Risks
Interest Rate Risk
The Fund’s investments in US T-Bills will change in value based on changes in interest rates. If interest rates rise, the fund’s portfolio value and correspondingly the TBILL token price may decline – and vice versa.
Changes in the Mark-to-Market value of the Fund’s US T-Bills portfolio will not impact the cash income of the portfolio, as US T-Bills are zero-coupon bonds. Also known as accrual bonds, zero-coupon bonds are purchased at a discount to their par value, allowing the portfolio to earn the interest income as a profit when the bond is redeemed at par at maturity. In theory, if the interest rate curve remains constant, then the Fund’s TBILL Vault portfolio should increase in value every day, as the price of US T-Bills increases daily and converges to par at maturity.
Bonds with longer maturities generally are subject to higher interest rate risk and greater fluctuations in value. Therefore, the interest rate risk of a portfolio of US T-Bills can be mitigated by limiting the maximum weighted-average maturity and duration to less than 3 months. Given shorter weighted-average maturity and duration, the US T-Bills portfolio could track prevailing interest rates more closely as US T-Bills mature and are reinvested over a shorter period. The Fund may experience heightened interest rate risk due to changes in central bank monetary policy and the unpredictability of those changes.
Market Liquidity Risk
During periods of heightened volatility in the US T-Bills market, Investors may face market liquidity risk if the Fund is forced to sell its US T-Bills holdings below the mark-to-market price to service large redemptions. To mitigate the impact of interest rate-induced price volatility, the Fund will diversify its holdings across different maturities. In addition, the Fund’s target weighted-average maturity of less than 3 months reduces the sensitivity of its portfolio to any large redemption of US T-Bills before they mature at par.
US Sovereign Credit Risk
The Fund’s investments are subject to the risk that issuers will fail to make payments when due or default completely. The value of the Fund’s investments may also be adversely impacted if any of the issuers are subject to an actual or perceived deterioration in credit quality. Credit spreads can widen, which may reduce the market values of the Fund’s securities.
US T-Bills are securities issued by the US Department of the Treasury and are backed by the “full faith and credit” of the US Federal Government. Therefore, should the credit risk of the US government rise, then so will the volatility of the Fund’s portfolio value and, by extension, the TBILL token’s price.
The US is highly rated by all major credit rating agencies, which makes it one of the safest assets in the world. As a result, the interest rate on three-month US T-Bills is often taken as the risk-free rate by US investors.
Fitch Ratings
AA+
Stable
Moody's
Aa1
Stable
Standard & Poor's
AA+
Stable
*Ratings as of 2025
Transactions Risk
The Fund might face losses, and its ability to convert securities into cash could be hindered when selling assets to fulfil redemption requests. The risk of incurring losses increases if redemption requests are exceptionally large or frequent, or if they occur during periods of market turbulence or falling prices. Similarly, substantial subscriptions made into the Fund can negatively impact its performance, especially if there are delays in deploying the new capital, leading to a need to maintain a larger cash reserve than typically required.
General Market Risk
The increasing interconnectedness of economies and global financial markets heightens the likelihood that events or conditions in one country or region can adversely affect markets or issuers in other parts of the world. Securities held in the Fund's portfolio may perform poorly relative to general financial markets, specific financial sectors, or other asset classes for various factors. These factors include inflation or expectations of it, deflation or expectations of it, interest rates, global demand for specific products or resources, market instability, financial system instability, debt crises and downgrades, embargoes, tariffs, sanctions, and other trade barriers, regulatory events, government trade or market control programs, and geopolitical events. Moreover, global events such as war, terrorism, environmental disasters, natural disasters, political instability in countries, and infectious disease epidemics or pandemics can negatively impact the value of the Fund's investments.
Smart Contract Risk
Smart contracts are inherently a new form of financial settlement technology, which makes their code base vulnerable to hacks and exploits. While these risks exist, the TBILL Vault smart contract is built on established code standards that have been battle-tested and widely adopted.
For instance, the main Vault smart contract is adapted from the EIP-4626 Tokenized Vaults standard – the industry standard for Ethereum-based vaults. The EIP-4626 standard includes an extensive list of key security considerations, which the OpenEden team has reviewed and adhered to during the development of the Vault smart contract.
Apart from maintaining good smart contract development and security practices, the TBILL Vault smart contract has been formally audited by Verichains for any potential security flaws. The following are the smart contract audit reports for the TBILL Vault smart contract:
Verichains, March 2023
Hacken, October 2023
While every effort has been made to ensure that the TBILL Vault smart contract adheres to the highest security standards at the time of deployment, there is no guarantee that new attack vectors will not arise in the future, as smart contract technology continues to evolve. Therefore, the OpenEden team will endeavour to comply with the latest security practices and stay abreast of new security exploits. Furthermore, liquidity reserves of the Fund are held off-chain as USD fiat instead of being held as USDC on-chain in the TBILL Vault, thus mitigating the impact of any smart contract breaches.
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