Superstate’s advantage, on the other hand, lies in the fact that the founder has enough resources from the world of crypto-rich people.
AAVE founder Stani Kulechov, now emphasizes his new identity, as the founder of Web3 social protocol Lens Protocol.
Similarly, as a leading DeFi lending protocol, Compound founder Robert Leshner seems to be unwilling to be left behind and has started a new entrepreneurial journey, targeting the current hot narrative – the tokenization of real-world assets (RWA).
On June 29th, Robert Leshner announced the birth of his new company, Superstate, on Twitter.
“Today, I am excited to announce the founding of a new company, Superstate, whose mission is to create regulated financial products that connect traditional markets and the blockchain ecosystem.
The main limiting factor of DeFi is that native crypto assets are the only interoperable assets. However, ultimately, trillions of “off-chain” assets will enter the blockchain, and we plan to facilitate this migration.
On Monday, we submitted a preliminary prospectus for the Superstate Short-Term Government Bond Fund to the US Securities and Exchange Commission, which is the first step in the long journey of upgrading the financial market.”
According to the documents submitted to the US Securities and Exchange Commission on June 26th, Superstate will use Ethereum as an auxiliary record-keeping tool, and create a short-term government bond fund, investing in “ultra-short-term government securities”, including US Treasury bonds, government agency securities, etc. 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 cryptocurrency.”
Currently, Superstate has completed a $4 million seed round of financing, with investors including BlockingraFi Capital, 1kx, Cumberland Ventures, and Distributed Global.
In summary, they are committed to purchasing short-term US Treasury bonds and putting them on the chain, using Ethereum and other blockchains as secondary records, tracking the ownership shares of the fund, and directly trading and circulating on the chain.
If Superstate’s product is approved, then cryptocurrency tycoons and native blockchain funds will be able to obtain high returns on US government bonds without changing their investment portfolio management methods, after all, the current risk-free US Treasury bond yields are already significantly higher than DeFi yields.
Superstate wrote in a statement to the media, “Our vision is to create an investment product registered with the SEC that will compete with stablecoins over time as a reserve asset and settlement choice for cryptocurrencies.”
From the tokenization of US Treasury bonds, once this scenario is truly realized and widely used, it will pave the way for tracking real-world assets on the blockchain in the future, but this road is full of layers of regulation.
Founder Leshner also stated 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?
Currently, the probability is quite high, as two similar products have already been approved by US regulators.
“FOBXX” launched by Franklin Templeton: The fund was first launched in 2021 and became the first registered mutual fund in the United States to use blockchain to process transactions and record ownership.
“WTSIX” launched by WisdomTree: A short-term US Treasury digital fund launched in 2022, which invests in short-term US Treasuries and uses blockchain for secondary recording.
WisdomTree President Jarrett previously stated: “We expect all financial assets to eventually move to blockchain infrastructure. This is an important step in that direction, as our blockchain-supported funds and tokenized assets bring mainstream investments such as fixed income, stocks, and commodities into the digital world.”
WTSIX was officially issued on January 18, 2023, with a fee of 0.41% and a minimum investment of $25, but the total net asset value is currently only $993,600.
In comparison, Superstate’s advantage lies in the fact that the founder has enough resources from the wealthy in the crypto world.
In 2021, Compound Labs launched Compound Treasury, which allows fintech and other institutional clients to convert dollars into USDC and deploy these USDC tokens on Compound at a guaranteed rate of 4% in partnership with Fireblocks and Circle.
In 2022, SCB 10X, the venture capital arm of Siam Commercial Bank in Thailand, announced that it had deposited funds into Compound Treasury, but in the first quarter of 2023, Compound Treasury announced its closure. After all, at this moment, DeFi returns are high-risk and low-yield.
So the question is, if the United States significantly lowers interest rates in the future, causing bond yields to drop sharply, and DeFi yields to rise sharply, what will Superstate’s narrative be?
Once upon a time, Compound Treasury helped traditional off-chain institutions make money through arbitrage in the crypto world; today, Superstate helps crypto newcomers profit in the fiat world. The path is different, but the goal is the same.
From Compound Treasury to Superstate, Robert Leshner’s original intention remains unchanged: to help the wealthy make more money.
Original author: 0xmin
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