USTB: Rebasing Stablecoin Yield, Backed by T-Bills
The RWA space currently covers a large assortment of DeFi assets, from tokenized Rolexes to on-chain credit markets. However, the consensus asset with the leading product-market fit would be US Treasury Bills (T-Bills).
Stablecoins backed by T-Bills have established a new category standard for rebasing, yield-generating stablecoins with fiat backing, a nearly perfect asset for this purpose:
- Deeply liquid with either instant, or projectable redemption windows (T+2)
- Natively yield generating with a guaranteed, “risk-free” rate
- Backed by the full faith and credit of the US Government
Stablecoins already had the best PMF in crypto, native yield from T-Bill backing just made them better.
With the launch of re.al, Tangible will deploy our own native-yield, rebasing stablecoin backed by T-Bils, aptly named USTB.
HOW IT WORKS
USTB is simply a wrapped version of Mountain Protocol’s USDM. USDM backs USTB 1:1 and USTB thus inherits the many benefits of USDM:
- Instant liquidity
- Secure and transparent structure
- Composability
- Regulated and compliant backing of T-Bills
Tangible’s USDM wrapper gives the token additional functionality including:
- Native deployment to an expanding list of chains, including but not limited to:
- re.al, Optimism, Base, Arbitrum and Polygon
- Full cross-chain functionality provided by LayerZero
- Permissionless access on any chain where it’s been deployed
The T-Bill backing maintained by Mountain Protocol provides the “value” and yield to USTB. Tangible wraps this value and using the Tangible Bridge, powered by LayerZero, allows the asset to move freely between various supported chains at no additional cost beyond gas. As long as the chain is supported by Tangible, USTB will accrue its daily rebase.
This functionality is the result of a custom, cross-chain LayerZero rebasing token implementation we developed to power USTB. That codebase and the codebase of USTB have been fully and successfully audited by leading security firm Omniscia.
USTB is minted 1:1 with USDM on Ethereum. At any time it can be redeemed 1:1 for USDM on Ethereum. USDM can itself be directly redeemed for USDC through the USDC facility secured by Mountain Protocol (KYC required.) Once this buffer is depleted, liquidity for redemptions will fallback to T+2 business days, the standard TradFi settlement timeline. Traders looking for market-neutral trades can consult the Mountain Protocol API for immediate availability of USDC liquidity.
This guaranteed redemption process allows market makers and arbitrageurs the tools and confidence they need to maintain the USTB market price at ~$1.
USTB in DeFi
The same process detailed above also allows protocols like Stack to offer leveraged yields on USTB while guaranteeing borrowers cannot be liquidated by a drop in USTB’s price. Because of the regulated and compliant backing, In the event of a depeg, Stack and Tangible both still view USTB = $1. Even if it takes T+2 days to redeem the assets, this is a profitable trade for the protocols. The benefit of this is the ability to offer leveraged yields on the “risk-free rate,” a product we believe will have significant demand in DeFi.
Additionally, the guaranteed, consistent, off-chain yield of USTB is a core feature in our flywheel, which will be central to liquidity generation on re.al. Scraping off-chain yields and using them as incentives for DEX voters is a novel approach with various ecosystem benefits. With USTB enforced as a required stablecoin to pair with on Pearl, as Pearl TVL increases, so do the incentives. These “dynamic incentives” helped Pearl reach $80MM in TVL on Polygon in just a few months and we believe we can run the same playbook again on re.al with USTB.
USTB will also feature prominently as the stablecoin partner to Stack’s CDP MORE, in token pairs on DEXs like Velodrome and Aerodrome. Part of maintaining the peg on MORE (and subsequently a healthy leverage protocol) is ensuring there’s enough demand for MORE to satisfy the mints/sales that take place during leveraged transactions. With its native, rebasing yield, USTB is the ideal stablecoin to pair with MORE, both on and off re.al.
The Power of Off-Chain Yields
When combined with DeFi primitives, tokenized RWAs can be used to build innovative financial products and services, maximizing the impact of some of the world’s most established assets. Consistent, uncorrelated sources of yield flow into the cryptoeconomy, in a unique non-zero-sum game that benefits all market participants.
This consistent influx of new cash is a unique asset for protocol teams, who can now use T-Bill yield as token liquidity incentives, where on-chain rewards no longer have to come at the expense of others in the ecosystem. By leveraging off-chain yields for incentives, we have a reliable flow of new money to the cryptoeconomy, a net gain to the ecosystem and on-chain users as a whole.
