Yield Distribution Mechanics

Core Design: Constant $1.00 Plus New-Token Airdrops#

USDBOND distributes yield using a constant NAV plus newly minted USDB airdrop model. Every USDB remains pegged at $1.00; Treasury interest does not change the token price but is distributed by minting new USDB tokens daily and airdropping them to eligible holder wallets.

This means USDB does not adopt any of the following common models:

Consistency With Franklin Templeton BENJI#

USDBOND's mechanism is identical to BENJI's:

• 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 yield accrues on a per-second basis as tokens are transferred.
• BENJI is the only tokenized money market fund currently capable of daily on-chain dividend distribution 365 days a year.

WisdomTree's WTGXX has also introduced continuous dividend accrual, allowing shares to allocate daily income according to how long each verified wallet has held tokens, using blockchain timestamps to track intraday transfers.

The Three Prerequisites for 365-Day Continuous Operation#

Traditional money market funds generally distribute dividends on business days. USDBOND is designed to distribute every day, 365 days a year, including weekends and holidays. This requires the following three mechanisms to hold simultaneously:

Airdrop Calculation Formula#

The quantity of USDB airdropped each day is calculated as follows:

Daily airdrop USDBᵢ = Holding USDBᵢ × (Fund daily net income ÷ Total fund shares outstanding) × (1 − Management fee rate)

The terms in the formula mean:

Yield Illustration#

Based on a current short-term US Treasury yield of approximately 3.5% and an annualized management fee of 0.15%:

Holding USDT or USDC over the same period yields 0%. The table above is an illustration based on a fixed yield rate; actual yield varies daily with Treasury yields and fund net income and does not constitute a yield commitment.

Definition of Eligible Holders#

The eligible users for airdrops are the USDB holding addresses that are eligible at the time of the airdrop. Eligibility is determined by status at the snapshot time, not by the time of subscription or the length of the holding history.

Snapshot Time#

A snapshot of on-chain USDB holding addresses is taken daily at UTC 00:00 (or another fixed time determined by protocol governance).

Eligibility Conditions#

An address must satisfy all of the following conditions simultaneously:

1. It has completed KYC/AML verification with the transfer agent and has been whitelisted.
2. It holds a USDB token balance at the snapshot time (balance > 0).
3. It is not under a lock-up, freeze, or sanctions list designation.
4. It is not located in a restricted jurisdiction.

Treatment of Ineligible Addresses#

Wallet addresses that have not passed KYC, sanctioned addresses, and addresses expressly excluded by protocol governance are not eligible for airdrops. USDB held by ineligible addresses remains redeemable at principal ($1.00 per token) but earns no yield airdrop.

Why it is designed this way: USDB is a registered investment company share under the Investment Company Act of 1940 and is a security. Yield can be distributed only to eligible holders that have completed KYC/AML verification; this is a component of the securities law compliance architecture, not an optional operating policy.

Airdrop Execution Process#

The daily airdrop is completed through coordination of off-chain yield calculation and on-chain execution, in five steps:

The airdrop is executed by batch transfer or Merkle distribution to optimize gas costs.

Smart Contract Interface#

function dailySnapshot() external onlyOperator {
    // Record eligible address balances at UTC 00:00
    // Generate snapshot data for use by the airdrop
}

function mintAndAirdrop(uint256 dailyYield, bytes32 snapshotRoot) external onlyOperator {
    // Mint new USDB into the distribution pool
    // Batch airdrop to eligible addresses using the snapshot data
}

function isEligible(address account) public view returns (bool) {
    // Check whether the address is whitelisted
    // Check whether the address is sanctioned
    // Check whether the address is in a restricted jurisdiction
}

Airdrop Execution Risk#

The daily airdrop depends on coordination between off-chain yield calculation and on-chain execution. Oracle delays, data deviations, or technical failures at the snapshot time can result in inaccurate airdrop quantities or failed distributions. The airdrop contract must undergo a third-party security audit. The complete risk list appears on the Risk Factors page.

Frequently Asked Questions#