TL;DR
- Diversification Effort: The Arbitrum Endowment Committee proposes a $27 million investment across six real-world assets (RWA) products to diversify their DAO treasury. This move aims to bridge traditional finance and decentralized finance (DeFi).
- Allocation Details: BlackRock’s BUIDL Fund receives the largest share (31% of funds), leveraging BlackRock’s asset management expertise. Ondo Finance’s USDY, despite being unavailable in the U.S. market due to regulations, secures 17% of the assets. Other allocations include Superstate’s USTB Fund and three additional projects.
- Validation for Ondo Finance: The validation from Arbitrum supports Ondo Finance’s expansion and adoption, emphasizing the importance of tokenizing real-world assets in the crypto and DeFi space.
The Arbitrum Endowment Committee is embarking on an exciting journey to connect the realms of traditional finance and decentralized finance (DeFi). In a bold move, they are suggesting a substantial $27 million investment in six real-world assets (RWA) products, aiming to bring diversity to their DAO treasury.
📰 @Unchained_pod reports on the recent proposal to diversify @arbitrum DAO treasury assets into yield-bearing assets, with over 17% set to be allocated to $USDY.https://t.co/halQESJiya
🚫 NOTE: USDY is not, and may not be, offered, sold, or otherwise made available in the US… https://t.co/3gQfjqb9qQ
— Ondo Finance (@OndoFinance) June 24, 2024
Arbitrum, known for its Layer 2 scaling solution, aims to enhance its financial stability and reduce dependency on the volatile crypto market. The proposed investment totals 35 million ARB (approximately $27 million) and is part of Arbitrum’s Stable Treasury Endowment Program (STEP). The program focuses on investing in stable, liquid, and yield-generating real-world assets.
Allocation Breakdown
Here’s how the funds are allocated:
- BlackRock’s BUIDL Fund with Securitize: BlackRock’s BUIDL Fund receives the biggest portion, around 31% of the overall funds. This smart decision capitalizes on BlackRock’s asset management prowess.
- Ondo Finance’s US Dollar Yield Token (USDY): Ondo Finance receives 6 million ARB, representing over 17% of the assets. However, USDY is currently unavailable in the U.S. market due to regulatory restrictions.
- Superstate’s USTB Fund: Another 6 million ARB is allocated to Superstate’s USTB Fund.
- Mountain Protocol’s USDM, OpenEden’s TBILL Fund, and Backed Finance’s bIB01 asset: The remaining funds are evenly distributed among these three projects.
Arbitrum’s Careful Selection Process
Arbitrum evaluated over 30 initial applications to the STEP program. The final six were chosen meticulously to avoid spreading the investment too thinly. By concentrating on established products managing more than $100 million in existing assets under management (AUM), the committee mitigated operational risks and the risk of principal loss.
The interest in tokenizing real-world assets is on the rise. The total value of all tokenized treasury product tokens has doubled, reaching $1.72 billion (compared to $778 million at the start of the year). This strategy not only enhances liquidity but also promotes financial inclusivity by merging blockchain technology with conventional financial assets.
USDY Receives 17% of Allocated Funds
Ondo Finance’s USDY, a tokenized note secured by short-term US Treasuries and bank demand deposits, received 17% of the total allocated funds. With 6 million ARB (worth $4.5 million), USDY stands as a significant player alongside BlackRock’s BUIDL.
The validation from Arbitrum underscores Ondo Finance’s importance in the crypto and DeFi space. As one of the selected projects, USDY’s allocation represents major support for its expansion and adoption.
In summary, Arbitrum’s diversification move sets a precedent for future blockchain use cases in asset management, emphasizing stability, growth, and innovation.
