Ethena Allocation Template for RWA/Reward-Accruing Assets

Summary

Entities seeking an allocation from the Reserve Fund or from the USDT backing of USDe, for their RWA/yield-bearing/reward-accruing asset, must complete the following template for submission to Ethena Governance.

The Reserve Fund assets currently sit at $45.4m, viewable here.

The USDT backing of USDe currently stands at ~$235m, or 7% of the backing of USDe, viewable here.

The Ethena Foundation will make final decisions on those proposals in a public and transparent manner.

The formal submission deadline for the first batch of applications is EOD August 12th.

Note: If any information requested below is sensitive or confidential, it can be shared privately and confidentially with the Foundation.

Please contact governance@ethenafoundation.com for more information.

Proposal Template

Applicant information

  1. Name
  2. Key Information
  3. Expected APY
  4. Underlying asset(s)
  5. Minimum/Maximum transaction size
  6. Current AUM for asset
  7. Volume metrics

Proposal Summary

Brief outline of the requested allocation of Ethena’s Reserve Fund to your asset/product and benefit to Ethena.

Basics and background

  1. How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?
  2. Please describe any experience your firm has in working with decentralized organizational structures
  3. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?

Legal design

  1. Do holders of your product have any shareholder, investor, creditor or similar rights?
  2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.
  3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?

Smart Contract/Architecture

  1. How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports.
  2. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
  3. Is the asset/product present on several chains? Are there any cross chain interactions?
  4. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.
  5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
  6. Is there any custom logic required for your token/product? If so please give any details.
10 Likes

This is a great move to increase the capital efficiency of Ethena and, ultimately, provide more value to USDe and ENA holders.

Mountain Protocol will be presenting a proposal in the coming days.

2 Likes

Thank you for sharing this application template. Could you share more details regarding any submission deadline, and email for sharing private/confidential information?

Applicant information

Name: Securitize Markets, LLC (as distributor of BlackRock USD Institutional Digital Liquidity Fund Ltd. (“BUIDL ” and on behalf of Blackrock Financial Management, Inc., as investment adviser for BUIDL)

Key Information

  1. Expected APY
  • The current fund yield will closely track the overnight repo rate minus the fund annual fee of 0.50%. As of 7/18/2024, the current yield after all fees is approximately ~4.88%. The yield will accrue to the holder of record every calendar day, as of 3:00 PM, and will be distributed monthly in-kind directly to the investor’s blockchain address on or about the 1st business day of the following month.
  1. Underlying asset(s)
  • The Fund will invest 100% of its total assets in cash, U.S. Treasury bills, notes or other obligations that mature in three months or less from the settlement of the purchase in both the primary and secondary markets. The Fund may invest in variable and floating rate instruments, and transact in securities on a when-issued, delayed delivery or forward commitment basis.

  • The Fund will only purchase securities that present minimal credit risk as determined by the investment adviser.

  • The Fund may also invest in one or more government money market funds (“Underlying BlackRock Funds”) managed by the investment adviser or an affiliate that invest in the same types of securities. For purposes of satisfying the Fund’s strategy of investing 100% of its total assets in cash and the other types of securities described above, investments in such underlying BlackRock Funds will be considered as if they are invested in cash and such securities.

  1. Minimum/Maximum transaction size
  • USD $5 million minimum first investment with $250,000 minimum follow-ons. The fund does not have a maximum transaction size.
  1. Current AUM for asset: Etherscan found here

  2. Volume metrics: Etherscan found here

Proposal Summary

Brief outline of the requested allocation of Ethena’s Reserve Fund to your asset/product and benefit to Ethena.

  • Securitize is committed to developing solutions in the digital assets space that help solve real problems, specifically by bringing digital asset securities to different markets for treasury management, portfolio diversification, and secured ecosystem utility.

  • Securitize is the leader in tokenizing real-world assets, driving the compliant digitization of financial assets through the blockchain. And now, in partnership with BlackRock, one of the world’s largest asset managers, we have BUIDL - the BlackRock USD Institutional Digital Liquidity Fund.

  • Since its launch in March 2024, BUIDL has become the fastest growing and largest fund of its kind, reaching over half a billion dollars in AUM in less than 4 months.

  • As the first fund to reach this milestone, BUIDL is paving the way in enabling players across the industry to more effectively diversify reserves and manage their treasuries. The utility of the token can be seen across funds, DAOs, stablecoins and other yield-bearing products, as these entities trust BUIDL to back part of their reserves.

  • BUIDL can enable Ethena’s reserve fund to invest in a treasury-backed product as a low-risk diversification play, while gaining the efficiencies of holding blockchain-based reserves in a product that earns stable yield, without ever leaving the blockchain ecosystem.

  • Securitize, as the distributor of BUIDL, proposes an allocation of $34M of the $45M of the reserves. $18M from USDT in Ethena’s treasury would instantly begin to earn yield on the balance if transferred to BUIDL. Additionally, if the $15M in DAI is not being used to yield farm or is returning highly variable yield due to staking that locks the asset, moving the balance to BUIDL would enable the Ethena to earn a stable yield, reduce protocol risk, and retain DeFi native interoperability via USDC subscription and redemption.

  • Supplementary Docs:

    1. Steakhouse Financial Report on BUIDL

    2. USDC Smart Contract Press Release

    3. Hidden Road Press Release

    4. FalconX BUIDL Press Release

    5. Dune Dashboard - BUIDL

    6. Data room - PPM, FAQs, pitch deck - available upon request

Basics and background

1. How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?

  • Securitize is the leader in tokenizing real-world assets, driving the compliant digitization of financial assets through the blockchain. And now, in partnership with BlackRock, one of the world’s largest asset managers, we have BUIDL - the BlackRock USD Institutional Digital Liquidity Fund.

  • Since its launch in March 2024, BUIDL has become the fastest growing and largest fund of its kind, reaching over half a billion dollars in AUM in less than 4 months.

  • BUIDL can enable Ethena’s reserve fund to invest in a treasury-backed product as a low-risk diversification play, while gaining the efficiencies of holding blockchain-based reserves in a product that earns stable yield, without ever leaving the blockchain ecosystem.

  • By trusting Blackrock, Ethena can reduce counterparty risk; Blackrock has a long history of successfully managing money for institutional clients, including corporate and public pension plans, and manages $10.5T in assets globally.

  • Additionally, Ethena will be able to experience efficiency in value movement, as BUIDL will allow for USDC subscriptions and redemptions to access liquidity on demand.

2. Please describe any experience your firm has in working with decentralized organizational structures.

  • Securitize is the leader in tokenizing real-world assets, driving the compliant digitization of financial assets through the blockchain. As a top 10 transfer agent, Securitize has worked with a considerable list of crypto-native firms, notably working through what KYC processes and requirements look like for DAOs. We have also proven out onboarding processes for DAOs, notably through our relationship with Arbitrum DAO as part of the STEP grant program.

  • This, and other DeFi-native relationships, has given Securitize insight into various strategies for onboarding decentralized organizational structures to be approved for investing in tokenized securities. While we cannot advise on legal structures for entities, we have seen others onboard via US corporations, non-US corporations, trusts, and other legal entity structures.

  • Securitize is also integrated with several additional networks, including Ethereum, Polygon, Avalanche, and XDC, to issue products on these chains.

3. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?

  • The BVI entity for BUIDL has ~$519M as of 7/22/2024 (see current AUM on etherscan here).

  • As of 16 July 2024, BlackRock has been entrusted to manage $10.5 trillion across equity, fixed income, alternatives, multi-asset, and cash management strategies for institutional and retail clients. BlackRock collectively supports millions of people around the world by working alongside institutions and financial advisors as they contribute to the financial well-being of those who depend on them. BlackRock’s cash management AUM is ~$800B.

Legal design

1. Do holders of your product have any shareholder, investor, creditor or similar rights?

  • BUIDL will offer investors non-voting, participating Class A Shares, having no par value, issued in the form of digital tokens.

2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.

Legal:

  • The Fund is a limited company incorporated under the laws of the British Virgin Islands on 18 September 2023, to operate as a professional fund. The Fund is a “professional fund” within the meaning of the Securities and Investment Business Act, 2010 (“SIBA”) and accordingly Shares in the Fund are only being offered to and will only be issued to “professional investors” within the meaning of SIBA.

  • The Articles are governed by the laws of the British Virgin Islands. The Subscription Documents relating to the Fund are governed by the laws of the state of Delaware. The Subscription Documents provide for disputes to be determined by the courts of the Supreme Court, State of New York, New York County and of the US District Court for the Southern District of New York.

  • US Regulatory: The Fund is not registered as an investment company and, therefore, is not required to adhere to certain investment policies under the Company Act in reliance on the exemption provided in Section 3(c)(7) of the Company Act with respect to offers made to U.S. persons. As part of the Fund’s responsibility for the prevention of money laundering, the Fund may require a detailed verification of a Shareholder’s identity, the identity of any beneficial owner underlying an investment in the Fund and the source of payment of such investment.

Contractual:

  • There are three primary legal documents associated with investing in BUIDL:
  1. The Master Subscription Agreement (“MSA”) (signature required)
  2. Fund Subscription Agreement (“FSA”) (signature required)
  3. Private Placement Memorandum (“PPM”) (for reference only)
  • Both the MSA and FSA require investor signature prior to investing; the PPM does not.

  • The MSA and FSA are binding agreements. They request information and representations from the investor to determine eligibility for investing in the Fund. They also outline the terms of the Fund that the investor must accept in order to invest. These documents need to be signed by legal signers or authorized representatives of the legal entity/Foundation/DAO (likely multiple individuals). Each legal signer must create a securitizeID account.

  • The PPM outlines detailed information about the Fund such as the investment objective, structure, legal considerations, risks, and other important information to consider before investing.

3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?

  • Ethena’s assets would be bankruptcy remote from the fund’s entity and its officers / key contributors. The transfer agent issues securities at the direction of the issuer and does not own or custody the assets. Should Securitize enter bankruptcy, the role of transfer agent could be transitioned to another provider who could redeem shares with the fund. The fund could also decide to close and return funds to shareholders if a successor transfer agent could not be engaged.

  • Additionally, the custodial relationship of the Fund with BNY Mellon is covered under the U.S. Securities Investor Protection Act.

Smart Contract/Architecture

1. How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports.

  • Securitize’s smart contracts have had periodical technical audits conducted over time. In the past, this was done by CoinFabril; however, our latest audit was performed by Certik. The most recent report can be shared upon request. Securitize is also a SOC1 compliant organization.

  • The smart contract code for BUIDL has also been reviewed in detail by several partners as part of the launch, including one partner who has conducted an independent audit. Additionally, Halborn audited the USDC <> BUIDL swap smart contract.

2. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?

  • The project is permissioned. Primary and Secondary trading are limited to whitelisted investors passing a KYC/AML onboarding process.

  • Each person seeking to invest in the shares must be, among other things, (i) an “accredited investor” and (ii) either (x) a “qualified purchaser” or a “knowledgeable employee,” in each case as defined under applicable U.S. federal securities laws or (y) a non-U.S. person that is outside of the United States at the time it acquires Shares.

  • Each prospective Shareholder will be required to agree that no shares, nor any interest therein, will be transferred (other than to a Whitelisted Account) without the prior written consent of the Board of Directors.

  • The Transfer Agent operates a “whitelist” comprising investors or prospective investors who are allowed to subscribe for or acquire shares from Shareholders without needing further suitability checks or anti-money laundering verifications. Transfers between these accounts are generally allowed at any time, even when the Fund isn’t accepting new subscriptions or redemptions, providing flexibility within a controlled environment.

  • The Transfer Agent controls the permissions for whitelisting through operations that require the usage of keys that are managed via multi-permission processes using Fireblocks. More about the technical details for the identity management and whitelisting mechanisms can be found here.

3. Is the asset/product present on several chains? Are there any cross chain interactions?

  • BUIDL is currently solely deployed on the public Ethereum blockchain.

4. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.

  • At the moment, BUIDL tokens are not being used in any other protocols other than the public Ethereum blockchain.

5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?

  • Securitize’s Trust Service component manages the permissioning for the contract. The roles involving certain permissions (MASTER for contract upgrades, ISSUER for daily issuances of tokens for new subscriptions, TRANSFER AGENT for transfer agent operations like burns or freezes) are handled via multipermissioned wallets using Fireblocks infrastructure and are under the control of Securitize.

  • A more in depth overview of trusted roles and admin management can be found here.

6. Is there any custom logic required for your token/product? If so please give any details.

  • BUIDL is ERC20 compatible, so no custom logic should be required.

  • However, the token has extended functionality though Securitize’s DS protocol, which deviates from the ERC20 standard. The extended functionality enabled by this protocol can be found in this series of articles.

Hey all, this is Fig from Superstate. We’re thrilled to respond to Ethena’s proposal and are excited to present a comprehensive application with all the details in the coming days.

We’ve prioritized this proposal and are currently awaiting approval from the Forum.

Stay tuned!

1 Like

Awesome to see this from the Ethena Governance team! Paxos International team is excited to share a response to Ethena’s proposal. We look forward to a potential partnership!

Great that Ethena is considering RWA for reserve. DigiFT, as a Singapore MAS licensed RWA exchange, is offering US treausries and money market fund, to provide safe yield for on-chain reserve management. Happy to know more about details and deadline!

1 Like

Very exciting initiative, At Frictionless Markets we would be humbled to manage the Ethena Treasury via our market-beating Frictionless Institutional Cash US Treasury Fund.

Our application has been provided directly to the foundation.

Great initiative! Fully believe that RWAs are an excellent diversifier for the Reserve Fund adding value to USDe and ENA holders. Matrixdock team is excited to respond to the proposal and submit our application for STBT

Applicant information

1. Name: Matrixdock STBT
2. Key Information:

Key Product Information
Short-term Treasury Bill Token (STBT) is designed for accredited investors seeking US treasury yields with their stablecoin holdings. STBT currently yields approximately 4.8-5.0% APY on average (as of Jul 2024). Each STBT is pegged to 1 USD and backed by US treasury securities with maturities within 6 months, reverse repurchase agreements collateralized by US treasury securities and cash not exceeding 5% of NAV.
T-bills will be bought with the highest yield in tranches, laddering maturity dates such that there will be access to potential liquidity to support any redemptions without selling any T-bills.
Matrixdock will distribute yield daily through the rebase of STBT in holders token balances. The total STBT supply is equivalent to the Net Asset Value (NAV) of the underlying asset portfolio, which equates to the sum of the market value of US T-bills, Repos (overnight loans fully-backed by T-bills) and cash.

Background
Matrixdock is a digital asset platform that provides access to Real World Assets (RWA) through tokenization. It is a brand fully owned by Matrixport, an all-in-one crypto financial service platform that offers custody, asset management, brokerage and RWA tokenization services. Matrixport currently custodies and manages approximately USD 6 billion of crypto assets. Its client base includes more than 5000+ miners, high-networth individuals, family offices, hedge funds, ventures, protocols and foundations across Asia, Europe, Australia and offshore countries.

Transparency
STBT is the first RWA tokenization project integrated with Chainlink Proof-of-Reserves (PoR) service, with Chainlink’s best in class real-time oracle feed, the integration ensures that STBT is sufficiently backed by US Treasury securities and verifiable 24/7. The STBT contract included Chainlink PoR verification logic to ensure STBT underlying reserves are greater than or equal to the total token supply at all times. Chainlink STBT PoR Feed

3. Expected APY: 4.8-5%
4. Underlying asset(s): T-Bills with maturity under 6 months, Reverse Repos and Cash
5. Minimum/Maximum transaction size: $100k minimum mint, $10k minimum redemption
6. Current AUM for asset: $39.8M as of 1 Aug 2024
7. Volume metrics

Proposal Summary

Brief outline of the requested allocation of Ethena’s Reserve Fund to your asset/product and benefit to Ethena.

Basics and background

1. How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?

STBT enables Ethena’s Reserve Fund to diversify its allocation to Matrixdock, a trusted RWA issuer with a proven track record of operating the STBT product for 1.5 years. With over $5M interest distributed to STBT holders, and TVL ATH of over $120M, Matrixdock has demonstrated its ability to mint and redeem large sums of capital without any issues. The volume of transactions LTM is over $800M (including deposits, redemptions, on-chain transactions). As one of the prominent Asia based RWA issuers, Matrixdock also provides diversification in geographical and regulatory risks, where most other T-Bill token issuers are based in other parts of the world.

2. Please describe any experience your firm has in working with decentralized organizational structures

Matrixdock has strong involvement in the DeFi ecosystem, and we are continuously engaging with partners, many of which are in various stages of decentralization. Additionally, our Transparency Panel consists of several key industry players, some of whom had past and current experiences working in DAO structures.

3. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?

$39.8M as of 1 Aug 2024

Historical Highest TVL $123.6M on 22 Aug 2023

Legal design

1. Do holders of your product have any shareholder, investor, creditor or similar rights?

Holders of STBT tokens have rights to a debt obligation of the token issuer. Holding of STBT Tokens is redeemable at an amount equivalent to one U.S. dollar per STBT Token of U.S. dollar-pegged Digital Assets less any applicable Fees, trading losses reflecting the value (at the time of redemption) of a pro rata amount of the Underlying Assets (at the time of redemption) and/or transactional costs incurred in connection with sales of Underlying Assets that the Affiliate Entity deems necessary to effect your redemption, subject to additional redemption restrictions.

Product T&C documents will be provided.

2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.

STBT is issued under an orphan SPV structure commonly adopted in asset-backed securities issuance by traditional financial organizations, which has the highest degree of credit enhancement. In this legal set-up, Matrixdock plays the role of a service provider and Matrixdock counterparty risk is fully removed because both the token issuance/redemption and the underlying asset management are conducted from this Orphan SPV which itself is a bankruptcy-remote trust.

3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?

This orphan trust structure effectively removed the STBT entities (token issuer and asset holder) from the balance sheet of Matrixdock, and the STBT entities would not be subject to any claims from Matrixdock creditors even in the unlikely event that Matrixdock is insolvent. Given that the STBT entities are special purpose vehicles that only conduct the STBT program, these entities incur no liabilities other than those obligations toward the STBT token holders, which are the only obligations of the STBT entities. As described above, the number of STBT tokens issued will always be less than the dollar value of the underlying reserves held by the STBT entities. With these factors combined, the STBT entities are bankruptcy remote.

Smart Contract/Architecture

How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports.

STBT’s smart contract has been audited by BlockSec and Zellic.io. Audit Report

1. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?

Whitelist mechanism: The STBT Token can only be minted/redeemed/transferred/held solely by account-holders that have been pre-approved by Matrixdock to satisfy KYC/AML/Accredited Investor requirements.

Whiteslited users can issue a request to whitelist additional addresses via the STBT website by signing a on-chain transaction using the new address or conduct a satoshi test.

2. Is the asset/product present on several chains? Are there any cross chain interactions?

wSTBT is present on Ethereum mainnet and Arbitrum One. Currently, there is a bridge contract between the two chains that uses Chainlink CCIP technology to execute cross-chain transfers of wSTBT.

The contracts have been audited by Blocksec. Contract address: WSTBTBridge | Address 0xC6C1706bF9b034FA8FE5591769261A8b19edeD06 | Etherscan 2

3. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.

STBT has been used in various DeFi protocols in several functions, including being the underlying assets for stablecoins, yield-generating products and collateral for loans.

At Verified USD foundation, USDV stablecoin is minted using STBT as the underlying RWA token, providing yield to ecosystem participants. At T-Protocol and Term Finance, STBT has also been used in collateralized loans, enabling capital efficiency through its strong composability with lending platforms.

4. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?

The permission framework of the STBT contract is broadly classified into three distinct roles: ControllerRole, IssuerRole, ModeratorRole. The proposal is to designate a single smart contract with a timelock function as the controller contract for all three roles. All STBT administrator activities are carried out via this controller contract, with each operation subject to two stages of proposing and executing, and the execution must conform to the delay specified by the timelock. The overall structure is as follows:

Timelock contract: There is a single external control smart contract with a timelock function as the controller contract, through which all STBT administrator activities are carried out. Each operation must go through two stages of proposing and executing, with execution conforming to the 4-hour delay specified by the timelock.

The timelock contract is the only admin, and the security of the STBT contract is normalized to the security of each role involved in the timelock controller: proposer, executor, and canceller. The canceller is one self-hosted hardware wallet that is authorized to cancel an operation scheduled during the timelock period by calling the timelock controller.

5. Is there any custom logic required for your token/product? If so please give any details.

STBT utilizes the whitelist mechanism to determine whether transmission and reception of addresses are authorized.

ERC1400 standard is split into several modular sub-standards:

  • ERC1410 defines partially fungible tokens where balances of tokens can have an associated metadata
  • ERC1594 defines transfer restrictions and core security token functionality
  • ERC1643 defines document management functionality.
  • ERC1644 defines controller operation functionality

In particular, the STBT token contract implements the ERC1594 transfer restrictions specs, and the ERC1644 controller operations specs.

Dear Ethena Community,

The M^0 Foundation will soon be submitting a proposal for Ethena’s Reserve Fund.

Expanding the collateral pool will be a crucial step for Ethena, and the adoption of $M will significantly improve stability and optimize returns for the ecosystem.

At M^0, we have created $M as a crucial building block for on-chain finance. $M is not a token wrapper of a fund (or fund of funds). $M is also not a wrapper of commingled (often regional) bank deposits.

$M is a governance framework sustaining a distributed set of minters and collateral storages, intending to be the best on-chain representation of the dollar risk-free rate, continuously compounding to Approved Earners without any additional smart contract risk.

We believe in the power arising from the composability of DeFi, which is why we have designed $M to be the raw material for innovative augmentative use cases such as Ethena’s.

More to come!

Applicant Information
Name: Arca Capital Management, LLC is an institutional financial services firm building products that utilize and invest in digital assets. The Company blends the time-tested attributes of finance with the transparency, immutability, and efficiency of the blockchain to create institutional-caliber products designed to allow investors into the digitally powered global economy.

Key Information:
● Expected APY: The current fund yield will closely track the overnight repo rate minus fees. As of 6/30/2024, the current 30-day SEC Yield is 5.36%. The yield will accrue every calendar day and will be distributed quarterly in kind directly to the investor’s blockchain address on or about the last business day of the end of each quarter. A standard calculation of yield introduced by the SEC is a Fund’s 30-day SEC Yield, which is a Fund’s hypothetical annualized income as a percentage of its assets. This yield reflects interest earned after deducting the Fund’s expenses over the most recent 30-day period. The calculated hypothetical income will differ (potentially significantly) from the Fund’s actual returns. As a result, income distributions may be higher or lower than the calculated 30-day SEC Yield. Ultimus, as the Fund Administrator, calculates this yield; it is unaudited and net of fee. The current unsubsidized 30-day SEC Yield is 5.36% as of 6/30/2024.

● Underlying asset(s): The Arca US Treasury Fund (the “Fund”) is the first of its kind—a closed-end fund registered under the Investment Company Act of 1940 (the “40 Act”) that issues its shares as digital asset securities transferable through the Ethereum Blockchain. The Arca US Treasury Fund provides investors and enterprises access to a managed portfolio consisting primarily of U.S. Government bills and notes, traditionally one of the least volatile U.S. asset classes, that is subject to the regulatory requirements under the 40 Act. Under normal circumstances, the Fund will invest at least 80% of its assets in a portfolio of U.S. Treasury securities, which include bills, bonds, and notes issued by the U.S. Treasury (“Treasury Securities”). Assets not invested in Treasury Securities may be held in cash or cash equivalents (including registered money market funds that operate in accordance with Rule 2a-7 under the 1940 Act). Under normal circumstances, the Fund will have a maximum average portfolio duration of zero to eight years and a dollar-weighted average portfolio maturity of between zero and five years.

â—Ź Minimum/Maximum transaction size: USD $1000.00 minimum first investment. The fund does not have a maximum transaction size.

â—Ź Current AUM for the asset: $404,675.55 as of 6/30/2024.

â—Ź Volume metrics: Etherscan found here

Proposal Summary
Arca is dedicated to pioneering innovative solutions within the digital assets space, addressing real-world challenges by introducing digital asset securities to diverse markets for treasury management, portfolio diversification, and secured ecosystem utility. Our commitment to excellence and forward-thinking approach ensures that we remain at the forefront of the financial technology landscape.

As the leader in tokenizing real-world assets, Arca drives the compliant digitization of financial assets through state-of-the-art blockchain technology. One of our flagship offerings is the Arca US Treasury Fund, a product that exemplifies our expertise and dedication to creating robust financial solutions.

Launched on July 6, 2020, the Arca US Treasury Fund is the first registered fund to issue shares as digital asset securities. This pioneering fund is setting new standards in the industry, enabling entities to diversify reserves and manage treasuries more effectively. The utility of the token spans various funds, DAOs, Stablecoins, and other yield-bearing products, with numerous entities placing their trust in the Arca US Treasury Fund to support part of their reserves.
The Arca US Treasury Fund provides Ethena’s reserve fund with a treasury-backed product as a low-risk diversification strategy. This approach allows for holding blockchain-based reserves that earn stable yields without leaving the blockchain ecosystem. By integrating this product, Ethena can enhance its financial resilience and optimize its capital allocation strategies.
As the advisor of the Arca US Treasury Fund, Arca proposes a strategic allocation of Ethena’s $45M reserves to our fund. Transferring USDT from Ethena’s treasury to the Arca US Treasury Fund would immediately start earning yield, leveraging the stability and reliability of U.S. Treasury Bills. Additionally, reallocating DAI from yield farming or highly variable yield staking to the Arca US Treasury Fund would provide Ethena with stable yields, reduced protocol risk, and maintained DeFi native interoperability via USDC subscription and redemption.

Basics and Background

How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?

Allocating to ArCoin will significantly enhance diversification by incorporating an asset backed by the most secure and liquid financial instruments—U.S. Treasury Bills. This will substantially reduce risk exposure and increase the overall stability of Ethena’s Reserve Fund. Additionally, the efficient yield provided by ArCoin will improve the capital efficiency of the fund, offering a reliable return on investment with minimal volatility. By integrating ArCoin, Ethena can achieve a more balanced and resilient investment portfolio, mitigating the inherent risks associated with more volatile assets.

Please describe any experience your firm has in working with decentralized organizational structures:

Our firm boasts extensive experience within decentralized finance (DeFi) ecosystems, having successfully collaborated with multiple DeFi platforms to integrate ArCoin. We have established strong partnerships with leading DeFi protocols and possess a proven track record of efficiently managing decentralized organizational structures. Our team is adept at navigating the complexities of decentralized governance and regulatory compliance, ensuring seamless integration and robust performance. We pride ourselves on our ability to innovate and adapt within the rapidly evolving DeFi landscape, consistently delivering value and security to our partners and clients.

What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?

ArCoin currently manages approximately $405,000 in assets under management (AUM). All assets are held in trust and are fully backed by U.S. Treasury Bills, ensuring a high level of security and stability for our investors. Although our current AUM might seem modest, it reflects our strategic approach to growing our asset base with utmost caution and diligence. The backing by U.S. Treasury Bills highlights our commitment to maintaining the highest standards of financial integrity and security. This robust foundation is designed to support future scaling, allowing us to handle larger investments securely and efficiently.

Legal Design

Do holders of your product have any shareholder, investor, creditor, or similar rights?

Holders of ArCoin possess investor rights comparable to those of traditional securities. These rights include entitlement to interest payments generated by the underlying U.S. Treasury Bills and the right to redeem their ArCoin holdings in compliance with regulatory requirements. This legal framework ensures that investors are protected and can confidently rely on the security and predictability of their returns.

Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable:

ArCoin is meticulously structured as a digital security, issued and managed by our firm under the stringent supervision of the U.S. Securities and Exchange Commission (SEC). The product complies fully with SEC regulations, ensuring high investor protection and regulatory oversight. Our legal and contractual structuring is designed to provide maximum transparency and security to investors, with clear terms regarding interest payments and redemption procedures. This rigorous compliance with regulatory standards underscores our commitment to maintaining the highest levels of integrity and trustworthiness in our financial products.

How would the proposed allocation be treated in a bankruptcy or insolvency situation?

In the event of bankruptcy or insolvency, the underlying U.S. Treasury Bills backing ArCoin would be liquidated, and the proceeds would be distributed to ArCoin holders. This process ensures that the investors’ capital is protected to the maximum extent possible, given U.S. Treasury Bills’ high liquidity and security. The structured liquidation and distribution mechanism provides a robust safeguard for investors, ensuring that their investments are secure even in adverse financial situations.

Smart Contract/Architecture

How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports:

We have conducted a comprehensive smart contract audit with Quantstamp. Copies of this audit report are available upon request and demonstrate the security and robustness of our smart contract architecture. These audits are critical in ensuring the reliability and security of our smart contracts, providing investors with confidence in the integrity of our technological infrastructure.
Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?

Yes, ArCoin is a permissioned asset. We manage user identities through a robust KYC/AML process, ensuring compliance with regulatory standards. Blacklisting and whitelisting features are implemented to prevent unauthorized transactions and ensure that only verified users can participate. This rigorous identity management protocol is essential for maintaining the security and integrity of our ecosystem, preventing fraudulent activities, and ensuring compliance with legal and regulatory requirements.

Is the asset/product present on several chains? Are there any cross-chain interactions?

Currently, ArCoin is listed on the Ethereum blockchain. However, we are actively exploring cross-chain interactions to enhance liquidity and accessibility. Interoperability with other chains will be achieved through trusted bridge protocols, ensuring secure and seamless asset transfers. Our commitment to expanding cross-chain capabilities reflects our dedication to increasing the utility and accessibility of ArCoin, allowing it to integrate more effectively within the broader blockchain ecosystem.

Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem:

At this time, the applicable ArCoin tokens are not being used in any other protocols. This approach ensures that we maintain a controlled and secure environment, focusing on the integrity and reliability of our own ecosystem without external dependencies.

How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?

Trusted roles and admins are managed through multi-signature wallets and stringent access controls. Key aspects requiring user trust include the integrity of the underlying asset management, compliance with regulatory standards, and the security of smart contracts. Regular audits and transparent reporting reinforce this trust, ensuring that our systems operate with the highest levels of security and integrity. This rigorous management framework is crucial for maintaining investor confidence and ensuring the reliable operation of our financial products.

Is there any custom logic required for your token/product? If so, please give any details:

Yes, custom logic is implemented to manage the periodic interest payments to ArCoin holders, the redemption process, and compliance with regulatory requirements. This logic ensures that the product operates seamlessly, providing consistent returns and adhering to legal standards. The implementation of custom logic is essential for ensuring the efficient and reliable operation of our financial products, delivering predictable and stable returns to investors.

Arca Disclosures
Important Information
Arca Capital Management, LLC, a wholly owned subsidiary of Arca Labs LLC, serves as adviser to the Arca U.S. Treasury Fund, distributed by UMB Distribution Services, Member FINRA/SIPC. Arca and UMB are not affiliated.

An investor should carefully consider the investment objectives, risks, charges, and expenses of the Arca U.S. Treasury Fund before investing.This and other information is available in the Fund’s prospectus, which should be reviewed carefully prior to investing. To obtain a prospectus, please call 1-888-526-1997.

Investors may not be able to sell their shares at the time or in the quantity of choosing regardless of how the Fund performs. The Funds Annual Operating Expense Ratio, as reflected in the current prospectus is 3.22%, however, Management has agreed to an expense cap of .75% through an expense limitation agreement valid until April 30, 2024. For more details relating to the fund’s expenses, please review the prospectus.

No assurance can be given that the Fund will achieve its investment objective, and investment results may vary substantially over time and from period to period. An investment in the Fund involves risk including loss of principal. An investment in the Fund is suitable only for investors who can bear the risks associated with limited liquidity in the shares and the uncertainty of emerging technologies, and should be viewed as a long-term investment. Other risks specifically associated with the Arca U.S. Treasury Fund are detailed in the prospectus and include no history of operations risk, conflict of interest risk, interval fund risk, no minimum amount of proceeds risk, fund closure risk, liquidity risk, tax related risks, credit and non-payment risk, interest rate risk, portfolio management risk, market risk, call risk, valuation risk and issuer risk.

The Arca U.S. Treasury Fund is one of the first registered funds to offer digital asset securities and there are additional risks associated with this feature of the fund, including regulatory risk, liquidity risk, emerging technology risk, operational and technology risk, and risks specifically associated with the Ethereum blockchain. There is the risk that management may be unable to successfully use blockchain technology to validate ownership and transfer ArCoin. For details regarding all of the risks described above, please review the prospectus.

Arca Capital Management, LLC, a wholly owned subsidiary of Arca Labs LLC, serves as adviser to the Arca U.S. Treasury Fund, distributed by UMB Distribution Services, Member FINRA/SIPC. Arca and UMB are not affiliated.

Dear Ethena Community,

Homium is excited to submit a proposal for the Ethena Reserve Fund as well in coming days. H-tokens represent an unprecedented use case for tokenized RWAs enabling institutional exposure to residential real estate for the first time in a highly scalable way, with direct societal impact. Homium acts as a bridge for institutional digital asset and tokenized RWA adoption on the Avalanche blockchain, and the adoption of H tokens as a base asset allows for new portfolio diversification, low correlation to financial markets, inflation protection, and improvement to portfolio Sharpe ratios. More details to follow.

The deadline for the first batch of submissions has now passed. The Risk Committee will spend the next week deliberating the proposals and arriving at a recommended allocation for the Reserve Fund. Thank you all for your applications. We will post a more detailed summary once the Committee has arrived at a decision next week.

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Applicant Information

1. Name: Franklin Templeton Digital Assets
2. Key Information: We are proposing allocation to the BENJI Token, which is a share of the Franklin OnChain U.S. Government Money Fund (the “Fund”) issued and recorded on blockchain, from the Ethena Reserve Fund or from their USDT (Tether’s stablecoin) backing of USDe (Ethena’s synthetic dollar coin).
3. Expected APY: The 7-day current yield of the Fund as of June 30, 2024 was 5.16%, and 5.14% as of July 31, 2024. For more current information, including daily updates for 7-day current yield, please visit the FOBXX webpage via our website. Income received from the Fund and estimated expenses are accrued daily. Dividends from net investment income are normally declared and distributed daily; these dividends may be reinvested or paid daily to shareholders.
4. Underlying asset(s): The Fund invests 99.5% of its total assets in Government securities, including U.S. Treasury Bills, Federal Home Loan Bank, and Federal Farm Credit Bank, as well as cash and repurchase agreements collateralized fully by Government securities or cash.
5. Minimum/Maximum transaction size: The minimum investment size is $5mm. There is no maximum transaction size, however, it’s encouraged to work with the Fund’s portfolio management team for very large sizes to ensure maximum optimization.
6. Current AUM for asset: The AUM for the Franklin OnChain U.S. Government Money Fund was $401.98 million as of June 30, 2024, and $416.36 million as of July 31, 2024.
7. Volume metrics: Over the last 12 months, the Fund has processed over 1,830 transactions. This does not include daily dividend reinvestments.

Proposal Summary

Under this proposal, a portion of Ethena’s Reserve Fund would be invested in the Franklin Onchain U.S. Government Money Fund, which is the world’s first U.S. registered money market mutual fund offered and issued on blockchain in tokenized form. An investment in the BENJI Token, which represents one share of the Fund, can help diversify Ethena’s Reserve Fund into a steady, income-generating asset that seeks to provide capital preservation, and its liquidity preservation characteristics present a unique opportunity for Ethena’s Reserve Fund. Similar to the objective of stablecoins, the Fund seeks to maintain a stable $1.00 share price (NAV), which it has maintained since inception. The Fund’s 7-day current yield is 5.14% as of July 31, 2024, with a 20 basis point net expense ratio.

The Fund invests at least 99.5% of its assets in Government securities, cash and repurchase agreements collateralized fully by Government securities or cash.

The Fund invests in:

  • U.S. government securities, which may include fixed, floating and variable rate securities.
  • Repurchase agreements which are agreements by the Fund to buy Government securities and then to sell the securities back on an agreed upon date (generally, less than seven days) at a higher price, which reflects prevailing short-term interest rates.

Please refer to the Fund’s Prospectus and SAI for more detailed information (see the end of the proposal for links).

As the longest tenured U.S. regulated money market fund offered and issued on blockchain with the only web3 native store of ownership record, we believe the BENJI Token is uniquely positioned to be Ethena’s largest reserve allocation.

Basics and Background

1. How will this investment improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?

The BENJI Token is a digital asset security that represents a share of a regulated money market mutual fund — the Franklin OnChain U.S. Government Money Fund. An investment in the BENJI Token provides an opportunity for Ethena’s Reserve Fund to practice sound treasury management, while also generating attractive income. The BENJI Token is a competitive solution for treasury fund diversification, while also acting as an additional source of income generation through competitive yield. Any income generated by investing in the BENJI Token can provide additional capital to aid in the development of new products, technology, or other initiatives deemed important to Ethena.

The BENJI Token is designed to provide transparency by using blockchain technology to process transactions and record share ownership. The Fund’s transfer agent maintains the official record of share ownership via a proprietary blockchain-integrated system that utilizes public blockchains as the source of truth for recording transactional activity, known as the Benji platform. Ensuring the safety and stability of treasury funds is of the utmost importance and, as a result, many invest in stablecoins to try to preserve capital. Stablecoin providers invest the underlying assets across many different investment types to generate return but rarely pass that return to holders of the stablecoin. In the case of the BENJI Token, we believe that Ethena’s Reserve Fund can not only receive the benefit of capital preservation but can also earn any income generated from the Fund’s holdings through an asset that lives natively on chain.

As mentioned earlier in the Proposal Summary, the Fund invests 99.5% of its total assets in Government securities, cash and repurchase agreements collateralized fully by Government securities or cash.

While BENJI Token subscriptions and redemptions are typically done in fiat, namely USD, investors in the BENJI Token are not required to utilize a bank account. We provide access to Zero Hash on the Benji platform to provide US Dollar Coin (USDC) to USD conversions. Zero Hash conversion services allow investors to convert USDC to USD, which in turn is transferred to their Franklin Templeton account and used to seamlessly purchase BENJI Tokens. Investors in the Fund may also use Zero Hash services to convert USD proceeds from the sale of BENJI Tokens to USDC.

We would like to advocate for the Ethena Reserve Fund (or their USDT backing of USDe) to liquidate a portion of its reserves and invest in the BENJI Token. Please see Appendix 1 – Say Hello to Benji – for more information on the Fund and the process for investing.

The Fund is registered as an investment company under the Investment Company Act of 1940, and performs the transfer agent transaction and share ownership recordkeeping function via public blockchains. It’s important to note that there is no personal identifiable information publicly available on the blockchain, just transaction-level data. Because the Benji platform records transaction records and Fund ownership via a public blockchain, Ethena would have increased transparency and assurance that their assets are in good stead. Ethena can interact with their account at any time using our Benji Institutional interface and provide a look through to their holdings using their preferred block explorer.

Please see below for a preview of our institutional interface supporting the BENJI Token.

The Fund has maintained a NAV of $1.00 since inception, having provided price stability, and is also required by law to provide quarterly public disclosure of all holdings. While minor, many of the largest stablecoins have faced price volatility in the peg of their stablecoin.

Additionally, the Fund generated a 7-day current yield of 5.16% as of June 30, 2024, and 5.14% as of July 31, 2024. This yield is distributed daily directly to investors in their digital wallet, providing a yield-generating investment with a stable NAV. To see current 7-day yield figures for the Fund, updated on a daily basis, please visit the FOBXX webpage via our website.

Please refer to Appendix 1 - Say Hello to Benji for more information on the BENJI Token and process of investing.

2. Please describe any experience your firm has in working with decentralized organizational structures.

Our team has relationships with some of the largest Decentralized Autonomous Organizations (DAOs) in the digital asset ecosystem. Currently in our Digital Asset Investment portfolios, we own several governance tokens including many of the top governance tokens by market cap.

3. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?

As of June 30, 2024, Franklin Templeton managed total assets of US$1.6 trillion, and $1.4 trillion as of July 31, 2024. The Franklin OnChain U.S. Government Money Fund had over US$401 million under management as of June 30, 2024, and over $416 million as of July 31, 2024.

Legal Design

1. Do holders of your product have any shareholder, investor, creditor or similar rights?

The Fund is a series of Franklin Templeton Trust, which is an open-end investment company under the Investment Company Act of 1940 Act (the “1940”), which confers certain rights to all shareholders, including, among other rights, the right to: (i) vote for the board of trustees; (ii) approve the Fund’s investment management agreement; and (iii) vote on other Fund-specific matters.

2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.

Franklin Templeton Trust is registered under the 1940 Act as an open-end management investment company, consisting of one series — the Franklin OnChain U.S. Government Money Fund. The Fund intends to be a “Government money market fund,” as such term is defined in or interpreted under Rule 2a-7 under the Investment Company Act of 1940 and is registered with the U.S. Securities and Exchange Commission. For more information, please contact our team or visit the Fund’s Prospectus (please see link to the Fund’s Prospectus at the end of the proposal).

3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?

The Fund’s assets are maintained by a qualified custodian and are separate from holdings of the Franklin Templeton company, manager or adviser assets. An investment in the Fund is not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency of the U.S. government. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed by, any bank. However, it is important to note that the Fund intends to be a “government money market fund” as such term is defined in or interpreted under Rule 2a-7 under the Investment Company Act of 1940 (1940 Act). The Fund invests at least 99.5% of its total assets in Government securities, cash and repurchase agreements collateralized fully by Government securities or cash.

Smart Contract/Architecture

1. How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports.

Our smart contract code has been audited by Trail of Bits as of September 2023. A detailed report can be accessed via Appendix 2 - Trail of Bits Smart Contract Code Audit. Updates to our smart contact code were made in May 2024 and audited by Ancilia. A detailed report can be accessed via Appendix 3 – Ancilia Smart Contract Code Audit Update.

2. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?

Yes, users of the Benji platform are run through typical KYC/AML verification and are whitelisted inside the contract (using ERC-20 roles).

3. Is the asset/product present on several chains? Are there any cross chain interactions?

The Fund currently uses the Stellar network as the primary public blockchain and Fund investors will initially hold their wallets on the Stellar network. However, the Fund may also use other blockchain networks, including Polygon, Aptos, Avalanche and Arbitrum, for certain accounts upon request and subject to eligibility, although one or more of those other blockchain networks may not be available at certain times. Please stay tuned for additional network availability.

Fund shares may be transferred in peer-to-peer transactions from one shareholder wallet to another shareholder wallet (or potential shareholder wallet) within any approved blockchain network or between any two approved blockchain networks. Shares of the Fund may be transferred using the Institutional Web Portal. A complete record of these transactions is viewable on the blockchain due to being recorded by the transfer agent’s blockchain-integrated recordkeeping system. Before transferring Fund shares, you (as the transferor) and the potential transferee must each have an active, permissioned (i.e., “whitelisted”) wallet registered with the Fund’s transfer agent on any approved blockchain network. You may use the Institutional Web Portal to authorize the transfer agent to transfer your shares to a transferee that you identify using the public key for the transferee’s wallet. There is no minimum number of shares required to process a transfer. The transfer agent is responsible for ensuring that the potential transferee in a peer-to-peer transaction has a permissioned wallet on an approved blockchain network.

  • Although you may provide instructions to transfer Fund shares at any time, transfers are processed at the Fund’s next NAV calculation time after we receive your transfer request in proper form through the Institutional Web Portal.
  • Notwithstanding the fact that the Fund processes peer-to-peer transfers after the next calculated NAV following the receipt of a transfer request in proper form, the Fund does not require that peer-to-peer transfers occur at NAV.
  • A whitelisted investor must be aware of other whitelisted investors who are available to enter into peer-to-peer transfers and neither the Fund nor its transfer agent will play any role in connecting transferors and transferees.
  • Peer-to-peer transfers do not constitute a public trading market and Fund shares will not be listed for trading on any such market, including a national securities exchange or an alternative trading system operating by a registered broker that is subject to Regulation ATS.
  • To the extent investors engage in peer-to-peer transfers at a price other than NAV, such transfers may, in certain circumstances, have legal implications for those investors under the federal securities laws or otherwise.
  • The transfer agent cannot ensure the reliability of any transfer of other assets negotiated in connection with peer-to-peer transfers other than transfers of Fund shares that a shareholder instructs the transfer agent to make.
  • Blockchain network(s) on which a peer-to-peer transfer is recorded may impose transaction fees to validate the transaction on the network. These fees are typically paid in the native digital asset for the operation of the blockchain network and will be the responsibility of the investment manager or its affiliates; Fund investors will not be required to purchase any native digital asset to transact on the network.

You should consult your own tax advisor regarding your particular circumstances, and about any federal, state, local and foreign tax consequences in connection with the transfer of Fund shares.

4. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.

The Fund currently uses the Stellar network as the primary public blockchain and Fund investors will initially hold their wallets on the Stellar network. However, the Fund may also use other blockchain networks, including Polygon, Aptos, Avalanche and Arbitrum, for certain accounts upon request and subject to eligibility, although one or more of those other blockchain networks may not be available at certain times. Please stay tuned for additional network availability.

5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?

During the onboarding process, Franklin Templeton obtains a list of authorized users sanctioned by the client (i.e., know-your-customer/anti-money laundering performed on all entities and entity persons). Franklin Templeton then sends out an invitation to each authorized user that will allow them to establish their username and password and set up multi-factor authentication using Okta Verify and WebAuthn (FIDO2 Compliant Devices - includes Windows Biometrics with TPM, iOS Passkeys onboarded with QR Codes, etc.).

For internal users, regular access control reviews are completed across all technical services used by the Digital Assets Technology team on a regular basis, or if there is a change in job function. There are varying levels of access based on job function and division of responsibilities as well. Access is granted based on the principle of least privilege, meaning a user is given the minimum levels of access – or permissions – needed to perform his/her job functions.

6. Is there any custom logic required for your token/product? If so please give any details.

For tracking, no custom logic is required – it’s ERC-20 compatible. Since user-managed wallet functionality is currently disabled, all operational logic (such as creating purchases and liquidations) has to go through our Institutional Website. There are additional custom functions available such as querying pending transactions.

References: Due to posting limitations, we will follow up with the following Appendix Items over email.

  • Franklin OnChain U.S. Government Money Fund Prospectus
  • Appendix 1 – Say Hello to Benji
  • Appendix 2 – Trail of Bits Smart Contract Code Audit
  • Appendix 3 – Ancilia Smart Contract Code Audit Update
  • Appendix 4 – Franklin Templeton Corporate Governance Documents
  • Appendix 5 – Franklin OnChain U.S. Government Money Fund SAI
  • Appendix 6 – Franklin OnChain U.S. Government Money Fund Annual Report

What are the risks?

All investments involve risk, including loss of principal. The Fund’s yield may be affected by changes in interest rates and changes in credit ratings. Blockchain is subject to a rapidly-evolving regulatory landscape in the U.S. and in other countries, which might result in security, privacy or other regulatory concerns that could require changes to the way transactions in the shares are recorded. These and other risks are discussed in the Fund’s prospectus.

You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

Investors should carefully consider a Fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial professional, call us at (800) DIAL BEN/342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.

© 2024 Franklin Distributors, LLC. Member FINRA/SIPC. All rights reserved.