compound, Reid was Head of Product at Chime and led product management at Stripe and Block (f/k/a. Square), building new products and infrastructure including Stripe Identity and Square’s machine learning platform. He is a former restructuring consultant and current angel investor and venture scout for Greylock.
Jim Hiltner, CFA, Co-founder and Head of Business Development
Previously, Jim was the Director of Sales at Compound Treasury, and held senior sales leadership and go-to-market roles in early-stage FinTech companies, including as a VP at Pagaya where he managed bank, FinTech, and card network partnerships, and as the Director of Sales at Visible Alpha where he was the first commercial team member responsible for building the institutional client base. Jim graduated with a double major in Finance and Management with a minor in Math from the University of Miami (FL) and is a Chartered Financial Analyst.
Alexander Zozos, General Counsel
Alex has worked on blockchain securities for >7 years. Alex served as a Special Counsel at the SEC where he contributed to the FinTech Working Group and focused on secondary trading of digital assets. Immediately before joining Superstate, Alex worked as Associate General Counsel at Coinbase where he worked closely with the MakerDAO community on ratifying MIP81 – Coinbase USDC Institutional Rewards. In addition he focused on Coinbase’s tokenization, brokerage, and derivatives exchange legal initiatives.
Jonathan Walch, Head of Engineering
Previously, a core engineer at Frax Finance and a smart contract auditor at Macro. He identified significant vulnerabilities in MakerDAO, Sommelier Finance, and Thirdweb. Jonathan serves as a technical advisor for crypto startups. Additionally, Jon is a former CTO, founder, and engineering leader, beginning his career at Morgan Stanley.
Voting:
- For: Invest USD or USDC reserves in USTB to back Frax USD with an initial cap of $100mm.
- Against: Do nothing.