Etherfuse
How US Treasuries and Stablebonds Shape the Future of Global Investments
Exploring the Evolution and Global Impact of US Debt Instruments
In global finance, bonds issued by the US play a crucial role in economic stability, investment strategies, and financial markets. These bonds, issued by the world’s largest economic entity, are more than debt instruments; they serve as a benchmark for financial security and indicators of broader economic health.
US Debt Market
The latter half of the 20th century saw significant diversification in US Treasury securities, providing a range of investment options tailored to various financial needs:
- Treasury bills (T-bills): These short-term securities are issued with maturities ranging from a few days to one year. They are sold at a discount to their face value, and interest is paid at maturity. T-bills offer a low-risk investment option with high liquidity, making them attractive to investors seeking short-term, stable returns.
- Treasury Notes (T-notes): With maturities ranging from two to ten years, T-notes provide semiannual interest payments and return the principal amount at maturity. This intermediate-term security balances the need for moderate returns and secure investment opportunities.
- Treasury Bonds (T-bonds): These long-term securities, with maturities of up to 30 years, offer semiannual interest payments and return the principal at maturity. T-bonds are designed for investors seeking long-term stability and predictable income.
The Federal Reserve conducts monetary policy by buying and selling government securities through competitive bidding rather than directly from the treasury. When the Fed purchases securities, it reduces market supply and increases prices. This action influences interest rates, affecting borrowing costs for consumers and businesses.
Role in the International Financial System
Government Backing: US treasuries are supported by the creditworthiness of the US government, offering a low-risk investment opportunity. Foreign governments hold US treasury bonds in reserves because they are among the most secure assets.
Global Financial Benchmark: Yields on US Treasuries often serve as global reference points for pricing other financial instruments. The spread between US treasuries and other bonds can signal market expectations about economic conditions, monetary policy, and risk perceptions.
Liquidity: The US Treasury market is the largest and most liquid bond market, with $27 trillion USD in securities outstanding. The size of the US market creates smooth trading and investing opportunities.
Etherfuse US Stablebonds (USTRY)
Etherfuse tokenized US treasuries are short-term government debt with a one-week maturity. With an APY of 5%, these US Stablebonds are a safe investment to hedge against market volatility.
These interest-bearing tokens function the same as our other Stablebond:
- Single Minting Process: After purchasing tokens, they are automatically reinvested each week at maturity. Users can divest at any time or hold the tokens in a wallet to accrue yield.
- Weekly Rebase Mechanism: Bond yields are adjusted each week based on market conditions. This ensures that our Stablebonds stay competitive and offer fair returns.
- Purchase Orders: Purchase Orders can be created if one wishes to purchase more bonds than we have available. Once an order is completed, the buyer receives an NFT as collateral until the following week, when new bonds are issued.
Looking ahead, the next phase in bond evolution is the advent of tokenized bonds. US Stablebonds build on traditional bond concepts by leveraging blockchain technology and opening up new opportunities for international investors to engage with sovereign bonds.
We are excited about expanding our Stablebond options and are committed to creating a more accessible bond market.
