Applicant information
1. Name: Backed (the brand name of Backed Finance AG, parent company and tokenizer, and Backed Assets (JE) Limited, licensed securities issuer)
2. Key Information:
Backed specializes in tokenizing publicly traded securities. Backed issues MiFID II compliant structured products - bTokens - directly onto blockchains which are tracker certificates collateralized 1 to 1 by an underlying asset. bTokens are directly linked to the underlying asset, ensuring a connection between the real-world asset and the token counterpart. When you hold a bToken, you are the legal owner of our product. Token holders have the primary claim to the collateral value of the product. bTokens are issued under an approved EU prospectus, meaning they are retail-grade financial products.
We offer a variety of investment products and have the capability to tokenize most publicly traded securities. For this proposal, we believe bIB01, bERNA and bZPR1 are the most relevant. The Final Terms for all of these products can be found via the links.
If the Ethena Foundation selects Backed as a provider, we are eager to collaborate with the foundation to tokenize any ETF or security deemed suitable for the protocol’s treasury diversification, if such a product is not already offered by us.
3. Expected APY:
Figures as of August 12th 2024
Backed IB01 $ Treasury Bond 0-1yr bIB01 - 5.09%
Backed ERNA $ Ultrashort Bond bERNA - 5.30%
Backed ZPR1 $ 1-3 Month T-Bill bZPR1 - 5.05%
Performance of bIB01 over a 90 day period via Steakhouse’s Tokenized Security Dashboard
4. Underlying asset(s):
Figures as of August 12th 2024
| Name | Issuer of Underlying | AUM [USD] | YTM [%] | Average Maturity [Years] |
|---|---|---|---|---|
| bIB01 | Blackrock iShares | 8.9 Billion | 5.06 | 0.33 |
| bERNA | Blackrock iShares | 1.2 Billion | 5.31 | 0.64 |
| bZPR1 | State Street | 530 Million | 5.30 | 0.09 |
5. Minimum/Maximum transaction size:
For both issuance and redemption of existing products: Minimum 5000 USD, no maximum. We would seek a guarantee for a minimum purchase of $5M USD to issue a new dedicated product.
6. Current AUM for asset:
It’s important to note primary market liquidity is linked to the underlying asset.
All bTokens - $27.3M
bIB01 - $9M outstanding - Underlying AUM $8.9 Billion
bERNA - New product - Underlying AUM $1.2 Billion
bZPR1 - New product - Underlying AUM $520 Million
7. Volume metrics:
$100M+ across 180+ transactions for all bTokens
For bIB01, $83M across 150 transactions.
Proposal Summary
1. How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?
The addition of Backed’s tokenized fixed-income products to Ethena’s Reserve Fund will provide a low-risk, stable source of yield generation. Assets like bIB01, bZPR1, and bERNA offer consistent, predictable returns through their underlying exposure to government bonds and investment-grade corporate debt. The AUM of the underlying assets is very large, with deep liquidity. This reliable yield can be reinvested into other parts of Ethena’s ecosystem, supporting the growth and development of new protocols, applications, and services. Additionally, bIB01 supports instant redemptions on-chain, currently around $10M via the Angle Transmuter for very low fees. Backed is committed to expanding instant liquidity for fixed-income bTokens through new partnerships.
2. Please describe any experience your firm has in working with decentralized organizational structures
Our product design means that bTokens are permissionless bearer assets. This makes them excellent for use within decentralized finance. Our tokens are currently enabled within MorphoBlue, and used as collateral by Angle Protocol to collateralize stablecoins. Our tokenized Nvidia tracker, bNVDA, is trading on INX, a registered ATS in the US. PWN.xyz recently enabled our tokens to be used for P2P lending contracts. Numerous blockchain organizations, including Arbitrum, Gnosis, and Aragon, employ our tokens as treasury management tools. There are many new decentralized projects currently integrating bTokens, bringing real-world yield on-chain in the most flexible way possible.
3. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?
Currently, there are over $27M USD of bTokens outstanding, the value varies with issuances and redemptions. The total transaction volume of bTokens is over $100M USD. Historical Highest AuM $50M.
Legal design
Please note, our prospectus and other legal documentation can be found here.
1. Do holders of your product have any shareholder, investor, creditor or similar rights?
Holders of bTokens are the legal owners of our structured products. The blockchain is the primary ledger in which ownership is defined. Holders of bTokens have the primary claim to the collateral value.
The structured product is directly linked to the underlying asset, ensuring a connection between the real-world asset and the token counterpart. This can be viewed in the Final Terms of any of our products. As our products are issued under an approved EU prospectus, risks are clearly defined, and the products are retail-grade.
When a user buys bTokens, they enter into a three-way agreement between themselves, Backed, and Security Agent Services AG. This Security Agent is obligated to act in the interest of the token holder in any instance where a complaint is lodged against Backed or if we go bankrupt. In the event we go bankrupt - and to be clear, this isn’t something we expect to happen - The Security Agent takes control of the custody accounts and liquidates the assets in favor of the token holders.
The underlying assets are owned by our special-purpose vehicle, Backed Assets (JE) Limited, to ensure there is no comingling of user funds and to keep them separate in the event of bankruptcy. Underlying assets are held securely with regulated Swiss custodian banks.
2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.
bTokens are structured products - tracker certificates to be precise. They are bearer instruments pegged to the price of an underlying collateral. They are issued by Backed Assets (JE) Limited, incorporated in Jersey Channel Islands. Tokens are issued under license by the JFSC, the Jersey Financial and Securities Regulator. The issuer is also AML-licensed and regulated in Jersey.
In addition to the Jersey regulation, Backed Finance AG is the parent company of Backed Assets (JE) Limited and is incorporated in Switzerland. Assets are tokenized following the Swiss DLT Act framework. bTokens are MIFID financial products by virtue of having an approved EU prospectus, filed with the Liechtenstein FMA.
3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?
All Backed products are bankruptcy remote. bTokens are issued by an SPV, which is legally separated from Backed Finance AG, the tokenizer and the operator of the employment activity. A 1:1 ratio of underlying assets is maintained at all times and legally must be adhered to. The underlying assets are held with regulated Swiss custodian banks. An appointed security agent has the authority to seize the assets on behalf of token holders in case there is any deviation from the commitments the issuer has made or in a bankruptcy event. In a bankruptcy or insolvency situation, Security Agent Services AG take control of the custody accounts and liquidates the assets in favor of the token holders.
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.
We have had 5 smart contracts audits conducted with Omega. The audits are publicly available on our github.
2. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
All bTokens are by default permissionless. Users need to go through KYC/AML to mint and redeem directly with Backed, but they can be freely transferred on the secondary market.
3. Is the asset/product present on several chains? Are there any cross-chain interactions?
Backed tokens are launched on 8 blockchains, Ethereum, Polygon, Arbitrum, Avalanche, Gnosis, Fantom, BSC, and Base.
4. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.
a. Backed was approved as an issuer as part of the Arbitrum STEP program, with bIB01 being chosen as the asset used for the diversification of their treasury. bTokens are used by other organizations as treasury management tools, such as Gnosis and Aragon among others.
b. bTokens are used by Angle Protocol as collateral for their stablecoins USDA and EURA. Due to this, some bTokens can be redeemed and swapped for USDA, USDC, and EURA all on-chain.
c. bTokens are enabled on MorphoBlue, and can be used as collateral for loans.
d. bTokens have been integrated into PWN.xyz, enabling P2P lending.
e. As bTokens are permissionless, they might also be used in other DeFi protocols. There are a few in stealth currently looking to launch in the next few months.
5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
a. All aspects related to collateral management are governed by the Board of the issuer. All banking operations require multiple signatories, which vary according to the value of the collateral and other factors.
b. Crypto operations are secured by several overlayed systems, which include MFAs, MPCs, hardware wallets, and more. The issuer does not disclose the security measures which are used.
6. Is there any custom logic required for your token/product? If so please give any details.
No
Disclaimers
Not for the distribution to any U.S. Person or any person or address in the United States.
Backed DOES NOT sell its tokens to U.S. Persons or for the account or benefit of U.S. Persons, and tokens are not marketed, offered, or solicited in the U.S. or in any other prohibited jurisdiction.
For a full list of prohibited and restricted countries and review of legal documentation, please visit https://www.assets.backed.fi/legal-documentation
The Backed Assets (JE) bIB01 is a tracker certificate issued as an ERC-20 token, which tracks the price of the iShares $ Treasury Bond 0-1yr UCITS ETF. Backed Finance AG and its subsidiary Backed Assets (JE) Limited are not affiliates of or licensed by BlackRock Inc, BlackRock Fund Advisors and any of its affiliates (“BlackRock”). BlackRock is not responsible in any way for bIB01 or any Backed products.
The Backed Assets (JE) bERNA is a tracker certificate issued as an ERC-20 token, which tracks the price of the iShares $ Ultrashort Bond UCITS ETF. Backed Finance AG and its subsidiary Backed Assets (JE) Limited are not affiliates of or licensed by BlackRock Inc, BlackRock Fund Advisors and any of its affiliates (“BlackRock”). BlackRock is not responsible in any way for bERNA or any Backed products.