By Nancy, PANews

Tokenization is becoming one of the few narratives in this crypto cycle that has Wall Street bowing and regulators agreeing. Amidst this RWA craze, Superstate, a tokenized asset management firm run by Robert Leshner, the "godfather of DeFi" and founder of Compound, has quietly grown into a significant tokenized player, attracting hundreds of millions of dollars in investment, with compliance as its cornerstone.

Three tokenized products have been launched, with hundreds of millions of dollars in funding

Tokenization is becoming a new growth engine for the global financial market, and the trend of putting real-world assets on blockchain is rapidly gaining momentum. From proof-of-concepts to explosive growth in the tens of billions of dollars, RWAs have attracted Wall Street giants to invest in them. Amid this wave, Superstate, founded just over two years ago, has already established a significant presence in the tokenization market.

Superstate is another stop for Leshner in the crypto industry. He is better known as the founder of Compound, whose "lending is mining" mechanism ignited the liquidity mining craze in June 2020, propelling Compound to a leading position in DeFi, with its TVL exceeding tens of billions of dollars at its peak.

However, as the DeFi market continued to slump, user activity plummeted, capital outflows became noticeable, and TVL steadily declined, the once-hot on-chain financial ecosystem entered a cooling phase. Amid this decline, Leshner left Compound and turned to the more realistic RWA sector, founding Superstate.

As DeFi leaders start up again, VCs are naturally rushing to invest. In the early days of its establishment, Superstate completed two rounds of financing with participation from well-known institutions such as ParaFi Capital, 1kx, DRW, CoinFund, Galaxy Digital, and Hack VC, with a cumulative amount of tens of millions of dollars.

Superstate has a clear mission: to develop compliant, on-chain financial products linked to real-world assets for institutional investors, within the US financial regulatory framework. Currently, Superstate has launched three tokenized products, covering three key areas: government bonds, crypto arbitrage, and equity assets, gradually building a diversified on-chain asset portfolio.

In February 2024, Superstate launched its first on-chain fund product, USTB. While superficially a short-term U.S. Treasury bond fund, it is fully compliant with the SEC, with ownership records governed by U.S. federal regulations. Furthermore, its ownership records are stored as tokens on Ethereum, with the net asset value (NAV) synchronized daily via smart contracts, allowing users to subscribe, redeem, and settle trades on-chain.

USTB is primarily targeted at qualified institutional investors in the United States, supporting subscriptions and redemptions in US dollars or the stablecoin USDC. The product circulates on Ethereum, Solana, and Plume Network. Compared to traditional zero-yield stablecoins, USTB provides actual interest returns on on-chain funds while preserving on-chain asset liquidity, significantly reducing the opportunity cost of capital.

This design has also made USTB a foundational yield asset for a growing number of DeFi protocols. For example, Frax Finance uses it as collateral for its stablecoin system, Omni Network has included USTB on its balance sheet, Sky has announced a $300 million investment in tokenized assets, Arbitrum and Ethena Labs have included it in their RWA portfolios, and the US regulated stablecoin USD uses USTB as part of its underlying backing asset.

As of August 6, USTB's assets under management have grown to nearly US$420 million, with a yield of 4.04% over the past seven days, second only to Franklin, Ondo, and WisdomTree among tokenized US Treasury bond funds.

After the significant success of its first product, Superstate returned to the market in July 2024 with the launch of its second investment product, the Superstate Crypto Carry Fund (USCC). This is an on-chain crypto arbitrage fund for qualified buyers, with a core strategy based on the "cash and hold" mechanism in traditional finance.

In traditional finance, USCC primarily focuses on the positive basis in the Bitcoin and Ethereum futures markets. By buying spot assets and simultaneously selling futures contracts with corresponding maturities, the company locks in the price difference and builds a risk-neutral, stable-return investment portfolio. Furthermore, USCC also integrates Ethereum staking and short-term U.S. Treasury bonds to improve overall capital efficiency and enhance the portfolio's resilience to volatility.

It can be said that USCC is another exploration of the integration of on-chain asset composability and off-chain compliance. To date, USCC's assets under management have exceeded US$220 million, and its annualized return on investment strategy has reached approximately 16.17%, far exceeding the industry average for traditional arbitrage products. The company has also established partnerships with protocols such as Morpho, Frax, Resolv, Steakhouse Financial, and Anzen.

Deploy tokenized stocks and promote the process of tokenization compliance

In May of this year, Superstate further expanded its product line into tokenized equities with the launch of Opening Bell, a new platform. This platform supports the issuance and trading of SEC-registered public stocks directly on blockchain networks, initially supporting Solana and gradually expanding to other on-chain ecosystems. Investors can directly hold and trade these compliant stock assets through crypto wallets, enabling direct interaction between traditional equity and DeFi protocols. Opening Bell has already partnered with Upexi, SOL Strategies, Galaxy, and others to promote the on-chain tokenization of their equity assets.

To promote the adoption of tokenization in financial markets, Superstate also launched the Superstate Industry Committee (SIC), which has so far attracted more than 50 traditional and crypto members including 1KX, Aave, Uniswap, Solana Foundation, BitGo, Galaxy Digital, Bitwise, Maple Finance and Plume.

Leshner saw the convergence of DeFi and traditional finance as early as the Compound era, but regulatory pressure hindered progress. Prior to the official launch of Superstate, Compound partnered with Fireblocks and Circle to launch Compound Treasury, a fixed-rate product for businesses and institutions. This product deployed USDC within the Compound protocol at a guaranteed 4% interest rate, a rate far exceeding US Treasury yields at the time. However, due to the volatility of the DeFi market, declining returns, and compliance pressures, Compound Treasury was ultimately shut down in the first quarter of 2023.

"The main limitation of DeFi is that crypto-native assets are the only interoperable assets," Leshner stated at the launch of Superstate. He is very optimistic about the potential of asset tokenization, and has publicly stated numerous times that in traditional financial markets, changing asset ownership is a complex and inefficient process, with each change requiring extensive back-office, settlement, and liquidation processes. Tokenization, on the other hand, is a more efficient way to record ownership, eliminating cumbersome intermediaries and significantly reducing transaction and settlement costs. He believes that tokenization will become a core trend in future financial markets, bringing various assets, such as stocks, bonds, and real estate, onto the blockchain to achieve a more efficient, transparent, and compliant market structure.

At the same time, Leshner has consistently prioritized compliance as a core strategy. He believes that appropriate regulation should not be a barrier, but rather a tool to make DeFi more inclusive, secure, and widely accepted. The SEC's guidance on crypto assets and security tokenization is gradually taking shape, with the issuance of multiple guidelines and the potential for exemptions. He predicts that by the end of 2025, the security tokenization market will have truly taken off in a more mature regulatory environment.

Superstate has stepped up its efforts this year to address compliance. In addition to registering as a transfer agent with the U.S. SEC, aiming to fully incorporate tokenized assets into the existing financial regulatory framework, it has also actively promoted breakthroughs in tokenization policies and the establishment of industry standards. For example, a few months ago, Superstate joined forces with the Solana Policy Institute (SPI), a new lobbying organization in Washington, to submit a proposal called Project Open, advocating for the issuance and trading of securities on public blockchains, and submitting relevant legal framework proposals, advocating for the inclusion of traditional assets such as stocks and bonds on the chain, and providing specific regulatory exemptions for non-custodial blockchain protocols.

It is worth mentioning that Leshner himself is also actively participating in the current popular cryptocurrency and stock game. For example, he used NFT CryptoPunk #5577 to exchange for GameSquare's preferred shares worth US$5.15 million; he also spent approximately US$2.03 million to acquire more than half of the shares of liquor company LQR House Inc., trying to establish a crypto treasury plan, which once triggered a dispute over the company's control.