Original Author: 0xmin
AAVE founder Stani Kulechov, now emphasizes his new identity as the founder of the Web 3 social protocol Lens Protocol.
Similarly, as the founder of DeFi lending protocol Compound, Robert Leshner seems unwilling to be left behind and has embarked on a new entrepreneurial journey, targeting the current hot narrative of tokenization of real-world assets (RWA).
On June 29, Robert Leshner announced the birth of his new company Superstate on Twitter.
"Today, I am excited to announce the establishment of a new company, Superstate, whose mission is to create regulated financial products that connect traditional markets and the blockchain ecosystem.
The main limitation of DeFi is that native crypto assets are the only interoperable assets. But 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 U.S. Securities and Exchange Commission. This is the first step in the long journey of upgrading the financial market."
According to documents submitted to the U.S. Securities and Exchange Commission (SEC) on June 26, 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 U.S. government bonds and government agency securities. In addition, the documents also emphasize that the fund will not directly or indirectly invest in any assets that rely on blockchain technology, such as cryptocurrencies.
Currently, Superstate has completed a $4 million seed funding round, with investors including ParaFi Capital, 1kx, Cumberland Ventures, and Distributed Global.
In summary, they are committed to purchasing short-term U.S. government bonds and putting them on the chain, using blockchain such as Ethereum as a secondary record, tracking the ownership shares of the fund, and allowing direct trading on the chain.
If Superstate's product is approved, cryptocurrency tycoons and native blockchain funds will be able to obtain high returns from U.S. government bonds without changing their portfolio management methods, after all, the current risk-free yield of U.S. government bonds is significantly higher than DeFi yields.
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 and become a reserve asset and settlement choice for cryptocurrencies."
From the tokenization of US Treasury bonds, once this scenario becomes a reality and widely adopted, it will pave the way for tracking real-world assets on the blockchain in the future. However, this path is filled with layers of regulation.
Founder Leshner also stated that anyone holding this asset must be whitelisted, and Superstate will not whitelist DeFi applications such as Uniswap or Compound, making them unable to use it.
Will Superstate's on-chain government bond product be approved by the SEC?
At present, the probability is quite high, as two similar products have already been approved by US regulatory agencies.
"FOBXX" launched by Franklin Templeton: This 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 government bond digital fund launched in 2022, investing in short-term US Treasury bonds and using blockchain for secondary records.
WisdomTree President Jarrett previously stated, "We expect that all financial assets will eventually move to blockchain infrastructure. This is an important step towards 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%, a minimum investment of $25, but the current total net worth is only $99.36 million.
In comparison, Superstate's advantage lies in its founder having sufficient resources from the crypto world's wealthy individuals.
In 2021, Compound Labs launched Compound Treasury, collaborating with Fireblocks and Circle to allow institutions such as fintech companies to convert US dollars into USDC. These USDC tokens would be deployed on Compound with a guaranteed interest rate of 4%, far exceeding the yield of US Treasury bonds at that time.
In 2022, SCB 10X, the venture capital arm of Thailand's Siam Commercial Bank, announced depositing funds into Compound Treasury. However, in the first quarter of 2023, Compound Treasury announced its closure. After all, at this moment, DeFi yields are high-risk and low-yield.
So here's the question, if the US significantly cuts interest rates in the future and the yield on government bonds drops sharply, with the DeFi yield rising sharply, what is the narrative for Superstate?
Once upon a time, Compound Treasury was helping traditional institutions in the off-chain world make money through arbitrage; now, Superstate is helping the emerging wealthy in the fiat world profit, with different paths but the same goal.
From Compound Treasury to Superstate, Comrade Robert Leshner's original intention remains unchanged: to help wealthy individuals earn even more money.
