New Stablecoin Issuers Embrace On-Chain U.S. Treasuries As Collateral

Real-world assets continue to garner adoption in web3, with a cohort of newly-launched stablecoins leveraging on-chain treasuries to support their value.

On Nov. 14, Verified USD Foundation launched USDV, a fully-collateralized stablecoin backed by tokenized U.S. treasury bills. USDV’s collateral is fully composed of Matrixport Short-term Treasury Bill Tokens (STBT).

STBT allows holders to earn yields derived from Treasury Bills on-chain and leverages the ERC-1400 security token standard to facilitate direct payouts to accredited investors. Matrixport estimates STBT is generating an annual percentage yield (APY) of 4.9% for holders based on a seven-day performance. However, USDV will exclusively distribute yields to token minters.

“USDV enables a collaborative community where those who create value can share in the rewards,” said Matthew Commons, President of the Verified USD Foundation. “The Foundation is excited to work with contributors in unlocking new use cases with real-world impact.”

SBTB is the second-largest Ethereum-based tokenized Treasury Bill with a total value locked of $112M, according to DeFi Llama. Matrixport offers real-time proof-of-reserves to provide transparency to STBT and USDV holders. Reward payouts are executed via LayerZero’s ColorTrace algorithm.

The Verified USD Foundation hinted it may support other on-chain treasury assets in the future.

RWAs in DeFi

The news comes as an increasing number of DeFi protocols are moving to embrace real-world assets.

MakerDAO led the charge last year, and has since accumulated a more than $2.5B portfolio of RWAs including more than $1B in U.S. Treasury Bills. MakerDAO estimated nearly 80% of its revenues were derived from the real-world assets as of July.

Stablecoin issuers like Verified USD are now embracing RWAs to drive transparency and confidence in their collatera. The move contrasts against the algorithmic stablecoins that briefly surged to contention across web3 last year until the catastrophic failure of Terra’s UST token.

However, U.S. treasuries recently experienced an uptick in volatility as investors moved to hedge their exposure to the United States economy. The action comes amid increasing concerns the U.S. may commit to unending military expenditure in support of Ukraine and Israel.

Treasury-Backed Stablecoins

The Verified USD Foundation said it secured integrations with 23 partners at launch, spanning both prominent CeFi and DeFi teams including Curve, Sushi, Wintermute, and Bitget.

The stablecoin is an ERC-20 leveraging LayerZero’s Omnichain Fungible Token (OFT) Standard to facilitate cross-chain composability. The token initially launched on the Ethereum, BNB Smartchain, Avalanche, Arbitrum, and Optimism blockchains, and can be transferred across more than 40 networks currently supported by OFT.

USDV was audited by Zellic, Ottersec, and Paladin Security.

The Verified USD Foundation is not alone is embracing RWAs as stablecoin collateral, with Midas also planning to release a stable token backed by U.S. Treasuries.

According to a Nov. 10 report from CoinDesk, Midas expects to integrate its stUSD token with top DeFi protocols including MakerDAO, Uniswap, and Aave in the coming weeks.

Midas aims to purchase U.S. Treasuries via BlackRock, the world’s largest asset manager, and will support Circle’s USDC token as an on-ramp. Midas expects to launch stUSD for retail users early next, issuing the token as a security per German law.