What Is USDBOND?
USDBOND is an on-chain stable equity. It combines three things in a single token: the legal characterization of a registered investment company share under the Investment Company Act of 1940, a constant $1.00 net asset value maintained under the Rule 2a-7 amortized cost method, and on-chain yield distribution through daily airdrops of newly minted tokens.
One-sentence definition: USDBOND is an on-chain yield-bearing instrument backed by short-term US Treasuries, whose shares are characterized as registered investment company shares, each pegged at a constant $1.00, and which airdrops Treasury yield to eligible holders every day.
USDBOND is not a payment stablecoin. USDB is a registered investment company share under the Investment Company Act of 1940 and is therefore a security. Its payment function is a secondary application of a security share within a restricted-transfer framework; it does not change its characterization as a security, nor does it trigger the GENIUS Act's prohibition on yield paid by payment stablecoin issuers.
Core Mechanism: Constant $1.00 Plus New-Token Airdrops
USDBOND uses neither rebasing nor NAV appreciation. Every USDB is permanently pegged to $1.00; Treasury yield does not change the token price but is distributed by minting new USDB daily and airdropping it to eligible holder wallets.
| Step | Mechanism |
|---|---|
| NAV maintenance | Rule 2a-7 amortized cost method; NAV is constant at $1.00 per share |
| Yield source | Short-term US Treasuries maturing within 93 days and Treasury-collateralized repurchase agreements |
| Yield distribution | New USDB minted daily and airdropped to eligible addresses in proportion to holdings |
| Distribution frequency | 365 days a year, including weekends and holidays |
| Holder action required | No staking, no lock-up, no manual claim |
| Issuer revenue | Management fee (e.g., 0.15% annualized) rather than the reserve spread |
| Eligibility | Holding addresses that have completed KYC/AML and been whitelisted at the snapshot |
Yield is distributed using the following formula:
Daily airdrop USDBᵢ = Holding USDBᵢ × (Fund daily net income ÷ Total fund shares outstanding) × (1 − Management fee rate)
Key Facts
| Item | Detail |
|---|---|
| Token ticker | USDB |
| Legal characterization | Registered investment company share under the Investment Company Act of 1940 (a security) |
| Valuation method | Rule 2a-7 amortized cost method |
| Target NAV | Constant $1.00 NAV |
| Underlying assets | Short-term US Treasuries with remaining maturity of 93 days or less; Treasury-collateralized repurchase agreements |
| Government securities requirement | ≥ 99.5% of total assets |
| Weighted average maturity (WAM) | ≤ 60 days |
| Weighted average life (WAL) | ≤ 120 days |
| Remaining maturity of a single instrument | ≤ 397 days |
| Shadow NAV remediation threshold | The board must consider remedial action when the deviation from $1.00 exceeds 0.5% |
| Snapshot time | Daily at UTC 00:00 |
| Management fee rate | 0.15% annualized (illustrative) |
| Planned deployment networks | Ethereum, Solana, Polygon, Base |
| Reference precedents | Franklin Templeton BENJI / FOBXX, BlackRock BUIDL |
Why Yield Ownership Has Been Flipped
The USDT and USDC business models are essentially two variants of one logic: the issuer allocates user-deposited dollars to yield-bearing assets such as short-term Treasuries, captures all of the interest income, and distributes none of it to holders. Users receive a payment instrument, not an investment instrument.
USDBOND flips this relationship:
| Dimension | USDT (Tether) | USDC (Circle) | USDB (USDBOND) |
|---|---|---|---|
| Core revenue model | Retains the full reserve spread | Reserve spread, with roughly 60%+ paid to distribution channels | Management fee (e.g., 0.15% annualized); yield belongs to holders |
| Yield distributed to holders | 0% | 0% | ~3.35% (after the management fee) |
| Distribution cost as a share of revenue | Minimal | ~62% | Minimal (direct holdings within the whitelist) |
| Regulatory characterization | Offshore entity; high regulatory uncertainty | US compliance benchmark; NYSE-listed | Registered investment company share under the 1940 Act |
USDT and USDC together control more than 82% of the stablecoin market, with roughly $257.7 billion in circulating supply. Almost all of those funds earn zero yield. USDB does not need to beat the duopoly on payment functionality — it only needs to become the yield-bearing parking place for on-chain dollar holders.
The Regulatory Window: GENIUS Act and CLARITY Act
The US GENIUS Act (signed in July 2025) explicitly prohibits payment stablecoin issuers from paying interest or yield to holders, but that prohibition does not apply to 1940 Act registered fund shares. The CLARITY Act now under consideration extends the yield prohibition further to intermediaries such as exchanges, banning rewards that are "economically or functionally equivalent to interest on a bank deposit."
This means the room for USDT and USDC to pass yield to users through exchange "rewards" is narrowing, while USDB, as a registered fund share, distributes yield as a lawful fund dividend.
Risk notice: The GENIUS Act's definition of "payment stablecoin" turns on whether the instrument serves as a means of payment or settlement and whether the issuer promises redemption at a fixed monetary value. If regulators characterize USDBOND as a payment stablecoin, the yield prohibition would apply directly. See Risk Factors for details.
Consistency With Proven Precedents
USDBOND's mechanism follows the operating model of the Franklin Templeton BENJI / FOBXX funds:
- BENJI distributes yield by minting new BENJI tokens daily and airdropping them directly to shareholder wallets, not through NAV changes.
- BENJI's daily on-chain dividend distributions run 365 days a year, including weekends and holidays.
- BENJI's minimum investment is only $20, with a 7-day annualized yield of 3.55%; BlackRock BUIDL yields approximately 3.42%.
- The SEC permitted that registered fund to use the on-chain BENJI system for cash management through a no-action letter, relying on Section 17(f) of the 1940 Act and Rule 17f-2, and recognized a hybrid transfer agent arrangement combining off-chain books with on-chain records.
Getting Started
- Read the full whitepaper — legal architecture, value stability mechanism, yield distribution, technical architecture, and compliance framework
- Understand the daily airdrop mechanism — snapshots, the calculation formula, the definition of eligible holders, and the execution process
- Compare USDT / USDC / USDB — business models and value comparison across three dollar tokens
- Review the FAQ — 27 high-frequency questions and answers about USDBOND
Frequently Asked Questions
What is USDBOND?
USDBOND (token ticker USDB) is an on-chain stable equity — an on-chain yield-bearing instrument backed by short-term US Treasuries whose shares are characterized as registered investment company shares under the Investment Company Act of 1940. Every USDB maintains a constant $1.00 NAV under the Rule 2a-7 amortized cost method and airdrops Treasury yield to eligible holders daily.
Is USDB a stablecoin?
No. USDB is a registered investment company share under the Investment Company Act of 1940 and is a security, not a payment stablecoin. It has the characteristics of a constant $1.00 net asset value and can be used for payments and settlement between whitelisted addresses that have completed KYC/AML, but that payment function is a secondary application of a security share within a restricted-transfer framework and does not change its characterization as a security.
How much yield does holding USDB earn?
Based on a 3.5% short-term US Treasury yield less a 0.15% annualized management fee, net annualized yield is approximately 3.35%. By comparison, holding USDT or USDC earns 0%. On a $1 million principal, USDB generates approximately $33,500 in additional income each year.
How is yield paid?
Yield is airdropped to eligible holder wallets as newly minted USDB tokens each day, running 365 days a year including weekends and holidays. Holders need not stake, lock, or claim anything; yield arrives in the wallet automatically.
Who is eligible for airdrops?
The eligible users for airdrops are the USDB holding addresses that are eligible at the time of the airdrop. An address must simultaneously: have completed KYC/AML verification with the transfer agent and be whitelisted; hold a USDB balance greater than zero at the daily UTC 00:00 snapshot; not be in a lock-up period, frozen status, or on a sanctions list; and not be located in a restricted jurisdiction. USDB held by ineligible addresses remains redeemable at principal ($1.00 per token) but earns no airdrop.
What are the risks of USDBOND?
The principal risks are regulatory characterization risk (if characterized as a payment stablecoin, the yield prohibition would apply directly), liquidity mismatch risk, the fact that the $1 peg is not an absolute guarantee in the secondary market, smart contract risk, airdrop execution risk, and tax risk, since daily airdrops may constitute a continuing taxable event in most jurisdictions. The full list appears on the Risk Factors page.