Superstate: Compliance-Driven Tokenization Pioneer

In the current cryptocurrency market cycle, tokenization is becoming a compelling narrative, attracting the attention of Wall Street and gaining recognition from regulators. In this wave of tokenization, the asset management company Superstate, founded by Compound founder Robert Leshner, has rapidly grown into an important player in the tokenization space with compliance as its cornerstone, having attracted hundreds of millions of dollars in funding.

Three Major Tokenization Products to Support Scale Expansion

With the rising trend of real-world assets being put on the blockchain, tokenization is becoming a new growth engine for the global financial market. From proof of concept to explosive growth on a scale of hundreds of billions of dollars, Tokens representing real-world assets have attracted numerous financial giants to make their moves. In this wave, Superstate, which has only been established for just over two years, has secured a place in the tokenization market.

Leshner has extensive experience in the crypto industry. He founded Compound and sparked a liquidity mining craze through the "lending is mining" mechanism in June 2020, briefly pushing Compound to a leading position in the DeFi space, with its total locked value exceeding several billion dollars at its peak.

However, as the DeFi market continues to stagnate, user activity has declined, capital outflows are significant, and the total locked value keeps decreasing, the once-booming on-chain financial ecosystem has entered a cooling period. In this tide retreat, Leshner chose to leave Compound and shift to the token track representing real-world assets with a more realistic foundation, founding Superstate.

As a well-known figure in the DeFi space, Superstate secured investments from several renowned institutions at its inception, raising a total of several tens of millions of dollars.

Superstate has a clear positioning, dedicated to developing on-chain financial products for institutional investors that can be accessed in compliance with the U.S. financial regulatory framework and are linked to real assets. Currently, the company has launched three tokenization products covering three segmented areas: government bonds, crypto arbitrage, and stock assets, gradually building a diversified on-chain asset portfolio.

In February 2024, Superstate launched its first on-chain fund product, USTB. This is a short-term U.S. Treasury bond fund, registered with the SEC and fully compliant, with ownership registration regulated by U.S. federal laws. At the same time, its ownership records exist in the form of tokens on Ethereum and daily net asset values are synchronized through smart contracts, allowing users to make on-chain subscriptions, redemptions, and trading settlements.

USTB is primarily aimed at qualified institutional investors in the United States, supporting subscriptions and redemptions in US dollars or the stablecoin USDC, with the product circulating across multiple blockchain networks. Compared to traditional zero-yield stablecoins, USTB provides actual interest returns for on-chain funds while preserving the on-chain liquidity of assets, significantly reducing the opportunity cost of funds.

This design makes USTB the foundational yield asset for an increasing number of DeFi protocols. Several well-known projects have incorporated USTB into their asset allocation or as collateral.

As of August 6, the asset management scale of USTB has approached $420 million, with a 7-day yield of 4.04%, performing excellently among the tokenized U.S. Treasury bond funds.

In July 2024, Superstate launched its second investment product, the Superstate Crypto Carry Fund (USCC). This is an on-chain crypto arbitrage fund aimed at qualified purchasers, with its core strategy based on the "cash and carry" mechanism found in traditional finance.

USCC mainly focuses on the positive basis of the Bitcoin and Ethereum futures market. By buying spot assets and simultaneously selling corresponding futures contracts of the same maturity, it locks in the price differential returns to build a risk-neutral and stable return investment portfolio. In addition, USCC also integrates Ethereum staking and short-term U.S. Treasury bonds to enhance overall capital efficiency and improve the portfolio's resistance to volatility.

USCC can be seen as another exploration of the fusion of on-chain asset composability and off-chain compliance. As of now, the asset management scale of USCC has surpassed $220 million, with an annualized strategy yield of approximately 16.17%, far exceeding the industry average level of traditional arbitrage products, and has established partnerships with several well-known protocols.

Layout tokenization of stocks to promote compliance process

In May of this year, Superstate further expanded its product line, venturing into the tokenization of stocks with the launch of the new platform Opening Bell. This platform supports the direct issuance and trading of publicly registered stocks on the blockchain network, initially supporting specific blockchains and gradually expanding to more on-chain ecosystems. Investors can directly hold and trade these compliant stock assets through cryptocurrency wallets, achieving direct interaction between traditional equity and DeFi protocols. Currently, Opening Bell has partnered with multiple companies to promote the on-chain tokenization of their stock assets.

To promote the adoption of tokenization in the financial markets, Superstate has also launched the Superstate Industry Committee (SIC), attracting over fifty members from both traditional and crypto sectors.

Leshner noticed the trend of DeFi integrating with traditional finance as early as the Compound era, but faced difficulties in progress due to regulatory pressures. Before founding Superstate, he had attempted to launch fixed-rate products aimed at enterprises and institutions, but ultimately shut them down due to market volatility and other reasons.

Leshner is very optimistic about the potential of asset tokenization. He believes that changes in asset ownership in traditional financial markets are a complex and inefficient process. Tokenization is a more efficient way to record ownership, eliminating cumbersome intermediaries and significantly reducing transaction and settlement costs. In his view, tokenization will become the core trend of future financial markets, bringing various types of assets onto the blockchain to achieve a more efficient, transparent, and compliant market structure.

At the same time, Leshner has always regarded compliance as a core strategy. He believes that appropriate regulation should not be an obstacle, but rather a tool to make DeFi more inclusive, secure, and widely accepted. With the gradual maturation of the regulatory environment, it is expected that by the end of 2025, the securities tokenization market will truly take off.

To promote the compliance process, Superstate has intensified its efforts this year. In addition to registering as a transfer agent with the US SEC, the company is also actively promoting breakthroughs in tokenization policies and the establishment of industry standards, including submitting proposals to allow the issuance and trading of securities on public blockchains and providing recommendations for specific regulatory exemptions for non-custodial blockchain protocols.

It is worth mentioning that Leshner himself is also actively involved in the current popular coin-stock gameplay, including using NFTs to exchange for preferred shares of listed companies, as well as innovative attempts to acquire company shares in an effort to establish a crypto treasury plan.