Revolutionizing DeFi: The Role of $STBT in Onboarding Real World Assets | TKX Weekly

5 min readMay 15, 2023

Today, real world assets (RWAs) have become a significant topic in the crypto world. Tokenized real estate, equity, and commercial bonds have been attempting to establish a foothold in the DeFi space. However, many people fail to recognize one of the most secure and low-risk assets: US Treasury bonds. Despite the potential benefits of tokenizing RWAs, US Treasury bonds have a proven track record of stability and security. As a result, they could serve as an ideal asset for individuals looking to invest in the crypto space while hedging against volatility and risk.

Intro

In general, $STBT is operated by MatrixDock, affiliated with a multi-billion-dollar institution, enabling users to access short-term US Treasury bonds (T-bonds) in a decentralized manner through Ethereum blockchain. $STBT is fully backed by T-bonds on a 1:1 basis, and the issuer is responsible for the minting, redeeming, and trading of the token.

Who can Buy $STBT

$STBT is a token specifically designed for accredited investors seeking to earn T-bill yields with their stablecoin holdings. This innovative investment opportunity provides exposure to US T-bill yields while maintaining the stability similiar to stablecoin investments.

$STBT has smart contract level restriction (enforced by ERC-1400 security token standards), which restricts token ownership to accredited investors with a whitelisted address. This ensures compliance with securities regulations and helps to create a reliable investment opportunity for accredited investors.

What Backs $STBT

Each $STBT token is backed by US Treasury securities with maturities of 6 months or less, as well as reverse repurchase agreements (reverse repos). By including exposure to US Treasury Bills in stablecoin portfolios, $STBT allows for greater diversification within the DeFi ecosystem. Furthermore, $STBT offers a risk-free interest option within the DeFi ecosystem. As of May 2023, the average APY for $STBT is 4.8%.

As for the security of the underlying asset, $STBT is issued by a Seychelles SPV that is legally owned by a purpose trust set up under the Seychelles Trusts Act 2021. $STBT holders are not exposed to counterparty risk due to this unique structure.

To provide $STBT holders with daily proof of reserve, dedicated underlying asset reports generated by the T-bill custodian and reverse repo broker are uploaded daily to the APP portal and on-chain.

How to Buy $STBT

Accredited investors who have successfully completed the issuer’s KYC process are able to submit minting and redemption requests at any time. However, due to the various steps involved in T-bill & reverse repo subscription, settlement, banking transfers, and stablecoin conversions, the settlement time for minting requests is expected to be T+4, while redemption requests may take T+5.

For addressing more immediate minting and redemption needs, $STBT developed the secondary market liquidity on Curve Finance, which supports 24/7 trading activity with real-time settlement. As of May 12, 2023, $STBT pair have $7.2 million of total value locked (TVL) on Curve. With the Curve DAO having approved the gauge controller role, $STBT holders can now earn an attractive 8–10% APY by providing liquidity as a stakeholder in the pool.

Fees

$STBT has distributed over $400k in on-chain interest payments as of May 12, 2023, thanks to their highly competitive fee structure. The platform charges two fees: a 0.1% APY service fee and a 0.1% redemption fee.

How can DeFi Users Participate in $STBT

As mentioned earlier, $STBT is not permissionless and only whitelisted addresses are able to purchase or interact with it. Current regulations prohibit the sale of $STBT to retail customers, even though it carries less risk than other tokens.

However, there is a workaround available. The Curve LP contract is whitelisted to provide LP operations, which allows DeFi users to deposit $USDT/$USDC/$DAI (3CRV) into the $STBT/$3CRV pool, thereby gaining $STBT exposure without restrictions.

Some Data

Based on data from the STBT Dune Dashboard, the total supply of $STBT stands at approximately 72 million USD, with a competitive annual percentage yield of 4.5%. The distributed interest so far has exceeded a whopping 430,000 USD.

The market capitalization of $STBT has been steadily growing. Additionally, based on data from Curve Finance, the $STBT/$3CRV pool currently offers a competitive 6.89% APY, including CRV rewards. This APY is noteworthy, especially when considering the current state of most DeFi protocols.

Final Ideas

Overall, $STBT offers several noteworthy advantages. Firstly, it provides an on-chain T-bill flexi-term yield, which is currently at an impressive 4.5% APY. This yield is both flexible and reliable, and the fee structue is competitave compared to most CeFi products.

Secondly, the underlying asset allocation on $STBT is transparent and comes with daily proof of reserve. This feature provides investors with peace of mind, knowing that their assets are secure and accurately allocated.

Thirdly, $STBT offers secondary market liquidity that is compatible with DeFi, making it easy for investors to trade their assets. The token’s characterisation as DeFi compatible allows for seamless integration with other DeFi protocols, unlocking new possibilities for investors.

Finally, in comparison to stable coins, I believe that $STBT offers a more direct and transparent exposure to users. With stable coins, users may be unsure whether their funds are held by a bank or the US government. In contrast, $STBT provides clear and reliable access to the underlying asset, with a single intermediary. As such, I believe that stable coins could potentially be built on top of the $STBT platform in the future.

Reference

https://defillama.com/protocol/matrixdock
https://dune.com/hankofdefi/stbt-dune-dashboard
https://github.com/Matrixdock-STBT/STBT-contracts/blob/main/whitepaper/STBT%20White%20Paper.pdf
https://curve.fi/#/ethereum/pools/factory-v2-279/swap

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