Stakeup $STTBY STEP Application

Applicant information

Name: StakeUp Protocol

Address (Headquarters):

Oceania Business Plaza, Tower 1000,

21st Floor, Isaac Hanono Missri Street,

Punta Pacifica, Panama City, Republic of Panama

Website: https://twitter.com/StakeUpProtocol

Primary contact Name: Arthur Wiseberg

Title: Co-Founder/Head of Growth

Country: Portugal

Email, Telegram, Forum, & other methods of contact: arthur@blueberry.garden & https://t.me/arthywise

Key Information

Expected Yield: 5.30%

Expected Maturity: TBY 6 month - stTBY liquid asset 1:1 redeemable for USDC

Underlying asset: IB01 & USDC (IB01 are tokenized iShares Treasury Bond 0-1 yr UCITS ETF)

Minimum/Maximum transaction size: $100 - No Max

Current AUM for product: $2.2M

Current AUM for issuer: $30M

Volume of transactions LTM:

Source of first-loss capital: N/a

Basics and background

How will this investment improve Arbitrum’s RWA ecosystem?

This investment takes advantage of an innovative structure that utilizes decentralized commercial lending and borrowing to facilitate cross-border scaling of stTBY, into and beyond DeFi protocols. In contrast to the stagnant growth of the KYC-mandated RWA market, stTBY stands poised to redefine the stablecoin landscape, offering a scalable yield-bearing stable asset that can improve DeFi ecosystems and scale in emerging markets by providing a reliable currency hedge against volatility.

Identify key management personnel and individual experience. Also include third parties utilized for managing assets and their qualifications.

Jonathan Thomas - CEO Previous a serial entrepreneur with multiple exits, and co-founder of Blueberry Finance. Previous non-DeFi experience as a management consultant for private companies with a focus on regulator compliance and operational improvement.

Bailey Spraggins - CTO: Previous DeFi experience as CEO of ThreeRocks, the integrations service provider at Balancer Finance. Focused on helping external protocols built on top of Balancer AMMs. Previous non-DeFi experience as a Software Engineer at a manufacturing startup building WMS applications, and working on machine learning.

Arthur Wiseberg - Head of Business/Growth: Previous experience stemming from traditional finance just under 10 years across: BlackRock, Barclays Capital, Soc Gen focusing on regulation, portfolio structuring and FX Sales. In Blockchain since 2018, built an agency OTC desk and Rolled out OTC flash loans for Houbi Global (London), Apifiny (NY) set up a go to market logic for market making and liquidity provision, focusing on CEX’s and token projects, operating on both call options and credit line model.

Describe any previous work by the entity or its officers/key contributors similar to that requested. References are encouraged.

Please refer to above answer

Has your entity or its officers/key contributors been subject to an enforcement action, criminal action, or defaulted on legal or financial obligations? Please describe the circumstances if so.

No

Describe any conflicts of interest for your entity and key personnel.

None

**Insurance coverages, guarantees, and backstops Name of insurer or guarantor Per incident coverage Aggregate coverage -

N/A

proposed Product 2024 YTD 2023 2022 2021

N/A

Brief reason for above tracking error

N/A

Please describe any experience your firm has in working with decentralized organizational structures

Previous experience with strategic partnerships with various protocols and DAO. Please see link below showing one of recent examples:

https://snapshot.org/#/olympusdao.eth/proposal/0xbd1232eea7a61733e9e75a854a67877a0683407b2ebb7fa84f419a33e0610474

What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?

Minted $2.2M TVL of TBY token in 9 days in 3 minting periods (open 3 days each), paused to roll out Stakeup. Live in 3-4 weeks.

How many of these assets held are present on Arbitrum One, if any?

None. We are seeking to have Arbitrum as the homebase for assets once Stakeup is live.

Plan design

Please describe your proposed product, including a description of the underlying assets and, if more than one asset, the proposed allocation among assets and general investment guidelines. Where appropriate, include targeted maturity mix and credit quality. Attach supplementary documents as appropriate.

Arbitrum Foundation has expressed an interest to invest in a new RWA/Money market liquid protocol. We propose the inclusion of StakeUp’s stTBY, a stable asset backed by corporate debt overcollateralized by US Treasury Bills (T-Bills)–a scalable asset.

Below I will describe why TBY and stTBY products are a suitable fit for DeFi and Arbitrums vision for STEP framework and could potentially offer a lower-risk profile compared to other stablecoins and on-chain US T-bills:

What is a TBY?

TBY, or Term Bound Yield, is a token issued by the Bloom protocol. It represents a fixed-income loan asset that is freely transferable and operates entirely on-chain. TBYs are designed to produce yields comparable to a 6-month U.S. Treasury Bill. They are unique because they offer accessibility to DeFi markets (permissionless) while maintaining a yield close or the same to traditional financial benchmarks. The yield is derived by commercial loan arrangements in which users lend USDC in a closed loop peer-to-pool model to a KYC borrower that is 102% overcollateralized with tokenized US treasuries. All collateral is held verifiably on-chain and debt is always repaid before the borrower realizes any return. Therefore, the TBYs have a similar economic risk profile to the underlying collateral.

Supporting Docs
Bloom: https://docs.bloom.garden/
TBY: https://docsend.com/view/ywukpt8kbqpg5m76/d/3kc3thbyrx48ku3z
Product Details

Service Providers

The Underlying

What is stTBY?

Staked TBY (stTBY) is a liquid yield vault for USDC, or a USDC LST, offered by the StakeUp protocol, and is pegged 1:1 to USDC. It aggregates the yields from multiple TBYs into a single, fungible token. This means stTBY holders can earn yield from a basket of TBYs, providing a consistent return rate while simplifying the process of yield generation for the user. Yield can be paid in a rebasing format or through wstTBY, which appreciates relative to stTBY.

stTBY core features:

  • Isolated T-bill collateral producing end yield
  • Verifiable on-chain collateral and repayment dates, eliminates counterparty mismanagement / duration risk
  • Redeemable 1:1 for USDC
  • Non-custodial / decentralized
  • Censorship resistant
  • Non-value-extractive, distributing 100% of fees to token holders
  • Natively Omni-chain, with native minting on Arbitrum
  • Non-upgradable, eliminating DAO discretion risk

What is $SUP?

$SUP is the utility token of the StakeUp protocol. It allows stakeholders to earn a share of its revenues, which are 100% shared with all holders of sSUP. Essentially, it’s a means for early investors and users to benefit from the protocol’s success. It is a completely non-extractive system, where 100% of all value is shared with stTBY and sSUP holders. This is a stark contrast to competitors, who extract fees to centralised entities.

$SUP Tokenomics

49% of the supply is allocated to the team, investors, and launch partners. 51% of the supply will be distributed to the community programmatically in support of mint volumes and deep Curve pool liquidity at the peg.

ultimately held?

The tokenized treasuries collateralizing TBYs are issued by Swiss RWA token issuer Backed. Backed’s DLT program registration guarantees that even in the case of an exploit, value can be recovered through the Swiss courts. This process has been tested and verified by the StakeUp team. Custodian info for ib01 can be found at Backed.fi.

Regulatory Innovation

  • Cross-Border Compliance: StakeUp’s stTBY operates within a commercial lending framework that allows clients to participate in these products without having the need to go through KYC, enabling frictionless cross-border transactions.

  • Rolling Commercial Loans: stTBY’s underlying TBYs are structured as short term commercial loans offered to purchasers of tokenized treasuries in a closed loop system.

  • Market Expansion: The decentralized nature of stTBY eliminates barriers to entry, allowing for rapid adoption in emerging markets to enter into USD dominated yields. It also enables 100% composability without concern over whitelists or liability spread between primary/secondary issuers.

  • Emerging Market Penetration: stTBY’s structure makes it an ideal candidate for becoming the leading stablecoin in less stable economies, offering an attractive product for value preservation, a hedge against local currency fluctuation, and providing additional assurance compared to competitors like MakerDAO’s DAI, which has far more economic risk vectors.

Decentralization and Autonomy

  • StakeUp protocol operates autonomously through smart contracts, reducing central oversight and counterparty risk.

  • The stTBY asset is rebased omnichain, guaranteeing DAOs like ours can operate across networks without losing yield opportunities or facing cross-chain restrictions.

Singular Collateral Risk Profile

  • stTBY is singularly collateralized by over-collateralized loans (102% on-chain) to market makers, backed by Tokenized Treasuries from Backed.Fi.

  • This single-asset focus provides a clear risk profile, unlike other stablecoins, which diversify collateral and, in doing so, may inadvertently increase exposure to volatility and complex risk factors.

Comparative Analysis with DAI

DAI, a stablecoin predominantly used in the DeFi space, has its yield generated through a mixture of collateral, including volatile cryptocurrencies and centralized business loans. In contrast, stTBY maintains an indirect link to the highly stable and liquid U.S. Treasury Bills market, which translates to a more stable and predictable yield.

The economic design of stTBY ensures that in extreme scenarios, like a liquidity rush, redemption is systematically queued, averting the ‘bank run’ risk and ensuring a maximum 6-month liquidity provision.

Supporting Docs
StTBY: https://blueberry-protocol.gitbook.io/sttby-product-docs

Do investors have any shareholder, investor, creditor or similar rights?

1. Describe the legal and contractual structuring for your product including regulatory bodies overseeing your business and the product and identifying all legal jurisdictions interacting with your product. Attach supplementary documents as appropriate.

TBYs are intentionally designed to be short term, decentralized, peer-to-peer commercial loans entered into between users and purchasers of tokenized treasuries in a closed loop system. More detailed legal analyses concerning product compliance are accessible to interested parties upon the execution of a signed NDA.

2. Would Arbitrum’s assets be bankruptcy remote from your own entity and its officers/key contributors? If so, please explain the legal and contractual basis. On a confidential, non-reliance basis, provide any third party legal opinions to support the conclusions.

Yes, Bloom/StakeUp protocol are non custodial, where we do not keep custody of clients assets and operate in a decentralized manner. The tokenized treasuries collateralizing TBYs are issued by Swiss RWA tokenizer Backed. Backed’s DLT program registration guarantees that even in the case of an exploit, value can be recovered through the Swiss courts.

How are Arbitrum’s assets protected vis-a-vis the bankruptcy of the brokerage or applicable financial institution (e.g., bank deposit insurance, securities insurance, etc.)?

The product is collateralized through the purchase of the Underlying’s. When an investor buys the product, the Issuer uses the proceeds, minus the costs, to finance the purchase of Underlyings. The value of the collateral at any point in time must correspond to the value of the product at that time, calculated accordingly by the Issuer. The investors have a primary claim to the collateral allocated to the specific product. In addition, the investors have a subordinated claim to the assets of the Issuer after all primary claims have been settled.

The broker & custodian Maerki Baumann & Co. AG, InCore Bank AG have Depositor protection in Switzerland provided by esisuisse, the depositor protection system is explained in detail at [https://www.esisuisse.ch/en.

Does the Issuer issue more than one asset? If so, what is the priority relationship between different asset classes?

Yes, Backed.Fi does issue another tokenized asset Backed IBTA $ Treasury Bond 1-3yr - Ticker: $bIBTA. Backed’s main focus would be on the IB01 given its larger market cap and our strategic alignment and commitment on partnership terms.

Provide a detailed cash flow diagram that shows the flow of funds from ARB/Fiat conversion, investment in underlying asset, payment of expenses, sale of underlying asset, and repayment (Fiat/ARB conversion), including the counterparties and legal jurisdictions involved.

Flow of Funds for TBY

The flow of funds is designed to be decentralized and peer-to-peer, and reduce counterparty risk to the maximum extent possible.

The primary counterparty risk that exists is the bank that holds the Treasury Securities on behalf of Backed, the Treasury Security Token Issuer. At no point does Blueberry, Bloom, or any associated dev shop have any control over funds in the system. Bloom solely facilitates peer-to-peer transactions.

stTBY Minting & Redemption

Minting

Anyone who holds TBYs can mint stTBY at a ratio of 1:1 tokens.

For example:

A user holds 100 TBY for a specific duration. TBYs, despite having different maturities and being different tokens depending on the maturity, are considered fungible by the protocol in terms of minting power. Minting can occur at any time with any active TBY. Once TBYs are in the protocol, they are managed. To manage them, they are simply deployed in the newest Bloom Pool until maturity. When a maturity tranche of TBYs matures, the protocol automatically redeems them for the underlying USDC principal and interest.

Redemption

At any point, a user can request a redemption. Redemption requests are added to a queue, with a first come first serve logic. Based on your stTBY ownership, you can redeem a pro rata amount of the underlying USDC, upon the next maturity date.

TBY Schedule: https://docs.bloom.garden/tbys has a list of all of the maturity dates.

TBYs will be minted and redeemed on a fixed schedule (above). The reason for this is to be compatible with the rolling schedule and remain as efficient as possible for stTBY. stTBY’s are 1:1 redeemable for USDC

Liquidity & Redemption

Onchain liquidity will be hosted on Curve

  • 25% of the SUP supply is algorithmically allocated to Curve liquidity providers within the wstTBY-3crv pool over a span of 5 years, offering high incentives that gradually decrease by 50% each year. The value of SUP is underpinned by fee distribution; this mechanism incentivizes the peg while disperses SUP ownership among the most vital participants, the LPs (Liquidity Providers).

  • Additionally, the pool emerges as an appealing choice, rewarding LPs with yield derived from the risk-free rate, on top of trading fees and incentives. The capability of stTBY to be redeemed for USDC positions it as an alternative for USDC LPs seeking more yield, effectively functioning as a USDC derivative.

Describe anticipated tax consequences (if any) in transacting on the underlying and/or receipt of yield.

wstTBY’s non rebasing nature simplifies tax reporting, this is because their value doesn’t change to rebasing events. Each rebase of a token like stTBY can be considered a taxable event in some jurisdictions like the UK for example,where your accountant would happily charge a premium for, requiring complex tracking and reporting.

Describe the process and expected timeline for liquidation of assets, if given instructions to do so by Arbitrum governance.

All TBYs have a 180 day maturity from the time of execution. You can redeem for underlying USDC + interest at any time after the redeem date using the redeem function. StTBY’s can be redeemed 1:1 for USDC at any given time. If the liquidation of all assets was mandatory, the biweekly cadency of TBY deployments would cease and liquidity would slowly become available on a 2 week basis. The maximum time of full redemption of the protocol would be 180 days or the maturity date of the last deployed TBY.

Liquidity and Asset Structure

  • Treasury Liquidity: US T-Bills, the underlying asset purchased by borrowers of commercial loans represented by TBYs, are the most liquid financial asset globally, ensuring that the DAO’s investment remains fluid and secure.

  • 1:1 USDC Redeemability: stTBY’s direct redeemability for USDC at a 1:1 ratio reduces risk and provides unparalleled liquidity compared to competitors whose portfolios of varied collateral types introduce complexity.

  • Simplified Asset Structure: stTBY’s single-asset collateral structure, governed by clear-cut smart contracts, presents a cleaner and less convoluted investment vehicle, thereby reducing systemic risk.

What amount of first-loss equity will Sponsor provide to ensure over-collateralization, how is the first-loss equity denominated, and what is the source of capital?

N/A

Describe the liquidity and stability of the proposed underlying assets, including anticipated settlement times from the sale of the underlying to the repayment of ARB.

As mentioned above TBY’s have a 180 day maturity and can be redeemed for USDC at any given time. The underline of TBY is the BlackRock iShares $ Treasury Bond 0-1yr UCITS ETF (IB01) which aims to track the investment results of an index composed of U.S. Dollar-denominated government bonds issued by the U.S. Treasury. The stability of this ETF is anchored by its investment in short-term U.S. Treasury bonds, which are backed by the full faith and credit of the U.S. government and are generally considered to be one of the safest and most liquid investments available, reflecting low credit risk.

If relying on the blockchain for any of the transactional flows, please describe any blockchain derived risks and mitigations.

stTBY uses LayerZero’s OFT contract as a means to facilitate all cross-chain bridging and yield syncing. It assumes any risks associated with LayerZero.

Does the product rely on any derivative product (swaps,OTC agreements?)

No

List all the third party counterparties linked to your assets including and not restricted to prime broker if any, custodian, reporting agent, banks for derivatives or loans and provide primary contact details for the third party counterparties.

Service Providers

The Underlying

Can you explain how is risk management (inv and operational) being done? Can you provide a copy of your risk management policy?

We take disclosures of risks seriously and want users to be making an informed decision when they use the protocol. The primary risks include the following:

The Bloom protocol is intentionally a very stripped back, isolated codebase that touches no other protocols. In addition, we’ve completed security audits of the protocol (see below) and expect to undergo further reviews in the future as the product scales.

Audit:https://docs.bloom.garden/audit

Risk Management: https://docs.bloom.garden/legal/terms-of-service#risk-disclosures

Performance reporting

What are your proposed performance benchmarks? If this is substantially different from the underlying assets, please explain why.

Another option to earn yield is from StakeUp protocols SUP token, the yield-bearing utility token for the ecosystem. stTBY charges three fees: Mint fee (1bps), Redeem Fee (50bps), and Performance Fee (10% yield). Rather than being held by a DAO treasury, 100% of fees go directly to SUP stakers. Staking SUP does not require a time lockup. As an early holder of a significant amount of circulating supply, would receive a high share of these fees during the startup phase.

StakeUp is offering 0.25% token supply per $1M stTBY minted.

Describe the content, format, preparation process, and cadence of performance reports. This should include proof of reserves, if appropriate. Please include a sample report.

We are planning to build a frontend dashboard which shows; proof of reserves, supplies on chain, bridged uptime etc.

Who provides the performance reports in respect of the underlying assets?

BlackRock

Describe any formal audit process and timing of such audits.

Inside of Stakeup all assets are held on-chain, they can be fully verified by anyone at any time. Smart contract related audits is documented below in Smart Contract/Architecture section 1.

Pricing

Provide a copy of your standard contract, or one similar to what is being proposed here.

Everything is done on the protocol level within smart contracts, the nature of this protocol does not require to have physical legal paperwork to negotiate and sign from any counterparties involved in the process.

Fee summary: Inclusive of the full scope of services requested. Product Fee schedule If asset based Fee calculation for our plan if asset based Annual fee if flat fee Any other fees (including redemption or minting fees)

Bloom takes no fees for TBYs.

Screenshot 2024-05-02 at 02.53.14

Stakeup has a performance fee, mint fee, and redeem fee.

Describe frequency of fee payment and its position vis-a-vis payment priority compared with other expenses (i.e., cash waterfall)

Fees associated with StTBY are paid instantly for minting and for redeeming to those staking SUP token on a block-by-block basis.

Smart Contract/Architecture

How many audits have you had and name of auditors? Please provide a copy of reports.

We have engaged with a number of third party audits, specifically the bloom audits are public which can accessed via this link: https://docs.bloom.garden/audit

Stakeup is currently in the process of going through an audit with Ottersec. Previously, there has been an audit completed by Hexens and 0x52. This can be requested to be reviewed until they are made available to the public upon completion of the most recent audit. Estimated completion of the audit with Ottersec is 3 weeks.

Is the project permissioned? If so how are you managing user identities? Any blacklisting/whitelisting features?

Bloom doesn’t issue or tokenize Treasuries. Instead, it operates as a protocol enabling individuals to lend to a pool. Eligible whitelisted parties (excluding USA and other restricted juristications) can then borrow from this pool and acquire treasury tokens from a whitelisted marketmaker that has treasury tokens from Backed within the same transaction, while debt and treasury tokens are locked in a smart contract to reduce counterparty risk. Bloom solely facilitates peer to pool commercial loans to KYC’d counterparties.

Is the product present on several chains? Are there any cross chain interactions?

At the moment only on Ethereum mainnet, the underline being the most liquid asset, it is our ambition to replicate that on-chain. The intention is to move the base chain to Arbitrum, housing all TBY liquidity, and bridge assets available on other EVM based chains.

Are the RWA tokens being used in any other protocols? Please describe the various components of the ecosystem

At the moment no, we are working on integrations across various chains where stTBYs will be composable and used across various markets as collateral.

How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?

The Stakeup system is completely trustless. At the beginning of the protocol, the admin will have the ability to set the initial curve pools that will be used to drip rewards, as well as distribute SUP via an initial airdrop. After the initial airdrop is complete all admin permissions will be revoked and set to address zero.

*Is there any custom logic required for your RWA token?

N/A

Supplementary

  1. Please attach any further information or documents you feel would help the screening committee or ARB tokenholders make an informed decision.

DISCLAIMERS

Stakeup does not offer any of the services to individuals in USA or any restricted jurisdictions.