Compound Founder Forms 'Superstate' to Create Bond Fund With Ethereum for Record-Keeping

The new fund will invest in short-term U.S. government bonds, relying on a traditional Wall Street transfer agent for keeping track of holders but using Ethereum as a secondary record-keeping source.

AccessTimeIconJun 28, 2023 at 8:35 p.m. UTC
Updated Jul 3, 2023 at 3:42 p.m. UTC

Robert Leshner, CEO of decentralized lender Compound, submitted filings to U.S. securities regulators for "Superstate," a new company that will create a short-term government bond fund using the Ethereum blockchain as a secondary record-keeping tool.

According to a June 26 filing with the Securities and Exchange Commission, Superstate's fund will invest in "ultra-short duration government securities," including U.S. Treasury bonds, government agency securities and other government-backed instruments.

The fund will rely on a traditional Wall Street "transfer agent" to keep ownership records of the holders of the fund, the filing states.

However, it the filing continues, "ownership of certain fund shares also will be recorded on one or more blockchains, initially the Ethereum blockchain, in the form of the Secondary Blockchain Records."

"The adviser believes that a blockchain-integrated recordkeeping system may provide operational efficiencies and enhance shareholder experience without negatively impacting the quality of the services provided by the fund's transfer agent," according to the filing. "In the future, the fund's shares may also be available for purchase, sale, or transfer from one shareholder to another shareholder (or potential shareholder) 'peer-to-peer' on a blockchain by utilizing Secondary Blockchain Records."

In that case, "the transfer agent's official record would be reconciled and matched routinely with the Secondary Blockchain Records to effect any peer-to-peer transfers of shares," the filing states.

A separate filing on June 16 by Superstate Inc. indicated a plan to sell as much as $3.75 million of securities in the category of "option, warrant or other right to acquire another security."

Leshner tweeted Wednesday that "this is the first step on a long journey to upgrade financial markets."

"Eventually, hundreds of trillions of 'offline' assets will find their way onto blockchains," Leshner wrote. "We plan to facilitate that migration."

Edited by Stephen Alpher.


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Bradley Keoun

Bradley Keoun is the managing editor of CoinDesk's Tech & Protocols team. He owns less than $1,000 each of several cryptocurrencies.