Compound Labs executives have submitted a filing for an Ethereum-based government bond fund. The name of this new endeavor is ‘Superstate.’
The Superstate short-term government bond explicitly states that it does not directly or indirectly invest in blockchain technology or cryptocurrencies. Instead, it uses blockchain tech to “maintain a courtesy secondary record of the shares of certain shareholders on one or more blockchains, initially the Ethereum blockchain.”
Compound Labs to Use Ethereum for Record Keeping
No information on the minimum initial purchase or minimum investment for subsequent purchases is available. The portfolio managers are Compound founder and CEO Robert Leshner and Compund’s Head of Sales Jim Hiltner.
Regarding the use of the blockchain for the bond, the filing reads,
“The adviser believes that a blockchain-integrated recordkeeping system may provide operational efficiencies and enhance shareholder experience without negatively impacting the quality of the services provided by the fund’s transfer agent. In the future, the fund’s shares may also be available for purchase, sale, or transfer from one shareholder to another shareholder (or potential shareholder) ‘peer-to-peer’ on a blockchain by utilizing Secondary Blockchain Records.”
Compound Labs has been busy in the past 12 months, making much technical progress. In August 2022, it deployed smart contracts for the USDC market on Ethereum.
The target was a reserve pool of 5 million USDC with a minimum borrow size of 100 USDC.
Compound Finance is one of the biggest players in the DeFi space. Check out our comprehensive guide on the platform to learn more: What Is Compound Finance?
The entity is also targeting institutions through Compound Treasury. It began allowing accredited institutions to borrow USD or USDC at an APR of 4%.
S&P Global Ratings also gave Compound Treasury a credit rating of B-.
DeFi Platforms Turning to TradFi
Compound Labs and other DeFi players have been turning their attention to TradFi for some time. MakerDAO invested $500 million in United States government bonds in Q4 2022.
Early in June 2023, it also began a vote to add $1.28 billion to that bond purchase.
The total in DAI stablecoin reserve of Treasury bonds is $1.2 billion. The purchase is a part of founder Rune Christensen’s “Endgame Plan.”
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