Applicant information
1. Applicant Information
Entity Name: OpenEden Group
Address (Headquarters): 1 Kim Seng Promenade #11-01 Great World City
City, State, Postal Code: Singapore, 237994
Country: Singapore
Website: https://openeden.com/
Primary Contact Name: Jeremy Ng
Title: Co-Founder
Country: Singapore
Email: jeremy.ng@openeden.com
Telegram: @ly3333
2. Key Information
The First Native On-chain TBILL Vault
The OpenEden Tokenized U.S. Treasury Bill Fund (“TBILL Fund” or “Fund” or “Token Issuer”) is the first regulated U.S Treasury Bills Fund that is offered 24/7/365 on-chain through the OpenEden TBILL Vault (“OE TBILL Vault”). The OE TBILL Vault is deployed natively on Ethereum and Arbitrum offering a DeFi UI/UX while offering the most institutional-grade and compliant access to U.S. Treasury Bills (“T-Bills”) yield on-chain. Having launched the Fund in April 2023, The TBILL Fund has a 16 months live track record which ranks amongst the longest in the market. The Fund is also the only on-chain native vault that utilises smart-contract technologies for settlement.
A Robust Regulatory-First Approach for a Global Audience
OpenEden’s TBILL tokens (“$TBILL”) are issued by The TBILL Fund, which is a British Virgin Islands Financial Services Commission (“BVIFSC”) regulated professional fund established under the British Virgin Islands Securities and Investment Business Act 2010. The bankruptcy-remote TBILL Fund is managed by OpenEden’s affiliated entity, which is a Registered Fund Management Company regulated by the Monetary Authority of Singapore (“MAS”). The investment manager of the TBILL Fund operates under an investment mandate to invest in short-dated T-Bills. $TBILL tokens of the Fund can be offered to Non-U.S Professional Investors defined under BVI SIBA Act and to U.S Accredited Investors defined under U.S Securities Act of 1993 Rule 501a (the Fund had filed SEC Form D Notice to offer under Reg D 506c).
Institutional-grade Foundation with Best-in-Class Partners
The TBILL Fund’s portfolio of T-Bills are bought, sold and custodised through the Fund’s licensed Prime Broker, UK FCA registered StoneX Financial Limited, and custodised in the Prime Broker’s licensed sub-custodian, being BNP Paribas Bank, New York in segregated accounts. As the Token Issuer is a regulated fund managed by a regulated fund manager, there are stringent regulatory requirements including the appointment of an independent fund administrator to (i) provide independent daily valuation of the $TBILL token’s NAV; and (ii) participate as an independent multi-sig party for all fund asset transfer transactions as an additional safeguard against fraud. The Fund has also appointed KPMG as its tax advisor and is subject to annual audits on its balance sheet and financials. More recently, the TBILL Fund was awarded an “A-bf” Bond Fund Rating by Moody’s, the first of any tokenized T-BIlls product globally to receive an “investment-grade” credit rating. The “A” rating from Moody’s is a validation of OpenEden’s dedication to building a reliable primitive for the DeFi ecosystem to access tokenized T-Bills as a source of on-chain yields. Ernst & Young also completed an independent audit on the OE TBILL Vault’s critical processes and controls in relation to the TBILL Fund’s KYC/AML procedures, valuation methodologies and the Fund’s asset transfer and custody procedures and controls. OpenEden is proud to have achieved the second highest rating with no critical or high risk findings.
Truly Crypto-native, Transparent and 24/7/365 Real-time Access
$TBILL tokens can be minted instantly 24/7/365 on-chain via the OE TBILL Vault using USDC, and $TBILL tokens are held in the investor’s self-custodial wallet. The OE TBILL Vault platform offers real-time, instant on-chain minting of T-Bill backed tokens, thus removing settlement risks and allowing investors to earn yield from the point of minting till the point of redemption, maximising capital efficiency.
3. Expected APY
~5.02% Yield To Maturity (net of all fees as of 25 July 2024)
4. Underlying asset(s)
The Fund’s portfolio consists of mainly U.S. Treasury Bills with maturities capped at 6 months and a portion in overnight reverse repurchase agreements fully collateralized by U.S. Treasury Securities. The Weighted Average Maturity of the portfolio is under 50 days ( as of 25 July 2024 ).
5. Minimum/Maximum transaction size
| USDC | ||
|---|---|---|
| Minimum Initial Deposit | : | 100,000 |
| Minimum Subsequent Deposit | : | 1,000 |
| Maximum Deposit | : | None |
| Minimum Redemption Amount | : | 1,000 |
| Maximum Redemption Amount | : | None |
6. Current AUM for asset
| As of 25 July 2024 | ||
|---|---|---|
| Ethereum Vault | : | US$70,652,233 |
| Arbitrum Vault | : | US$5,236,630 |
| Total | : | US$75,888,863 |
7. Volume metrics
Approximately USDC 98,000,000 (including both deposits and withdrawals) in the last 12 months.
Proposal Summary
Brief outline of the requested allocation of Ethena’s Reserve Fund to your asset/product and benefit to Ethena.
Proposed Allocation: $68 million USDT total - $18 million USDT of Ethena Reserve Fund, $50 million USDT of USDe asset backing
Proposed Product: OpenEden $TBILL
As previously explained above in this RFP, the issuer of the $TBILL, being the TBILL Fund, is a registered professional fund (“Fund”) established under the British Virgin Islands Securities and Investment Business Act 2010 (“SIBA”) and regulated by the BVIFSC. The TBILL Fund is managed by AEC (as defined above), a wholly owned subsidiary of the OpenEden Group, which operates as a registered fund management company under MAS supervision. The TBILL Fund operates the OE TBILL Vault, a smart contract vault that provides investors with direct exposure to a pool of short-dated U.S. T-Bills and overnight reverse repurchase agreements through the minting of the $TBILL. The $TBILL is backed 1:1 by short-dated U.S. T-Bills and a small portion of U.S. Dollar (“USD”) held in bankruptcy remote segregated accounts in the Fund’s name. $TBILLs can be minted instantly 24/7/365, allowing investors to earn yield backed by the U.S. government on their USDC subscription at the point-of-mint itself, rather than having to wait up to T+2 business days as compared to traditional funds.
The OE TBILL Vault operates on a zero-trust protocol, ensuring that all transactions are fully atomic, automated, transparent and managed on-chain without manual intervention. The protocol smart contract dictates that $TBILL can only be minted in the presence of the underlying asset, USDC, thus ensuring each token is always backed by actual assets. This minimises reliance on trust, making our system more secure and transparent than traditional incumbents. The OE TBILL Vault does not have the capability to freely mint tokens, which significantly reduces the risk of unauthorised token creation.
The OE TBILL Vault is a permissioned protocol, which means that an investor has to meet specific criteria before the investor is eligible to hold $TBILL issued by the Fund. The OE TBILL Vault is currently only accessible to “Professional Investors’’ as defined under SIBA and to U.S. “Accredited Investors’’ within the meaning of Rule 501(a) of Regulation D promulgated under the U.S. Securities Act. $TBILL can only be minted and redeemed via the OE TBILL Vault by whitelisted wallets that have been fully onboarded after completing the Fund’s KYC/KYB process. As a permissioned token, $TBILL are transferable between whitelisted wallets.
The $TBILL is an EIP-20-compliant representation of an investor’s economic interest in the Fund. By depositing USDC and minting $TBILL, the investor will have legal rights to the redemption value of the net assets held by the Fund, proportional to the amount of $TBILL the investor holds relative to the total outstanding supply of $TBILL. The $TBILL minted by the investor are held in the investor’s whitelisted self custodial wallet.
Whitelisted investors are also provided with access to the investor dashboard visible on the OE TBILL Vault dApp. The dashboard provides the investor with a real-time view of their $TBILL balance and their realised and unrealised P/L. Please find the sample screenshot of the investor dashboard displayed below.
Investment strategy
The Fund aims to provide the highest possible level of income generation while maintaining liquidity and maximum safety of principal. Given these requirements, the Fund will be managed according to the following metrics:
- Target portfolio composition: A pool of short-duration U.S. T-Bills
- Target weighted-average maturity of portfolio: Less than 6 months
U.S. T-Bills’ credit quality is rated as follows:
- Moody’s: AAA
- Fitch: AA+
- S&P: AA+
Any securities held as safe custody assets by the Fund are deposited in StoneX Financial Ltd.’s sub-custodian, BNP Paribas New York. All investors are able to view the Fund’s portfolio holdings as seen below screenshot on the OE TBILL Vault dApp. The portfolio holdings are updated daily displaying the estimated yield-to-maturity (net of fees), the weighted average maturity, and the individual holdings.
Basics and background
1. How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?
An analysis of the Ethena’s Reserve Fund and backing assets show that USDT represents a significant amount of assets that are not productively generating yield to the Ethena protocol, as compared to BTC and ETH (via funding rate arbitrage), ETH LSTs (via staking yields) and sDAI (via RWA yields).
USDT is a widely used stablecoin across many blockchain ecosystems, yet it is unproductive as a reserve asset given that the yield generated from its underlying assets are all absorbed by its issuer, Tether. Our proposed product, OpenEden $TBILL, can be a viable alternative to USDT that generates yield safely and transparently.
As covered in the Proposal Summary section above, OpenEden $TBILL generates its native yields from an underlying pool of short-duration U.S. T-Bills, and those yields are passed on to holders. The product can add on to further yield diversification of Ethena’s Reserve Fund and backing assets, as well as an overall yield boost not previously provided by holding USDT. In addition, the yield generated from the U.S. T-Bills have low volatility, and are uncorrelated to basis yield and the overall performance of crypto markets, thus adding another layer of diversification.
Furthermore, having exposure to USDT, or other stablecoins, inherently brings on potential stablecoin de-peg risks, as observed from prior de-peg situations suffered by USDC and USDT. The underlying assets of OpenEden $TBILL are held off-chain as short-duration U.S. T-Bills, thus eliminating stablecoin de-peg risks by having no exposure to stablecoins.
2. Please describe any experience your firm has in working with decentralised organisational structures.
The OpenEden team has been recently selected as one of six tokenized T-Bills service providers (out of more than thirty applicants) by the Arbitrum Foundation as part of the Arbitrum Stable Treasury Endowment Program. The selection process was vetted by an expert committee that focused on product structuring, quality, regulatory compliance and transparency. The selection of OpenEden as a service provider is testament to the superior product offering, and strong commitment towards supporting DAO communities and to provide high-quality treasury management services.
Furthermore, our Co-Founder Eugene has been investing and supporting crypto-native projects since 2017, and advisor to HFT firm DWF Labs has since amassed more than 700 crypto projects with a number of DAO foundations. Through his extensive network of crypto-native connections, he would be able to bring much value and expertise in any formal DAO engagement. He was also a core member of a relatively small DAO called DAOvergence.
OpenEden has onboarded multiple DAOs as users and thus is familiar and comfortable working with the often unique structures associated with DAOs.
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 total value locked (“TVL”) of the $TBILL is currently approximately US$75,888,863 (as of 25 July 2024).
Legal design
1. Do holders of your product have any shareholder, investor, creditor or similar rights?
Investors who purchase $TBILL have legal rights governed by the terms of their subscription/purchase of $TBILL as set out in the Fund’s offering documents and T&Cs.
The primary rights of a $TBILL investor are the legal and contractual rights to the net redemption value of the underlying assets held by the Fund, and such rights/claims, including in the event of a distribution of the Fund’s assets where the Fund is being wound up, are ranked ahead of the management shareholders of the Fund via a legally enforceable subordination deed.
For the avoidance of doubt, management shareholders do not have any economic participation rights to the assets of the Fund as management shares are no par value non-participating, non-redeemable, voting shares.
2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.
The $TBILL issuer, being the TBILL Fund, is a registered professional fund incorporated in the British Virgin Islands and regulated by the BVIFSC. The Certificate of Recognition will be provided via private email.
The investment manager of the Fund, being Adam Eve Capital Pte Ltd (“AEC”), is a registered fund management company incorporated in Singapore and regulated by the MAS.
As a regulatory requirement for registered professional funds, the Fund has to lodge a Private Placement Memorandum and Subscription/Redemption Agreement with the BVIFSC that documents all the contractual rights of $TBILL holders. The Fund also has to notify the BVIFSC of any appointments of service providers to the Fund.
Every tokenholder has legal and contractual rights to the redemption value of the net assets held by the Fund, proportional to the amount of $TBILL the investor holds relative to the total outstanding supply of $TBILL.
3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?
The Fund’s assets are segregated from the OpenEden Group companies, chiefly AEC (the investment manager), OEL (the technology service provider). No operational capital of AEC or OEL are commingled with the Fund’s assets.
As per relevant regulatory requirements, the Fund holds its assets with independent and regulated custodians and/or institutions in its own name and not in the name of any other OpenEden Group entity, ensuring proper segregation of assets from the operating accounts of the Fund Manager and Technology Service Provider. Digital wallet transfers from wallets held with licensed custodians are also subject to independent third-party multi-signatory approval from the Fund’s fund administrator to ensure additional control over the Fund’s assets.
Each $TBILL holder’s rights are set out in the Fund’s offering documentation and they have legal and contractual rights to the net redemption value of the underlying assets held by the Fund, and such rights/claims are ranked ahead of the management shareholders of the Fund via a legally enforceable subordination deed. Management shareholders do not have economic participation rights to the underlying assets held by the Fund. All terms are documented in the Private Placement Memorandum (provided in Supplementary documents section).
The following excerpts below are extracted from StoneX Financial Limited’s custody services contract with the Fund.
Any securities which StoneX holds as safe custody assets for their clients will be deposited via their sub-custodian network. The sub-custodian(s) which StoneX use and their credit ratings are identified in the following table:
| Sub-custodian | Standard & Poor’s Rating | Moody’s Rating |
|---|---|---|
| BNP Paribas S.A | A+ as of 25th April 2022 | Aa3 as of 5th July 2022 |
Under the terms of the custody agreement(s) with StoneX’s sub-custodian(s), each sub-custodian will segregate in its books and registers any clients’ safe custody assets from their own securities. StoneX’s sub-custodian(s) will not have security or similar rights enabling it to dispose of clients’ safe custody assets except to satisfy obligations incurred by clients, or for payment for services related to the clients’ safe custody assets, meaning that clients’ safe custody assets will not be commingled with StoneX’s assets or exposed to the performance of StoneX’s assets.
In providing the custody service, StoneX is subject to the oversight and supervision of its regulator, the Financial Conduct Authority. The arrangements which StoneX has put in place with its sub-custodian(s) give effect, in particular, to the requirements of the Financial Conduct Authority’s CASS Sourcebook, under which StoneX has a regulatory obligation to ensure that any clients’ safe custody assets deposited with a sub-custodian are identifiable separately from its own assets and from the assets of its sub-custodian(s), for the purpose of ring-fencing clients’ assets in order to safeguard their ownership rights.
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.
Verichains Lab, 29 March 2023:
Hacken, 31 October 2023:
2. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
Yes, only users who have fully cleared KYC and satisfied the Fund’s onboarding requirements will be whitelisted. Only whitelisted addresses can interact with the TBILL Vault dapp and hold $TBILL. Transfers are only permissible between whitelisted addresses. Additionally, the vault has a blacklisting feature, where addresses identified as blacklisted are prohibited from transferring or interacting with the OE TBILL Vault, including subscribing for or redeeming $TBILL tokens.
3. Is the asset/product present on several chains? Are there any cross chain interactions?
The product is available on Ethereum,Arbitrum and XRPL networks. There are currently no cross-chain interactions between $TBILL on the three networks, though there may be plans for such integrations in the future.
4. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.
$TBILL tokens have been accepted as eligible collateral on Hidden Road Partners through a tri-party agreement between OpenEden, Zodia Custody and Hidden Road Partners. $TBILL is also accepted as collateral in several OTC Market Makers. Discussions are currently ongoing for $TBILL to be used as collateral on lending/borrowing DeFi protocols, perpetual exchanges and others.
5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
All actions which require admin intervention (such as asset transfers between venues, modification of the USDC deposit address, etc) are protected by multi-sig or multi-approval mechanisms to prevent any single admin user from executing any actions individually. The Fund Administrator is also part of the list of multi-sig approvers to provide external third-party oversight over such actions.
Importantly, the OE TBILL Vault operates with a strict protocol where $TBILL tokens can only be minted in the presence of the underlying asset, USDC. This process is entirely managed on-chain, distinguishing it from other systems where manual token issuance might occur. The vault does not possess the authority to freely mint tokens; it can only mint $TBILL tokens when equivalent USDC deposits are confirmed, ensuring that token creation is always backed by actual assets. This key feature minimises trust reliance, making our system inherently more secure and transparent compared to traditional incumbents in the space.
6. Is there any custom logic required for your token/product? If so please give any details.
No, the $TBILL is a standard ERC-20 token.
Supplementary Documents
The following documents will be provided via private email to governance@ethenafoundation.com:
- HLI BVIFSC Certificate of Recognition
- Private Placement Memorandum (Non-U.S.)
- Subscription and Redemption Agreement (Non-U.S.)
- Investment Management Agreement
- Subordination Deed