Introduction

The OpenEden Treasury Bills TBILL Vault ("TBILL Vault") is a smart contract vault that provides investors with direct exposure to a pool of short-dated U.S. Treasury Bills (“U.S. T-Bills”) through the minting of the TBILL token, which is backed 1:1 by U.S. T-Bills and a small portion of U.S. Dollar (“USD”) held as reserves for liquidity purposes. The TBILL token token issuer is a registered professional fund (“Fund”) regulated by the British Virgin Islands Financial Services Commission (“Token Issuer”) and the underlying U.S. Treasury Bill assets are managed by a registered fund management company regulated in a tier-1 jurisdiction.

TBILL token holders will receive a return on their capital that reflects the returns generated by the underlying U.S. T-Bills portfolio held by the Fund. At any given time, the Fund will hold a portfolio of U.S. T-Bills and USD with designated regulated on-chain and off-chain custodians.

Stakeholders

The TBILL Vault has four key stakeholders:

Investor

The Investor subscribes for TBILL tokens by depositing USDC into the TBILL. In exchange, the Investor receives TBILL tokens, which they self-custody in their private wallets, ensuring they retain control and ownership over their TBILL tokens. The Investor will redeem their TBILL tokens for USDC from the TBILL Vault.

Token Issuer

Hill Lights International Limited, the Token Issuer, is a professional fund established under the British Virgin Islands Securities and Investment Business Act 2010.

Investment Manager

Adam Eve Capital is a registered fund management company regulated by the Monetary Authority of Singapore with an investment mandate for short-dated U.S. T-Bills. The sole purpose of the Investment Manager is to invest the Fund’s assets in segregated accounts with tier-one, regulated, and qualified custodians.

Fintech Service Provider

OpenEden Labs Pte Ltd, the developer of the TBILL Vault, is a financial technology company and not a regulated entity, depository, bank, or credit union.

Why T-Bill Exposure On-chain

End of the easy-money era

To prevent runaway inflation, the U.S. Federal Reserve raised its benchmark interest rate aggressively throughout 2022 and 2023, pushing up yields on U.S. T-Bills to above 5%. The move cast a pall over risk assets, with investors selling off everything from equities and bonds to crypto tokens. That reduction in risk appetite also spilt over into DeFi, with Total Value Locked falling more than 75% from its peak in 2022. As demand from borrowers fell, returns for lending out crypto assets on major DeFi platforms, such as Aave and Compound, have also dropped to as low as 1%.

Unsustainable DeFi yield farms

The DeFi yield farming frenzy of the past few years saw investors hopping from one protocol to another in search of ever-higher yields, which were paid out in those protocols’ native tokens. But many yield farming opportunities were never going to be sustainable, given the number of protocols with large or unlimited token supplies – not to mention dubious utility. The high reward rates they paid out were also tied to the market value of their protocol tokens, which soared during the bull run. All that came to an abrupt end during the market crash in 2022, causing reward rates to fall in tandem.

Risky DeFi credit offerings

Under-collateralised lending protocols – regardless of whether they involve real-world assets or crypto-native assets – face several risks, including credit risk, legal complexity, and an over-reliance on third parties to conduct due diligence. Furthermore, many of these protocols are neither compliant nor regulated. The 4% excess returns (versus the U.S. risk-free rate) delivered by under-collateralised products are also a poor risk-return tradeoff – especially in a rising interest rate environment.

Large idle stablecoin supply

Despite the collapses of 3AC, Terra, and FTX, the total supply of stablecoins has remained steady. But the subsequent flight to safety saw many stablecoin holders taking shelter in self-custody, bluechip DeFi protocols, and third-party custodians perceived to be secure. Anecdotal evidence suggests that a substantial portion of these stablecoins remain unallocated, resulting in significant opportunity costs for stablecoin holders.

Benefits of on-chain T-Bills exposure

Given the current DeFi landscape, there is a gap to be filled for crypto-native investors looking to earn a safe and transparent return on their stablecoin assets. As real world assets with stable returns such as U.S. T-Bills have always been a traditional off-chain investment asset, the OpenEden TBILL Vault addresses this gap by enabling on-chain access to U.S. T-Bills, which are:

• AA+ S&P / Aaa Moody’s rated U.S. sovereign risk

• Highly liquid, U.S. T-Bills trades more than $100 billion daily

• Short duration, portfolio has weighted-average maturity of less than 3 months

With the Federal Funds rate expected to stay elevated, U.S. T-Bills remain an attractive option to Web3 investors who do not have easy access to this asset class. The TBILL Vault provides a DeFi user experience that allows investors to invest their USDC in a single transaction – seamlessly and instantaneously. Investors will be able to enjoy the following benefits:

• 24/7 instant settlement: Smart contracts enable instant subscription on-chain, versus up to two business days for fiat transactions on TradFi platforms.

• Audited and verifiable: The OpenEden T-BILL Vault uploads daily statements and reports, inclusive of the Fund’s custodian asset reports and monthly NAV statements by the fund administrator.

• Self-custody: Investors will have custody of their minted TBILL tokens, which contractually represent their economic interest in the value of the underlying assets held by the Fund.

• Low default risk: U.S. T-Bills are backed by the "full faith and credit" of the U.S. Federal Government, and will only default when the U.S. government defaults.

• Institutional-grade partners: The Fund collaborates with leading banks, qualified custodians, and tier-1 legal counsel, including StoneX Financial Ltd (U.S. T-Bills broker), BNP Paribas (U.S. T-Bills sub-custodian), Coinbase Prime (fiat on-ramp), KPMG (tax advisor), Elliptic (blockchain compliance), Harneys (legal counsel), Protege Fund Services (fund administrator), TJ Assurance Partners PAC (fund auditor) and LSEG (U.S. T-Bills market data provider).

• Regulatory-first: Hill Lights International Limited, the Token Issuer, is a professional fund established under the British Virgin Islands’ Securities and Investment Business Act 2010. Adam Eve Capital, the Fund Manager, is a registered fund management company regulated by the Monetary Authority of Singapore.

• Transferability: Whitelisted users may transfer TBILL tokens to other whitelisted wallet addresses in accordance with the terms set out in the Fund’s Private Placement Memorandum.

• Composability: Third party institutions and web3 projects are actively building out composability and interoperability features for TBILL tokens across different protocols and DEXes.