After reviewing the proposal and the product summary for USDtb, Steakhouse provides the following analysis and recommendation:
Key Considerations:
Asset Composition and Stability: USDtb is primarily backed by Blackrock’s institutional-grade tokenized U.S. treasury fund product, BUIDL. A reserve of USDC (roughly 10% of the backing portfolio) is maintained for immediate liquidity during redemptions. As BUIDL has already been approved by the Risk Committee and Ethena for use in the Reserve Fund, USDtb does not materially increase the credit risk or stability of Ethena.
Structural Independence: USDtb’s issuance is designed to be bankruptcy remote, with clear delineation between its operational entities:
- Issuer: Pallas (BVI) Ltd, a BVI business company with limited liability
- Supporting entity: Pallas Foundation, a Cayman Islands foundation.
- Fund: Pallas Fund (BVI) Ltd, a BVI business company incorporated with limited liability.
- Investment manager: Athene Management Limited, an affiliate of Ethena Labs.
Steakhouse has not specifically reviewed the governing documents relating to the underlying entities but recognizes that this structure is common for similar products in the industry and assuming best practices, is suitable for this product.
Transparency and Governance: USDtb operates with transparency protocols, including:
- Publicly accessible on-chain wallets.
- Monthly NAV reports provided by MG Stover.
Holders of USDtb do not have governance rights over Pallas entities.
Liquidity Management: Minting and redemption operations for USDtb are satisfactory, with instantaneous settlement supported by BUIDL’s underlying liquidity vehicle with Circle and a significant reserve of USDC.
Smart Contract Security: The USDtb mint and redeem contracts have undergone audits by Pashov Audit Group, Quantstamp, and Cyfrin, with no high- or medium-level findings. A Code4rena contest further validated the smart contract code.
Compliance Measures: USDtb adheres to KYC protocols. Only whitelisted users from permitted jurisdictions can mint or redeem USDtb.
Conclusion and Recommendation:
Given the high-quality asset backing, established legal and structural framework, and audit results, USDtb appears to be a low-risk candidate for inclusion in the USDe backing assets and Reserve Fund. However, as the product is newly launched and its operational practices remain relatively untested, Steakhouse recommends a phased deployment approach. This strategy allows for cautious integration while monitoring the product’s performance and scalability over time