Ben Strack

A new tokenized fund on decentralized marketplace Archblock allows USDC holders and on-chain investors outside the US to access the yields of short-term US Treasury bills.



The fund’s target yield is 5%, a figure slightly below the 5.33% effective federal funds rate — a volume-weighted median of overnight federal funds transactions.



Fund group Adapt3r Digital, <a href="https://blockworks.co/news/defi-credit-protocol-pushes-to-onboard-community-banks">which Archblock partnered with last year</a>, ensures every transaction and fund allocation is recorded on the Ethereum blockchain.&nbsp;



The portfolio comprises short-dated US Treasury securities with a weighted-average maturity range of three to six months, a USDC reserve capped at roughly 5% and cash, according to Adapt3r Digital Chief Investment Officer Marcus Leanos.



“Given the anticipation of sustained elevated levels of the federal funds rate, short-term Treasury bills remain an attractive avenue for Web3 investors who are seeking exposure to this asset class,” Leanos told Blockworks.



Archblock is built on the financial infrastructure by DeFi credit protocol TrueFi, which has facilitated roughly $1.8 billion in originated loans on-chain since its inception in November 2020. Asset managers, such as Adapt3r Digital, build their portfolios on Archblock’s smart contracts, which automate fund operations like disbursements, redemptions and reporting.&nbsp;



The fund aims to process all redemption requests within one trading day.&nbsp;It has a management fee of 0.3% and a protocol fee 0.2%.



On-chain assets are safeguarded by multi-signature requirements, as multiple private keys are needed for transaction authorization.&nbsp;



An institutional custodian and a FINRA-regulated broker-dealer — both of which a spokesperson for Archblock declined to name — hold the off-chain assets in custody.&nbsp;



<h2 class="wp-block-heading">Competing offerings amid tokenization push</h2>



Among the fund’s biggest competitors are other DeFi yield opportunities, such as algorithmic yield on protocols Compound and Aave, according to Leanos.&nbsp;&nbsp;&nbsp;&nbsp;



“As compared to the risk-adjusted returns US Treasury bills offer, algorithmic investment opportunities are typically more risky because the respective protocols lend funds to collateralized borrowers,” he said.



More direct competition is <a href="https://blockworks.co/news/ondo-launches-on-chain-treasurys-bonds">Ondo Finance’s tokenized US Treasurys and bond offerings</a> launched in January. The firm’s US Government Bond Fund (OUSG), for example, was set to initially invest exclusively in short-term US Treasurys via the Blackrock’s US Treasuries ETF (SHV). Ondo Finance charges fees for the product that total 0.45%.



Ondo Finance said in a <a href="https://blog.ondo.finance/announcing-tokenized-us-treasuries-and-bonds/">blog</a> at the time that its goal was “making traditional capital markets more accessible to investors who collectively hold more than $100 billion of non-yield-bearing stablecoins.”



Other competing products, albeit more indirect, include off-chain traditional ETFs and mutual funds that invest in Treasurys, such as SHV.&nbsp;



“The off-chain competition requires access to US bank and brokerage accounts and does not operate on a 24/7 basis like the on-chain opportunities,” Leanos noted.



Tokenization has become more of a mainstream topic in recent years as traditional players tout its benefits.



BlackRock CEO Larry Fink said in a <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-annual-chairmans-letter">letter</a> to investors in March that <a href="https://blockworks.co/news/blackrock-ceo-us-lagging-innovation-tokenization">the tokenization of assets</a> could help in “driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”



Firms like WisdomTree and Franklin Templeton have also expressed interest in pushing deeper into the tokenization space, and acted.



WisdomTree — a firm with $97.5 billion in assets under management — <a href="https://blockworks.co/news/wisdomtree-set-to-launch-fund-with-real-world-focus">gained regulatory approval</a> for its Short-Term Treasury Digital Fund (WTSYX) last year. The fund digitizes its fund share ownership record on the Ethereum or Stellar blockchains.



The WisdomTree fund is one of nine digital funds available on its <a href="https://blockworks.co/news/blockchain-wisdomtree-app">“blockchain-enabled” consumer app that went live</a> last month.&nbsp;



$1.45 trillion asset manager Franklin Templeton launched its OnChain U.S. Government Money Fund in 2021.&nbsp;



Read more: <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">A stablecoin with yield? Tokenized fund perhaps just the start for fund giant</a>



One share of the fund, which seeks to maintain a $1 share price, is represented by one BENJI token. Holders of the token can access the fund in digital wallets through the Benji Investments app.



“If a money fund continues to offer attractive yield, we would expect investors to continue to find it as, at a minimum, a complementary product as they use currency stablecoins, which do not offer income,” Roger Bayston, head of digital assets at Franklin Templeton, told Blockworks in June.



Updated Aug. 15, 2023 at 10:35 am ET: Added information about the fund’s fees.



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Archblock

New fund gives on-chain investors another way to access US Treasury yields

Casey Wagner

<div id="highlights-block_632c562604cad" class="highlights">
 <ul>
 <li>TrustToken opts for a rebrand in the midst of what many are calling an industry turning point </li>
 <li>TrueFi, a decentralized protocol that facilitates uncollateralized lending, launched by TrustToken in 2020, is going DAO</li>
 </ul>
 
</div>



TrustToken, the core team behind popular stablecoin TUSD and uncollateralized lending protocol TrueFi is leaning into the institutional narrative with its new rebranding, in a tumultuous year for stablecoins and crypto as it angles to attract more big lenders and asset managers to the space.



Once acting as the core team behind the TrueFi protocol, which has originated nearly $2 billion in uncollateralized loans to crypto borrowers like Alameda as well as making inroads into real-world lending, <a href="https://www.archblock.com/" target="_blank" rel="noreferrer noopener">Archblock</a> is now handing off the future of the protocol to a decentralized autonomous organization (DAO) and Foundation. This includes passing off the TrueFi treasury, smart contracts, intellectual property, and responsibilities for designing and executing on the protocol’s roadmap.



“We&#8217;ve issued nearly $2 billion in loans, paid out tens of millions of dollars worth of interest, and maintained zero defaults,” said <a href="https://www.linkedin.com/in/ryanrodenbaugh" target="_blank" rel="noreferrer noopener">Ryan Rodenbaugh, TrueFi’s business development lead</a>.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Though we started by lending to crypto trading firms, we are currently laser focused on connecting DeFi with ‘real-world’ lending opportunities across a number of sectors to give these businesses access to the efficiency of DeFi,” he said.&nbsp;</blockquote>



Institutions are likely more weary of crypto lending platforms after the fall of now bankrupt crypto lender and trading platform <a href="https://cms.blockworks.co/40-state-regulators-are-opening-celsius-books-in-search-of-fraud/" target="_blank" rel="noreferrer noopener">Celsius</a>, but the Archblock team is confident that a decentralized approach focused on transparency and &#8220;hands-on support from the Archblock team&#8221; will bring traditional players into the space.&nbsp;



With the DAO now overseeing much of TrueFi’s operations, Archblock will continue to “make major contributions to the technology and growth efforts,” the company said.&nbsp;The goal is to grow TrueFi’s total value outstanding, a spokesperson added. 



As TrustToken, the company, launched its largest stablecoin, TrueUSD (TUSD), in 2018. With a current market cap of about $1.1 billion, TUSD is the sixth-largest stablecoin, behind FRAX, <a href="https://www.coingecko.com/en/categories/stablecoins" target="_blank" rel="noreferrer noopener">according to CoinGecko</a>. The token is fully redeemable, “one-to-one for US dollars, as independently attested every 30 seconds” by business management firm Armanino, said Ryan Christensen, Archblock’s former chief product officer and its new CEO.



In the aftermath of TerraUSD’s <a href="https://cms.blockworks.co/7-south-korean-crypto-exchanges-raided-in-connection-with-terrausd-crash-report/" target="_blank" rel="noreferrer noopener">collapse</a>, transparency and security of reserves is even more important for investors and regulators, who have vowed to <a href="https://cms.blockworks.co/congress-mulling-stablecoin-regulation-after-terra-crash/" target="_blank" rel="noreferrer noopener">take a closer look</a> at the industry. A spokesperson for the company declined to comment on Wednesday’s reports that a new stablecoin bill is in the works in Congress, but Archblock is complying with current regulations, Christensen said.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We consider stablecoins a key building block to worldwide DeFi adoption, most exemplified by dollar-denominated global lending, and are proud to be involved at both the asset and infrastructure layers,” Christensen added.&nbsp;</blockquote>



Archblock isn’t the only crypto company looking to refresh its image in the current market environment. Enterprise technology infrastructure provider <a href="https://cms.blockworks.co/enterprise-blockchain-provider-targets-wall-street-partners-with-rebrand/" target="_blank" rel="noreferrer noopener">Symbiont</a> unveiled its plans to revamp its brand earlier this month. The company is hoping to draw more interest from Wall Street with its plans.&nbsp;



Now is the time “to better educate the industry on the entire digital asset/blockchain ecosystem on the heels of a crypto winter,” Mark Smith, CEO and co-founder of Symbiont, said.



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