Tokenized T-Bills Go Live On Canto

A new project on Canto will help tap into the deep liquidity of US Treasuries.

Can Real-World Assets help connect DeFi ecosystems with trillions of dollars of new liquidity?

Integration of real-world assets (RWA) into DeFi ecosystems is an important step for onboarding trillions of dollars of new liquidity and bringing decentralized technologies into the mainstream. To date, however, relatively few projects have successfully bridged the gap between TradFi and DeFi.

Fortunafi's new initiative brings US Treasuries—the world's most popular and liquid asset—to Canto, a Layer-1 blockchain that has prioritized the provision and availability of liquidity in the interests of ecosystem growth.

Tokenizing Treasuries

Fortunafi's Tokenized Asset Protocol (TAP) allows KYC'd US and non-US users to deploy stablecoins into RWA via a smart contract. Investments are offered through a private fund structure. The tokenized assets can then be integrated with DeFi protocols. For example, they can be used as collateral for lending dApps—such as the Canto Lending market, in this case.

Short-term US Treasuries are an obvious asset for tokenization, because they are so widely-known and trusted, and currently offer high and essentially risk-free returns.

$fBILL (for US users) and $ifBILL (for non-US users) are backed by direct purchases of US Treasury Bills that have a remaining maturity under 12 months, and/or ETFs that invest in short-term US Treasury Bills, such as BIL, SGOV, and SHV.

In the present environment of high interest rates, government bonds are an attractive option, with such assets returning 5% or more. Ironically, this is better than even the most popular DeFi dApps are currently offering. Over the last six months, rates for supplying USDT on Aave have averaged just 3.6%, though are now starting to pick up.

Aave returns on USDT supply, screenshot
Returns for supplying USDT on Aave are starting to pick up from historically low levels.

What Is Canto?

Canto is a new L1 that launched in August 2022 and saw a surge in activity into the beginning of 2023. The ecosystem was built to prioritize liquidity and growth, which it aims to achieve in several unique ways.

With no Foundation, VC backers, and no presale, the platform attempts to avoid the concentrations of holders that have been so damaging to other blockchain ecosystems. Moreover, it takes a "free public infrastructure" approach, so that critical services cannot be used to tax users, as the platform's doc describe:

  • Liquidity as a Free Public Good: Zero fees for Liquidity Providers (LPs). Canto makes liquidity free for protocols, arbitrageurs and traders.
  • Rent Extraction Resistant: Canto aims to establish Free Public Infrastructure. Core DeFi primitives will not have sovereign governance tokens, nor the capacity to extract rent in the future.
  • Minimal Viable User Capture: Where possible, Canto avoids interface-driven user ownership. Public infrastructure DEXes will have no swapping interface, so all users must trade on third-party aggregators. This will facilitate user acquisition for new protocols.

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