Superstate Short Duration US Government Securities Fund (USTB) STEP Application

Applicant Information

Name: Superstate Short Duration US Government Securities Fund (“USTB” or the “Fund”)
Address (Headquarters): 205 W 28th Street, Suite 6B
City, State, Postal Code: New York, NY 10001
Country: United States
Website: Superstate - USTB Fund

Primary Contact

Name: Francis Gowen (FIG)
Title: Protocol Relations Lead, Superstate Inc., the Fund’s Investment Manager
Country: United States

Email, Telegram, Forum, & other methods of contact:

Twitter & Telegram: @francisgowen
Forum: @fig1

Key Information

Expected Yield: Targeting returns in line with the federal funds rate, providing current income as is consistent with liquidity and stability of principal. This was 5.36% as of 04/15/2024.

Expected Maturity: USTB is an open-end fund and does not have a maturity. The Fund expects to maintain an average portfolio duration of one year or less. The underlying holdings have a weighted average maturity of ~28 days as of 04/15/2024

Underlying Asset: Short-duration U.S. Treasury Bills and U.S. Government Agency securities (“Government Securities”). Assets not invested in Government Securities are expected to be held in cash.

Minimum/Maximum Transaction Size: $100,000 Minimum / No Maximum

Current AUM for the product: $99,342,187.59
Current AUM for issuer: $99,342,187.59

Volume of Transactions LTM: 31
Source of First-Loss Capital: N/A

All data points are as of 04/15/2024.

Basics and Background

1. How will this investment improve Arbitrum’s RWA ecosystem?

Arbitrum’s primary goal for this proposal is to invest in teams/products that not only deliver a liquid, stable, and uncorrelated yield for the Treasury, but also bring deep crypto-native expertise, prioritize compliance, and collaboratively foster ecosystem growth. Superstate shares Arbitrum’s mission of bringing traditional capital markets onchain and we are committed to collaborating to grow the ecosystem together.

Superstate is modernizing investing through tokenized financial products, bringing traditional assets onchain via compliant, programmable, and composable tokens. Our first product, USTB, is a yield-bearing ERC-20 token backed by a short-duration U.S. Treasury Bill and Agency Securities fund. All investors must be Qualified Purchasers and undergo KYC prior to investing. When investors onboard to the Fund, they can provide Ethereum address(es) which are added to a proprietary AllowList.

USTB delivers consistent, uncorrelated, capital-preserving yield that the Arbitrum Treasury seeks to invest in. The Fund’s investment objective is to target returns in line with the federal funds rate (currently >5%), providing current income as is consistent with liquidity and stability of principal.

USTB is programmable and composable across smart contracts and applications with transactions permitted between counterparties on the aforementioned AllowList beginning in May 2024. USTB is currently on Ethereum but intends to expand across key EVM ecosystems to maximize utility for protocols, developers, traders, and investors.

In addition to USTB, Superstate plans to launch additional products with different underlying investment strategies and asset classes that benefit from the advantages enabled by public blockchains. Our team has deep experience building onchain and is committed to partnering with Arbitrum to bring more RWAs to the ecosystem, ensuring Arbitrum is a top destination for this burgeoning asset class, which has been projected to bring trillions of dollars onchain, disrupting traditional capital markets.

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

Management Personnel

Robert Leshner, Co-founder and CEO
Robert is a serial entrepreneur and previously co-founder of Compound Labs. He is a venture investor at Robot Ventures and co-hosts The Chopping Block, a crypto-native podcast. Robert is directly responsible for designing smart contracts such as Governor Bravo and the ERC-7246 token standard, Encumber. Robert is the former chair of the San Francisco Revenue Bond Oversight Committee and a CFA charter holder.

Reid Cuming, Co-founder and COO
Previously, Reid was the VP and GM of Compound Treasury. Prior to Compound, Reid was Head of Product at Chime and led product management at Stripe and Block (fka. Square), building new products and infrastructure including Stripe Identity and Square’s machine learning platform. He is a former restructuring consultant and current angel investor and venture scout for Greylock.

Jim Hiltner, Co-founder and Head of BD
Previously, Jim was the Director of Sales at Compound Treasury, and held senior sales leadership and go-to-market roles in early-stage FinTech companies, including as a VP at Pagaya where he managed bank, FinTech, and card network partnerships, and as the Director of Sales at Visible Alpha where he was the first commercial team member responsible for building the institutional client base. Jim graduated with a double major in Finance and Management with a minor in Math from the University of Miami (FL) and is a Chartered Financial Analyst.

Alex Zozos, General Counsel
Alex has worked on blockchain securities matters for >7 years. Alex served as a Special Counsel at the SEC where he served on the FinTech Working Group and focused on secondary trading of digital assets. Immediately before joining Superstate, Alex worked as an Associate General Counsel at Coinbase where he led their tokenization, brokerage, and derivatives exchange legal initiatives. Alex previously worked at Lowenstein Sandler and JP Morgan’s investment bank.

Jonathan Walch, Engineering Lead
Previously, a core engineer at Frax Finance and a smart contract auditor at Macro. Jon has identified significant vulnerabilities in MakerDAO, Sommelier Finance, and Thirdweb. Jonathan serves as a technical advisor for consumer startups. Additionally, Jon is a former CTO, founder, and engineering leader, beginning his career at Morgan Stanley.

Service Providers

In 2023, Superstate Inc. conducted a robust Request For Proposal (RFP) process to identify world-class service providers to support USTB. The following list reflects the companies selected to support the Fund:

Investment Adviser: Superstate, Inc.
Superstate Inc., the Fund’s Investment Adviser, is currently an Exempt Reporting Adviser (“ERA”) with the U.S. Securities and Exchange Commission (“SEC”) in reliance on the private fund adviser exemption under the Investment Advisers Act of 1940 (“Advisers Act”). Information about Superstate Inc. can be found by visiting the SEC website and searching for our firm name.

Superstate Inc. also develops proprietary technology (both on-chain and off-chain) for the Fund.

Sub-Adviser: Federated Hermes
Superstate contracted with a Sub-Adviser, Federated Hermes, to ensure investors’ assets are managed by professional and experienced Portfolio Managers.

Federated Hermes is a leading fixed-income asset management firm that was founded in 1955 with over $700B in AUM – it is a publicly traded company that adheres to strict reporting and audit standards.

Susan Hill, CFA, Senior Vice Portfolio Manager and Head of Government Liquidity Group at Federated Hermes, is the portfolio manager responsible for executing the investment mandate for the Fund and has 30+ years of experience, directly responsible for managing $300B+ AUM across multiple funds.

Custodian: UMB Bank, N.A.
All underlying securities (T-Bills and Agency Securities) in the Fund are held in a segregated custodial account in the name of the Fund at UMB Bank, N.A., the Fund’s Custodian.

UMB Bank, N.A., is a U.S.-based, OCC-regulated bank (charter #23920). It has provided comprehensive business banking services and asset management for more than a century and now custodies $44B+ in assets.

Fund Accountant: NAV Consulting
Based on the Fund’s holdings, trading activity, and inflows/outflows, NAV Consulting calculates the Fund’s Net Asset Value (“NAV”) each Market Day. The NAV is delivered daily to Superstate via API which is then displayed on our website and used to determine the price for purchases and redemptions. NAV Consulting is committed to rapid data delivery and offers overnight fund administration, with over $200B in assets under administration (“AUA”) across hundreds of other asset managers.

Auditor: Ernst & Young LLP
Superstate has contracted with a top-tier audit firm to provide independent annual assessments of the Fund’s financial statements and added transparency for our investors.

Ernst & Young LLP (EY) is one of the world’s largest accounting firms and is considered one of the ‘The Big 4’, providing global tax, audit, and advisory services to thousands of clients. EY audits USTB annually to ensure accurate financial reporting.

USDC Services: Circle Internet Financial
Superstate allows investors to opt-in to purchasing shares with USDC and has contracted with Circle Internet Financial (“Circle) to perform mint/burn services as a convenience to shareholders.

Circle will convert USDC to US Dollars (“USD”), and vice versa, for purchases and redemptions into and out of the Fund.

Secure Private Key Services: Fireblocks
To mint/burn USTB tokens or add new addresses to the AllowList, Superstate requires a 2 of 4 approval process. Superstate contracted Fireblocks for their MPC wallet solution to administer such functions.

Fireblocks is a secure private key management service used by Superstate to initiate and sign digital transactions to: a) mint USTB tokens, and b) add investors’ Ethereum addresses to the AllowList.

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

Superstate’s team has deep traditional finance and crypto expertise, as demonstrated by the biographies provided above. Before launching Superstate, the co-founders had managed $300M in assets at Compound Treasury which provided yield for institutional investors and protected 100% of client principal during the crypto bear market of 2022.

In addition to the team’s asset management, FinTech, and crypto experience, the Fund employs/contracts with top-tier service providers. Currently, USTB has $99.3M in AUM.

To provide additional reference, Superstate is happy to coordinate an introduction to the following institutions that are investors in the Fund or partners of Superstate Inc. :

Uniswap Labs

Additional references are available upon request.

4. 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.


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

N/A. The Fund’s Investment Manager is a fiduciary and therefore is required to act in its best interests.

6. Insurance coverages, guarantees, and backstops:

Directors and Officers (D&O) Insurance
Errors and Omissions (E&O) Insurance

Name of insurer or guarantor: Endurance Risk Solutions Assurance Co.
Per incident coverage: N/A
Aggregate coverage: $2,000,000

7. Historical tracking error in your proposed product, or similar to that being proposed product:

USTB has not had any tracking errors versus its benchmark. Since inception, the yield has been in line with the objective (federal funds rate): Effective Federal Funds Rate - FEDERAL RESERVE BANK of NEW YORK

8. Brief reason for the above tracking error:


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

Our team is uniquely qualified to work with and understand decentralized organizations. Collectively, Superstate’s team has played a significant role in building the core primitives of DeFi, including Compound, Aave, Frax, Uniswap, and Scroll. Our CEO Robert Leshner was one of the founders of Compound Labs, which developed the Compound Protocol and the Compound Governance module.

I previously served as a reviewer on Aave Grants, a trustee of dYdX’s Operations Trust, and contributed to the growth of the major DeFi ecosystem since 2021. Notably, I drove the utility for Arbitrum’s token holders by adding $ARB to Arbitrum Aave V3.

At Superstate, we strongly believe in decentralized organizational structures and are committed to supporting DAOs and their communities to thrive in the future through compliant, innovative, and robust asset management. To learn more about our team and our experience, please visit: Superstate - About Us

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

USTB’s assets under management are $99,342,187.59 as of April 15, 2024.

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


Plan Design

1. 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.

Section 1: Product Description

Superstate Short Duration US Government Securities Fund (USTB) is a separate series of Superstate Asset Trust and a Delaware Statutory Trust. USTB is a private fund pursuant to Section 3(c)(7) of the Investment Company Act. USTB is only available to a limited subset of potential investors that meet the criteria outlined in the Private Placement Memorandum. Investors must undergo AML, KYC, and sanctions compliance checks.

USTB’s investment mandate is targeting returns in line with the federal funds rate by investing substantially all of its net assets in short-duration U.S. Treasury securities, securities issued by U.S. government agencies or instrumentalities, and other U.S. government securities (collectively, “Government Securities”). This mandate is executed by USTB’s Sub-Advisor, Federated Hermes, and Sue Hill, a tenured portfolio manager, responsible for overseeing $300B in fixed-income assets. USTB’s underlying securities are held in custody in the name of the Trust at an OCC-regulated bank, UMB Bank. USTB is audited annually by EY, ensuring the accuracy of accounting for investors. Daily NAV, transparent holdings, yield, and more are available via the Investor Portal or by visiting: Superstate - USTB Fund

Investors may purchase Shares of USTB via USDC or USD (“cash”) which may be issued in the form of ERC-20 tokens. This tokenized ownership is composable and transferable where one Share will be represented by one token on the Blockchain named a “USTB token.”

The process entails three key steps: onboarding, purchase, and minting/redeeming. First, investors undergo Superstate’s KYC/AML onboarding where up to 3 Ethereum addresses may be added to the AllowList, with the Primary AllowList Address designated for USTB token minting. Second, to purchase USTB, investors transfer USDC (or USD) to their unique USTB Purchase Address. Lastly, Shares are minted and the quantity is calculated based on the prior Market Day’s NAV and gas fees covered by Superstate Inc. Redemption can be initiated by transferring them to the USTB Contract Address or “burning” the tokens. The proceeds from redeeming USTB are provided pursuant to the investor instructions in USDC (or USD) and are expected within 2 business days of the request, though often arriving within 24 hours. Certain investors may opt to record USTB Shares only in book entry form, electing to mint tokenized Shares at a later date or never at all. For book entry USTB, the key steps are the same except no tokens will be minted/burned.

USTB offers T+0 liquidity for investors on Market Days when initiating a subscription or redemption before 9:00:00 A.M. ET. Market Days are defined as when both the New York Stock Exchange and the Federal Reserve Bank of Philadelphia are open. Upon receipt of USD or USDC, Shares are minted on the Market Day at, or shortly after, the opening of business (typically 9:00:00 A.M. Eastern Standard Time) directly into the shareholder’s designated address. Shares will be minted at the net asset value (NAV) at the prior day’s close of regular trading, typically at 4:00 pm Eastern Time on Market Days. USTB accrues yield daily, reflected in the daily appreciation of the NAV per share. USTB may be redeemed at any time.

Section 2: Description of Underlying Assets

Under normal market conditions, the Fund expects to invest at least 95% of its net assets in Government Securities with a duration of one year or less. These underlying Government securities are Treasury Bills and US Agency Securities which target returns in line with the federal funds rate. Government Securities does not encompass securities issued by U.S. states or municipalities. The portfolio has a current weighted average maturity of ~28 days. Below you will find a detailed list of USTB’s holdings as of 04/15/2024:

CUSIP Security Description Current Face Units Maturity Date Fed Cost % Portfolio
912796CX5 United States Treasury Bill DTD 4/20/2023 4/18/2024 3,030,000.00 3,030,000.0000 04/18/2024 3,023,343.47 3.05%
912796Y52 United States Treasury Bill DTD 1/4/2024 7/5/2024 2,000,000.00 2,000,000.0000 07/05/2024 1,973,268.88 1.99%
912797FH5 United State Treasury Bills DTD 5/18/2023 5/16/2024 8,075,000.00 8,075,000.0000 05/16/2024 8,025,399.31 8.09%
912797GB7 United State Treasury Bills DTD 7/13/2023 7/11/2024 1,500,000.00 1,500,000.0000 07/11/2024 1,480,188.54 1.49%
912797HG5 United State Treasury Bills DTD 10/26/2023 4/25/2024 6,050,000.00 6,050,000.0000 04/25/2024 6,012,696.71 6.08%
912797HH3 United State Treasury Bills DTD 11/2/2023 5/2/2024 4,250,000.00 4,250,000.0000 05/02/2024 4,223,820.00 4.27%
912797HR1 United State Treasury Bills DTD 11/24/2023 5/23/2024 16,220,000.00 16,220,000.0000 05/23/2024 16,121,975.04 16.24%
912797JN8 United State Treasury Bills DTD 12/19/2023 4/16/2024 5,030,000.00 5,030,000.0000 04/16/2024 5,009,808.97 5.06%
912797JP3 United State Treasury Bills DTD 12/26/2023 4/23/2024 7,375,000.00 7,375,000.0000 04/23/2024 7,345,259.28 7.42%
912797JQ1 United State Treasury Bills DTD 1/2/2024 4/30/2024 15,060,000.00 15,060,000.0000 04/30/2024 14,998,095.03 15.13%
912797JV0 United State Treasury Bills DTD 1/9/2024 5/7/2024 9,575,000.00 9,575,000.0000 05/07/2024 9,535,790.38 9.61%
912797JX6 United State Treasury Bills DTD 1/23/2024 5/21/2024 7,000,000.00 7,000,000.0000 05/21/2024 6,943,747.22 7.01%
912797JY4 United State Treasury Bills DTD 1/30/2024 5/28/2024 9,070,000.00 9,070,000.0000 05/28/2024 8,995,575.61 9.07%
912797KP1 United State Treasury Bills DTD 3/19/2024 7/16/2024 1,500,000.00 1,500,000.0000 07/16/2024 1,474,167.08 1.49%
912797KR7 United States Treasury Bills DTD 4/2/2024 7/30/2024 1,000,000.00 1,000,000.0000 07/30/2024 982,794.58 0.99%
912797KW6 United States Treasury Bills DTD 4/9/2024 8/6/2024 2,000,000.00 2,000,000.0000 08/06/2024 1,965,622.22 1.98%
3130B0SF7 Federal Home Loan Banks DTD 4/9/2024 0.000% 9/9/2024 1,000,000.00 1,000,000.0000 09/09/2024 1,000,000.00 1.01%
US Dollar Currency 23,818.4400 23,818.44 n/a 23,818.44 0.02%

These holdings are subject to change with a targeted maximum one-year duration on the portfolio. The current weighted average maturity is ~28 days.

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

Yes, investors in USTB are the owners of the Fund and are granted shareholder rights that are detailed in the Fund’s offering materials (shared with the Screening Committee). Owners are shareholders in Superstate Short Duration US Government Securities Fund, a Delaware Statutory Trust (DSTA). This Asset Trust is bankruptcy remote and separate from Superstate Inc. Each shareholder will be entitled to the benefits of the inter-series limitation of liability provided for in the DSTA.

3. 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.

Legal Structure
The Fund (Superstate Asset Trust) is organized as a Series in a Delaware Series Trust. Superstate Inc. serves as the Investment Manager for the Fund. The Delaware Series Trust structure means the shareholder’s investment in the Fund is in a separate legal entity which is bankruptcy remote from Superstate Inc. Additionally, this structure affords shareholders with inter-series liability, meaning shareholders will not be subject to potential liability that arises against Superstate Inc.

The Fund is exempt from registration with the U.S. Securities and Exchange Commission (SEC) as a private fund per Section 3(c)(7) of the Investment Company Act and is only available to a limited subset of potential investors that meet certain criteria as outlined in the Private Placement Memorandum. The Fund is offered pursuant to 506(c) exemption of Regulation D of the Securities Act of 1933 and has filed Form D available here.

Superstate Inc., the Fund’s Investment Manager, is a Delaware corporation. Superstate Inc. is currently exempt from registration with the SEC in reliance on the private fund adviser exemption under the Investment Advisers Act of 1940 (“Advisers Act”) and is considered an Exempt Reporting Adviser. Information about Superstate Inc. can be found by visiting the SEC website and searching for our firm name.

Contractual Structure
There are two key legal documents associated with investing in USTB:

  1. Private Placement Memorandum
  2. Investment Agreement

The Private Placement Memorandum (available to the Screening Committee) attempts to outline the potential risks and structure of the Fund.

The Investment Agreement is a binding agreement between the investor and the Fund where the investor provides information and representations that are used for determining eligibility. Further, the terms of the Fund are described and assented to by the investor.

The information provided within the Private Placement Memorandum and the Investment Agreement is not a recommendation to invest. Investors must rely on their own examination and assessment of the risks and merits involved prior to making an investment decision.

4. Would Arbitrum’s assets be bankruptcy remote from your 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, Arbitrum’s assets are safeguarded in a bankruptcy-remote Delaware Statutory Trust, the Superstate Asset Trust, that is independent of Superstate Inc. and wholly owned by investors in the Fund. Superstate Inc. and its officers/key contributors only act as service providers to the Fund providing investment advisory, technology, and other services.

5. 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 Fund’s underlying securities are held at UMB Bank, an OCC-chartered bank, pursuant to a Custody Agreement. Assets are held in a custody account at UMB that are segregated consistent with the Customer Protection Rule and are not rehypothecated, lent against, or otherwise encumbered. This means the Fund’s assets are securely held at UMB and if there is an unlikely credit or stress event, the Fund’s assets will remain protected and available for withdrawal.

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

No, Superstate Inc. currently only manages one fund.

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

As a convenience to shareholders, purchases and redemptions may be made with USDC or fiat (USD), resulting in two unique, but similar, flows of funds.

The Fund does not accept ARB tokens to purchase USTB, therefore conversion from ARB to USDC or USD must be done separately and prior to the below sequence.

The Arbitrum Foundation will undergo Superstate’s KYC/AML onboarding process and once approved may add up to three Ethereum addresses to the AllowList. The Primary AllowList Address is where all USTB tokens will be minted.

To initiate a purchase of USTB, Arbitrum Foundation will transfer USDC to their USTB Purchase Address, which is a unique address provided to the Foundation after successful onboarding. Upon receipt of USDC, Circle Financial converts USDC to USD (“cash”) and sends it to the custodian, UMB Bank. Once the cash has settled, Federated Hermes is instructed to buy the U.S. Treasury Bills or U.S. Agency Securities with less than a one-year duration. Treasury Bills are custodied at UMB Bank and tokens are minted as a 1:1 representation of their underlying shares.

The quantity of tokens minted will be calculated by dividing the dollar value of USDC (or cash) by the Market Day’s NAV. Superstate will pay gas fees for minting USTB tokens.

Redemption can be initiated one of two ways: 1) call the token’s burn() function or 2) transfer the tokens to the USTB Redemption Address: 0x43415eB6ff9DB7E26A15b704e7A3eDCe97d31C4e.

Gas fees to burn or transfer USTB are paid by the Arbitrum Foundation.

Upon calling this burn function or transferring tokens to the contract, Superstate Inc. instructs Federated Hermes to sell U.S. Treasury Bills or U.S. Agency Securities. The proceeds of this sale are then transferred to UMB Bank, which wires cash to Circle Financial. Circle mints the corresponding amount of USDC and sends it back to the designated Ethereum address controlled by the Foundation and DAO.

Please see the diagram below for the sequence of the flow of funds, including the mint and burn of USTB tokens.

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

On Market Days, NAV Consulting will provide a Net Asset Value per share. The NAV reflects the valuation of the securities in the portfolio, net of expenses, and is reported on a per-share basis.

When investors purchase/redeem USTB, their purchase/redemption will be recorded at a specific NAV per share (see details above). The gain incurred between the redemption proceeds and the purchase amount will be taxable at their applicable tax rate (depending on their jurisdiction and short vs. long-term capital gains).

The Fund does not pay any distributions/dividends so there are no additional tax consequences, aside from what was mentioned above. There are no taxes withheld on any transactions.

Investors in the Fund are responsible for their own tax obligations and should consult with a tax adviser. NAV Consulting will prepare a Schedule K-1 annually for each investor reflecting their share of the Fund’s gains or losses during the period.

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

Liquidity is daily during Market Days, as defined above. Superstate Inc. mints or burns USTB tokens at 9:00:00 AM ET at the prior day’s NAV. After 9:00:00 AM ET, purchases/redemptions triggered by investors are processed on the next Market Day.

For redemptions before the cutoff time, we instruct Federated Hermes at 9:00:00 AM ET to sell securities that they aim to settle by 1:00:00 PM ET so UMB Bank may wire USD back to Circle to return USDC to you the same day (which we anticipate will happen a majority of the time given the assets in the fund). If Government Securities don’t settle before the wire cut-off, then we will send USDC back the following Market Day. USTB’s PPM and IA contemplate up to T+2 for redemption as a conservative buffer.

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

NA - there is no product lending.

11. 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.

The Fund is composed of Government Securities which consist of short-duration U.S. Treasury Bills and U.S. Government Agency securities. U.S. Treasury bills are widely regarded as one of the most stable investments due to their deep and liquid trading market along with their backing by the U.S. government, which significantly limits the risk of default. With short-term maturities and high liquidity, Government Securities offer investors a safe option for yield and provides the flexibility to quickly access their funds, making them a cornerstone of conservative investment strategies. The short duration and investment mandate of USTB (less than one year) diminishes the risk of interest rates impacting the value and yield of securities in the Fund.

These underlying Government Securities may be easily sold during Market Days, allowing T+0 for investors and repayment of USDC when redeeming before the cutoff time. Please see above for a more detailed flow. Superstate Inc. will also provide a white glove service for the Arbitrum DAO to be informed every step of the way and work to accelerate redemptions as much as possible, however, we have some constraints given the underlying reliance upon traditional banking/fiat system.

A list of USTB’s current holdings is provided above.

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

USDC Subscription & Redemption
As a convenience to crypto-native investors, USTB permits purchasing shares via USDC. The Fund has a relationship with Circle Internet Financial (Circle) to enable conversion between USDC to fiat (and vice versa). Each client who elects to use USDC is given a unique deposit address (at Circle) on Ethereum Mainnet. When an investor sends USDC to this address, Circle burns USDC and wires USD to the Fund’s account at UMB Bank which gets invested from there. The unique deposit address enables Superstate to attribute each purchase to the right client. Investors must confirm they are sending USDC to the correct USTB Purchase Address provided to them. Superstate makes this information available on our Investor Portal to help ensure clients can confirm details before sending USDC.

When Superstate returns USDC to clients, the reverse order of operations is performed (Government Securities are sold, USD is settled at UMB then wired to Circle to mint USDC, and last sent back to the client’s USDC Redemption Address). This end-to-end process enables a convenient way to purchase USTB but potentially adds risk to the process where investors must confirm all addresses before submitting transactions. Again, we provide an Investor Portal and are available to confirm verbally before making transactions, especially for the first few times.

Investors may need to request the removal of an AllowList address that holds a positive balance of USTB for a variety of reasons. Superstate has controls to ensure if these errors occur, Superstate can reconcile properly with off-chain systems and return ownership.

Several of these reasons are attributable to investor error and include any of the following:

  • Lost access to a private key
  • Private key compromised
  • Held in the inaccessible smart contract (e.g. Gnosis Safe)

For any of these issues above, investors must inform Superstate as soon as possible and submit a form (or in the future via our Investor Portal) to fix this issue. This begins the reconstitution process where Superstate will burn USTB from the affected address, remove it from the AllowList, and reconstitute shares in an unaffected address in the investor’s control.

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

No – USTB’s investment mandate prohibits any options or derivatives

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

Investment Manager: Superstate Inc.
Sub-Advisor: Federated Hermes, Inc.
Custodian: UMB Bank, N.A.
Auditor: Ernst & Young LLP
NAV Calculation Agent: NAV Consulting, Inc.

Superstate Inc. will facilitate communication between the DAO’s Screening Committee and the relevant counterparties.

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

Superstate Inc. is an ​​Exempt Reporting Adviser (ERA) with the Securities and Exchange Committee. Further information is available at: IAPD - Investment Adviser Public Disclosure - Homepage

Superstate Inc. is responsible for managing operational risks and ensuring compliance for our clients. We have developed multiple systems to maintain checks and balances between on-chain and off-chain records, as well as with USTB third parties. Superstate Inc. maintains a robust compliance program that includes processes, procedures, and training. For instance, all Superstate Inc. employees undergo compliance training, which includes strict AML/KYC and Code of Ethics training. In addition, Superstate Inc.’s COO is responsible for administering ethics and trading policies, as well as monitoring employees’ external communications.

Access to both the custodian and Circle accounts is limited to authorized personnel only. To ensure extra safety measures, Superstate employs a secure Fireblocks MPC framework for all administrative addresses that manage token contracts and the AllowList for USTB. These updates require a multi-signature approval of 2-4 individuals.

Superstate Inc. adheres to daily reports and reconciliations with third parties, ensuring consistent accounts and valuation. Federated Hermes, USTB’s Sub-Advisor, has developed robust risk management systems that have been tested over decades of managing similar investment mandates to USTB. They maintain a robust compliance program designed to comply with regulations for US investment companies. For transparency and audit controls, there are daily reports that go between the custodian, fund advisor, and Superstate Inc. to ensure there are no discrepancies

Performance Reporting

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

The Fund’s investment objective is to seek current income as is consistent with liquidity and stability of principal, targeting returns in line with the federal funds rate. Given the portfolio is managed by an experienced Sub-Adviser and is restricted to only invest in less than one-year duration U.S.Treasury Bills and Agency Securities, Superstate does not anticipate a deviation from the benchmark as the short-term US government securities market is highly correlated with Federal Reserve policy (effective federal funds rate).

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

Investors currently receive monthly statements via the Investor Portal. This Portal gives investors transparency into their current investment activity, Fund details and securities holdings, user controls, and AllowList addresses. For Arbitrum, these monthly reports may be shared on the public forum by members of the DAO for community visibility and review.

Fund statistics such as daily NAV, AUM, and performance are publicly available at the following link, which the Arbitrum community can easily access:

Below is an example of an Account Statement for Arbitrum:

3. Who provides the performance reports with respect to the underlying assets?

NAV Consulting Inc. calculates the fund’s NAV on each Market Day and prepares account statements for investors on a monthly basis. Investors may see the YTD performance and NAV of their investment by soon visiting the Investor Portal.

4. Describe any formal audit process and timing of such audits.

Ernst & Young LLP performs an annual financial audit for the Fund.


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

Please see the Investment Agreement shared privately.

2. Fee summary

The investment manager has waived all fees until the fund’s AUM exceeds $200M. After reaching $200M in AUM, Superstate Inc. charges a 0.15% management fee and the fund bears additional administrative, professional, and operating expenses. Shareholders are not subject to a performance-based fee or allocation.

A summary of all expenses is found below:

Note: These fees and expenses are outlined explicitly in the Fund’s Private Placement Memorandum and Investor Agreement upon subscription.

(i) the Management Fee of 0.15%
(ii) operating the Fund (including, but not limited to, administrative, audit, custody, financial statement preparation, and Circle Internet Financial fees)
(iii) any expenses not expressly the responsibility of the Investment Manager.
(iv) blockchain expenses and gas fees to mint USTB tokens

Superstate Inc. has agreed to waive or pay for certain expenses on behalf of the Fund. Superstate Inc. (not shareholders) shall continue to be responsible for paying new and/or ongoing expenses related to:

(a) the offering and organization of the Trust and the Series,
(b) Sub-Advisor fees
(c) insurance costs and expenses (e.g., for the assets of the Fund, D&O, E&O),
(d) expenses in connection with tokenization of the Shares.

The Fund does not charge early exit fees when clients choose to redeem, regardless of how long they have been invested in the fund. There are no gas fees for minting USTB tokens.

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

The Fund’s daily NAV is calculated by subtracting all daily accrued expenses from the daily interest income of the securities in the portfolio. Service providers to the Fund are billed either monthly or annually, and the payment is made upon receiving the invoice. The NAV of the fund takes into account this payment on a daily accrual basis, so when investors redeem their shares, they have already covered their expenses.

Smart Contract / Architecture

1. How many audits have you had and names of auditors?

Superstate has performed one smart contract audit via ChainSecurity.

Audit: ChainSecurity
Date: November 6th, 2023

Superstate Inc. has also undergone a systems audit via Trail of Bits.

Please see the Audit shared privately.

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

Yes – investors must undergo a standard KYC/AML process administered by Superstate Inc. before being able to purchase USTB. As part of onboarding, Superstate Inc. collects Ethereum addresses from each investor. Upon successful onboarding, Superstate adds the investors’ provided addresses to an AllowList smart contract which ensures USTB is only held in approved addresses. The AllowList requires 2/4 signatures via Fireblocks MPC.

3. Is the product present in several chains? Are there any cross-chain interactions?

Currently, USTB is only available onchain on Ethereum Mainnet and is an ERC-20 token. Certain investors may choose to hold their shares only in the book-entry form (off-chain) instead of being tokenized and mint at a later date.

We plan to natively launch on other chains in the future, depending on client demand and opportunities. Superstate Inc. is looking forward to collaborating with the Arbitrum community to grow the RWA ecosystem.

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

USTB is not yet used on other protocols. We intend to grow USTB integrations on-chain across various ecosystems and protocols, depending on client demand and where permissible.

Beyond the blockchain, USTB may become integrated with core institutional intermediaries including OTC desks, Prime Brokers, etc. for clients to be able to use their tokens for various secondary market opportunities between AllowList participants.

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

Superstate’s USTB is built to be robust, reflecting similar structures in traditional finance that have been developed over several decades and are governed by applicable law. The Fund’s investment mandate is executed by experienced portfolio managers who deploy capital within the Fund, based on thorough analysis, industry expertise, and adherence to fiduciary responsibilities. Superstate strives to provide total transparency into every detail of the Fund, including public and private information, holdings, and NAV.

Investors rely on Superstate’s management of admin privileges via our Investor Portal. Access to privileged roles within our Investor Portal is carefully controlled and restricted to whom Arbitrum grants access. We employ a robust authentication and authorization system to ensure that only authorized personnel have access to sensitive functionalities and data. Investors can use the Portal to see their portfolio’s performance, transactions, and any actions taken by administrators or trusted roles.

Investors trust Superstate to perform mint/burn activities per the 2-4 multi-signature standards outlined above (using Fireblocks MPC) and to continue developing reliable technology and infrastructure while getting independent third-party audits as needed. Superstate Inc. limits access to Circle and custody systems via multi-factor authentication, distributed across key management personnel. Regular audits and reviews are conducted to ensure compliance with internal controls and industry regulations.

6. Is there any custom logic required for your RWA token? If so please give any details.

No, USTB is built on a standard ERC-20 OpenZeppelin Contract.


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



Excited about this one. Great product, stellar team - seems like an obvious win-win for Arbitrum!