Traditional assets to head on-chain as DeFi summer fades, says Superstate CEO Leshner

“T-bills are 5% plus. Who doesn’t want that? It’s one of the greatest assets of all time. It’s an incredibly safe short-term investment.”


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Sometimes, boring is best.

At least when it comes to investment. As a hook to start off a story, not so much. 

And for an investment portfolio, nothing is more boring than holding US government bonds. 

On the plus side, they’re virtually risk-free, barring a monetary apocalypse that would make bitcoin maxis salivate. Bonds now offer decent short-term returns as central bank interest rates appear to be inching toward a potential peak.

If a crypto-focused company wants to hold their funds in something relatively safe, stablecoins have been the go-to solution. But just like the fiat currencies upon which they are pegged, any such holdings fall victim to inflation and slowly bleed away value.

Robert Leshner is looking to bring the boring but safe world of government bond funds to the hyperactive crypto space, addressing a niche that has flown under the radar in the industry.

The Superstate CEO spoke to Blockworks on the Empire podcast (Spotify/Apple) about his plans for a registered investible mutual fund that will bridge the gap between the industries.

The key difference between Superstate and other mutual funds is its blockchain component, Leshner explains. Shareholders can “request to have a record of their ownership sent to a blockchain address” under their own custody or held at a qualified custodian.

A crypto venture or hedge fund could create “parallel infrastructure between crypto investments and trad-fi investments,” keeping it all under one roof at the same crypto custodian.

This provides a “distinct advantage” to shareholders in the form of greater transparency, Leshner says. 

“This would give you a tool to be an investor in a very specific mutual fund, but also see it alongside your other investments at a custodian or be able to track it in a single portfolio management approach.”

This is chapter one

Leshner says the service offers a unified architecture for storing, managing and monitoring investments across a portfolio. It’s the first step for the tokenization of traditional assets, he says, bringing them “on-chain in some capacity.”

“This is chapter one of — as a whole society and a whole industry — this shift of bringing assets on-chain.” 

“And the advantages, long term, of having assets on-chain are numerous,” he adds.

Among the key advantages, Leshner lists composability with other on-chain systems, as well as a “massive increase in transparency, in automation, [and] in the speed and permanence of settlement.”

“All of the reasons that people love DeFi are eventually going to exist for traditional assets.”

Superstate is aimed at providing a “very specific narrow piece to usher in the future,” Leshner says. 

Leshner reflects on the early stages of tokenization technology, recalling the naive world-changing optimism that was so prevalent years ago. 

“I was like, oh man, we’re just like one step away from all of the bonds and all of the equities and all of the currency and commodities and real estate being tokens on a blockchain!”

“Six years later,” he says, “we’ve seen very little demonstrable traction and proof of assets coming from traditional markets onto the blockchain.”

The chicken and the egg

Leshner explains that it’s a chicken-and-egg sort of problem. “There has to be demand from end-users to have things brought on-chain or a giant economic invisible hand that’s pushing them on-chain.”

The main draw for crypto users has been assets that are unique to crypto, according to Leshner. “All the most popular crypto assets for traders in crypto, for hedge funds, for venture funds, for whatever, are crypto-native assets.”

Most people in crypto are excited because it’s different from real estate or equities, he says. But he sees a change coming with the attractive returns offered by short-term interest rates. 

“The biggest pull is going to be people who are on-chain,” he says, who want the yield that is now provided by traditional finance. “T-bills are 5% plus. Who doesn’t want that? It’s one of the greatest assets of all time. It’s an incredibly safe short-term investment.”

“Everybody wants that and it doesn’t really exist on-chain right now.”

“It’s the time for there to be a giant magnet pulling assets from off-chain, on-chain. The opposite existed three years ago where rates in DeFi were like 8%.” 

“It’s the inverse of DeFi summer, when TradFi was zero.”

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