Product Structuring

TBILL Token

The TBILL token is an EIP-20-compliant representation of shares in the Fund. By depositing USDC and minting TBILL tokens, the Investor will have legal rights to the redemption value of all the assets (U.S. T-Bills and USD) held by the Fund, proportional to the amount of TBILL tokens the Investor holds relative to the total outstanding supply of TBILL tokens.

The TBILL tokens minted by the Investor will be held in the Investor’s whitelisted wallet. It is the sole responsibility of the Investor to take the necessary steps to safeguard the TBILL tokens from potential loss. The Token Issuer will not be liable for the loss of TBILL tokens held in the Investor’s self-custody.

At present, the TBILL token can only be minted and redeemed via the TBILL Vault by whitelisted wallets that have been fully onboarded after completing the KYC/KYB process. TBILL tokens are currently only transferable between whitelisted wallets only. However, there are other projects and developers who are building use cases, bringing composability across different venues and networks for the TBILL token, spanning the gamut of secondary trading, usage as collateral for borrowing or trading, and bridging to other blockchain networks.

Vault Strategy

The TBILL Vault aims to provide the highest possible level of income generation while maintaining liquidity and maximum safety of principal. Given these requirements, the TBILL Vault will be managed according to the following metrics:

• Target portfolio composition: A pool of short-dated U.S. Treasury securities

• Target weighted-average maturity of portfolio: Less than 3 months

U.S. T-Bills

U.S. T-Bills are government debt instruments issued by the U.S. Department of the Treasury to finance government spending as an alternative to taxation. They are backed by the full faith and credit of the U.S. Federal Government, with the government promising to raise money by any legally available means to repay them. Although the U.S. is a sovereign power and may default without recourse, the Treasury has a strong record of repayment that has given its securities a reputation as one of the world’s lowest-risk investments. As a result, Treasury securities occupy a unique position within the financial markets, where they are used as cash equivalents by institutions, corporations, and high-net-worth investors.

There are four types of marketable Treasury securities – U.S. T-Bills, Treasury Notes, Treasury Bonds, and Treasury Inflation-Protected Securities – differentiated by length of maturity. The Treasury security referenced throughout this documentation is U.S. T-Bills which have a maximum tenor of one year.

As zero-coupon bonds, U.S. T-Bills are issued at a discount to their par value. For example, an investor may purchase a T-Bill with a par value of $1,000 for only $950. When the bill matures, the investor redeems it at par, for a yield-to-maturity of ~5%. If the par value of the bill is greater than its purchase price, then the difference is the interest earned by the investor. Unlike coupon bonds, U.S. T-Bills do not pay interest to investors on a regular basis.

Liquidity reserve

To minimise cash drag and maximise returns on the portfolio, the Fund’s liquidity reserves (in USD fiat primarily) will be maintained at under 1% of the total assets. The reserve is used to service redemptions and provide same-day liquidity for the Investor who wishes to withdraw capital on short notice.

Target utilisation rate

Given an approximate maximum 1% liquidity reserve, the target utilisation rate of the TBILL Vault will be about ~99% at the minimum. The target utilisation rate will be achieved through the active rebalancing of assets. When the actual utilisation rate is higher than the target utilisation rate, U.S. T-Bills held in the custodian account will be sold to normalise the liquidity reserve ratio and utilisation rate. Conversely, when the actual utilisation rate is lower than the target utilisation rate, excess liquidity will be used to purchase U.S. T-Bills. The sale and purchase of U.S. T-Bills to maintain the target utilisation rate and liquidity reserve ratio will be executed while maintaining the target weighted-average maturity of the U.S. T-Bills portfolio. The Fund reserves the right in its sole discretion to amend or change the method of normalising the utilisation rate at any time and for any reason without prior notice.