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Tokenized Treasuries
Real-World Assets • Bullion • Physical Collateral
blockchain-based access to sovereign-backed yield
Tokenized Treasuries are blockchain-based representations of U.S. government debt instruments—such as Treasury bills and notes—backed 1:1 by real-world securities. These tokens enable smart contract-based access to sovereign-backed yield products, merging the stability of traditional finance with the transparency and efficiency of decentralized networks.
Use Case: A regulated stablecoin like $RLUSD holds tokenized Treasuries as reserves, providing both yield and compliance while maintaining a stable U.S. dollar peg on-chain.
Key Concepts:
- Real-World Asset (RWA) — Digitized versions of traditional financial instruments issued on blockchain
- Sovereign Yield — Returns generated from government-issued securities, tokenized for DeFi use
- Fractionalization — Token holders can own fractions of a Treasury, enabling broader access
- 24/7 Liquidity — Blockchain settlement enables global, always-on trading without intermediaries
- Real-World Assets — The broader category of tokenized traditional finance instruments
- Treasury Yield — The risk-free rate that tokenized treasuries pass through to holders
- Yield-Bearing Stablecoin — Stablecoins backed by tokenized treasuries for passive yield
- Fractional Ownership — Enabling small investors to access institutional-grade assets
Summary: Tokenized Treasuries are a key step in integrating traditional finance with Web3. By anchoring stablecoins, protocols, and portfolios to real sovereign debt, they provide yield, compliance, and credibility. As DeFi evolves, tokenized government bonds are emerging as the backbone of institutional-grade blockchain infrastructure.
How Tokenized Treasuries Work
the flow from government bonds to on-chain yield
Treasury
Custodian
Issuer
Token
Custodian
Issuer
Token
Step 1: Treasury Purchase
Issuer buys U.S. Treasury bills through regulated channels • Securities held with qualified custodian • Full 1:1 backing established
Issuer buys U.S. Treasury bills through regulated channels • Securities held with qualified custodian • Full 1:1 backing established
Step 2: Custody & Verification
Third-party custodian holds treasuries • Regular attestations confirm backing • Segregated accounts protect assets
Third-party custodian holds treasuries • Regular attestations confirm backing • Segregated accounts protect assets
Step 3: Token Minting
Smart contract mints tokens representing treasuries • Each token = fractional claim on underlying • Supply matches treasury holdings exactly
Smart contract mints tokens representing treasuries • Each token = fractional claim on underlying • Supply matches treasury holdings exactly
Step 4: Yield Distribution
Treasury interest accrues to token • Distributed via rebase or value appreciation • Holders earn risk-free rate on-chain
Treasury interest accrues to token • Distributed via rebase or value appreciation • Holders earn risk-free rate on-chain
Key Innovation: Tokenized treasuries bridge TradFi and DeFi by bringing government-guaranteed yield on-chain. The blockchain adds transparency, 24/7 access, and composability—the treasury provides the underlying value.
Tokenized Treasury Landscape
major issuers bringing government bonds on-chain
Ondo Finance (OUSG/USDY)
Focus: Short-term treasuries
Yield: ~5% APY
Chains: Ethereum, Solana, others
Notable: Institutional-grade, BlackRock partnership
Focus: Short-term treasuries
Yield: ~5% APY
Chains: Ethereum, Solana, others
Notable: Institutional-grade, BlackRock partnership
Franklin Templeton (BENJI)
Focus: Money market fund
Yield: ~5% APY
Chains: Stellar, Polygon
Notable: First major asset manager on-chain
Focus: Money market fund
Yield: ~5% APY
Chains: Stellar, Polygon
Notable: First major asset manager on-chain
Mountain Protocol (USDM)
Focus: Treasury-backed stablecoin
Yield: ~5% APY (rebasing)
Chains: Ethereum, L2s
Notable: Permissionless, rebasing model
Focus: Treasury-backed stablecoin
Yield: ~5% APY (rebasing)
Chains: Ethereum, L2s
Notable: Permissionless, rebasing model
Backed Finance (bIB01)
Focus: Short-term treasury ETF
Yield: ~5% APY
Chains: Ethereum, Gnosis
Notable: Swiss-regulated, ETF wrapper
Focus: Short-term treasury ETF
Yield: ~5% APY
Chains: Ethereum, Gnosis
Notable: Swiss-regulated, ETF wrapper
Matrixdock (STBT)
Focus: Short-term treasury bills
Yield: ~5% APY
Chains: Ethereum
Notable: Singapore-based, accredited investors
Focus: Short-term treasury bills
Yield: ~5% APY
Chains: Ethereum
Notable: Singapore-based, accredited investors
OpenEden (TBILL)
Focus: T-bill vault
Yield: ~5% APY
Chains: Ethereum, Arbitrum
Notable: Real-time NAV, institutional focus
Focus: T-bill vault
Yield: ~5% APY
Chains: Ethereum, Arbitrum
Notable: Real-time NAV, institutional focus
Market Growth: Tokenized treasury TVL has grown from ~$100M to over $1B+ in 2023-2024. As TradFi institutions enter crypto, expect this market to expand significantly—potentially reaching tens of billions.
Use Cases for Tokenized Treasuries
how protocols and investors deploy treasury-backed tokens
Stablecoin Reserves
Back stablecoins with treasuries
Earn yield on reserves (not just hold)
Improve transparency and compliance
Example: RLUSD, some USDC reserves
Back stablecoins with treasuries
Earn yield on reserves (not just hold)
Improve transparency and compliance
Example: RLUSD, some USDC reserves
DAO Treasury Management
Park idle treasury in yield-bearing asset
Earn 4-5% on dollars held
Maintain liquidity for operations
Example: MakerDAO DSR backing
Park idle treasury in yield-bearing asset
Earn 4-5% on dollars held
Maintain liquidity for operations
Example: MakerDAO DSR backing
DeFi Collateral
Use as pristine collateral for borrowing
Earn yield while collateralized
Lower liquidation risk than crypto
Example: Lending protocol integrations
Use as pristine collateral for borrowing
Earn yield while collateralized
Lower liquidation risk than crypto
Example: Lending protocol integrations
Yield Optimization
Base layer for yield strategies
Stack DeFi yield on top of treasury yield
Risk-adjusted return improvement
Example: Vault strategies using OUSG
Base layer for yield strategies
Stack DeFi yield on top of treasury yield
Risk-adjusted return improvement
Example: Vault strategies using OUSG
Global Access
Non-US investors access US treasuries
No brokerage account needed
24/7 liquidity and settlement
Financial inclusion use case
Non-US investors access US treasuries
No brokerage account needed
24/7 liquidity and settlement
Financial inclusion use case
Institutional On-Ramp
Familiar asset for TradFi institutions
Compliant entry point to DeFi
Bridge conservative capital on-chain
Growing institutional adoption
Familiar asset for TradFi institutions
Compliant entry point to DeFi
Bridge conservative capital on-chain
Growing institutional adoption
Strategic Value: Tokenized treasuries are becoming the risk-free rate of DeFi. They provide the stable foundation that enables more complex yield strategies while maintaining compliance and transparency.
Tokenized Treasury Risk Assessment
understanding what can go wrong
Low Risk (Underlying Asset)
U.S. Treasuries = risk-free rate
Government-backed principal
No credit risk on bonds themselves
Liquid global market
U.S. Treasuries = risk-free rate
Government-backed principal
No credit risk on bonds themselves
Liquid global market
Medium Risk (Issuer/Custodian)
Counterparty risk to token issuer
Custodian bankruptcy exposure
Regulatory action against issuer
Redemption process complexity
Counterparty risk to token issuer
Custodian bankruptcy exposure
Regulatory action against issuer
Redemption process complexity
Higher Risk (Smart Contract)
Token contract vulnerabilities
Bridge exploits (if cross-chain)
Oracle manipulation potential
Upgrade/admin key risks
Token contract vulnerabilities
Bridge exploits (if cross-chain)
Oracle manipulation potential
Upgrade/admin key risks
Mitigating Factors
Choose regulated, audited issuers
Verify custody arrangements
Check attestation frequency
Understand redemption process
Choose regulated, audited issuers
Verify custody arrangements
Check attestation frequency
Understand redemption process
Risk Reality: The underlying treasury is safe—the risk layers are the issuer, custodian, and smart contract. A tokenized treasury from a regulated issuer with third-party custody is dramatically safer than algorithmic stablecoins, but not risk-free.
Tokenized Treasuries vs Alternatives
comparing yield options for stable capital
vs Traditional Treasuries
Same underlying asset
+ 24/7 access and liquidity
+ Global, permissionless
+ DeFi composability
– Counterparty risk to issuer
– Smart contract risk
Same underlying asset
+ 24/7 access and liquidity
+ Global, permissionless
+ DeFi composability
– Counterparty risk to issuer
– Smart contract risk
vs DeFi Lending (Aave/Compound)
Lower yield (treasury rate vs variable)
+ Sovereign backing, not crypto collateral
+ Stable yield, not utilization-dependent
+ No liquidation cascade risk
– Less yield optimization potential
Lower yield (treasury rate vs variable)
+ Sovereign backing, not crypto collateral
+ Stable yield, not utilization-dependent
+ No liquidation cascade risk
– Less yield optimization potential
vs Idle Stablecoins (USDC/USDT)
+ Earn 4-5% instead of 0%
+ Transparent backing
+ Productive capital
– Additional smart contract risk
– Issuer/custodian counterparty
+ Earn 4-5% instead of 0%
+ Transparent backing
+ Productive capital
– Additional smart contract risk
– Issuer/custodian counterparty
vs Metal-Backed ($KAG/$KAU)
Different purpose: yield vs store of value
Treasuries: dollar yield, inflation exposure
Metals: inflation hedge, no yield
Consider: Both in diversified allocation
Use case determines choice
Different purpose: yield vs store of value
Treasuries: dollar yield, inflation exposure
Metals: inflation hedge, no yield
Consider: Both in diversified allocation
Use case determines choice