Introducing tfBILL – A New Standard for On-Chain U.S. Treasury Bill Exposure

AAVE Community,

In response to @stani‘s recent tweet, we’d like to introduce ourselves to the AAVE Community and its stakeholders – we are Adapt3r Digital, a crypto-native asset manager focused on building the next generation of compliant RWA products.

Our flagship product, the Adapt3r Short-Term U.S. Treasury Bill Fund, offers on-chain stablecoin holders 24/7, direct access to US Treasury Bill yield. Upon depositing USDC to the smart contract vault, investors are issued tfBILL tokens which represent Limited Partner interest in a BVI registered professional fund that exclusively holds treasury bills. The entity is bankruptcy remote and solely owned by the holders of tfBILL, who have full legal recourse to tfBILL’s underlying securities. The vault is built on TrueFi’s open, transparent, and battle-tested smart contracts and is conveniently offered on Archblock’s institutional-grade frontend marketplace.

The vault was deployed in September 2023 and currently accepts USDC deposits from KYC’d non-US investors. At the time of writing, the TVL of the vault is approximately $8,528,342.11 and offers an estimated yield of approximately 5.32%.

tfBILL was built in response to compliance and complexity concerns we continually heard from DAOs and on-chain investors about existing treasury bill offerings. Specifically, many DeFi entities and users expressed difficulty evaluating existing options due to contrived and opaque legal structures with uncertain investor recourse, hidden layers of fees, and aggressive operation in regulatory “grey areas.”

Since the beginning, the primary goal has been to build an on-chain treasury instrument that is simple, transparent, and secure for all users. Here are some of the key ways tfBILL differentiates itself:

  1. Compliance-focused: A tokenized asset is only as strong as the regulatory position of its issuer. Given treasury bills are US securities, tfBILL complies with all applicable regulations (i.e. SEC Reg S), only accepting qualified non-US investors with rigorous controls in place. Although we believe in permissionless DeFi, we feel that it would be ill-advised to put the underlying treasury primitive at risk by offering a permissionless or broadly transferable asset. Although this has shown to be an effective way of bootstrapping (relatively small) liquidity for tokenized treasuries, we feel that the risk only benefits few but is socialized to all. This decision enables tfBILL to be THE lowest risk asset in DeFi.
  2. Simply T-Bills: tfBILL is directly backed by treasury bills purchased through and custodied by a regulated broker-dealer in the United States. The Fund does not allocate to ETFs which, although somewhat liquid, offer greater volatility, higher tracking error, more counterparties, and higher fees. By purchasing treasuries directly, tfBILL has access to far greater liquidity with over $150 billion in average daily volume to sell/buy into versus less than $400 million for treasury ETFs.
  3. Enhanced transparency: Adapt3r Digital has gone one step further than most to ensure the underlying backing of tfBILL is open and accessible to all. Everyday the third-party Fund Administrator provides a daily Net Asset Value attestation, which is subsequently uploaded on-chain and to IPFS. These daily capital updates are required for fees to be taken from the vault. In every on-chain update the manager includes the Net Asset Value of the fund (and thus tfBILL tokens), the underlying positions/CUSIPs, and the source PDF that the Fund Administrator provides. This same data file is used to update our Transparency Board. In addition, tfBILL is currently integrating Chainlink Proof of Reserves for further attestations from the API of our regulated broker-dealer. Finally, the Fund is audited on an annual basis by Wolf & Co.
  4. On-demand liquidity: tfBILL is mintable on-chain through Archblock’s interface, utilizing TrueFi’s smart contract architecture. This interface is open 24/7 and currently accepts USDC, but can be expanded to other stablecoins with little friction.
  5. Battle-tested smart contracts: Single points of failure are the hidden risk embedded in every tokenized asset. By using TrueFi’s battle-tested smart contracts, which have facilitated almost $2 billion in lending volume to date, tfBILL has achieved two significant milestones that differentiate us from all other players in this space: 1) offering a new tokenized asset without compromising on the smart contract level and 2) offering enhanced protections and controls by separating the front-end, blockchain, and d’App from the manager of the product itself. Unlike other treasury bill primitives, TrueFi’s underlying infrastructure is independent from Adapt3r’s operations and is always on.

If you are looking to learn more about tfBILL check out our documentation or reach out via DM or email.