A T-Bill-Backed Stablecoin You Can Buy Stock In
The Opportunity
Tokenized U.S. Treasury bills are coming on-chain. Products like BlackRock’s BUIDL, Ondo’s USDY, and OpenEden’s TBILL are early entrants in what will become a deep, liquid market for tokenized government debt. When that market matures, it creates a straightforward opportunity: a stablecoin fully backed by tokenized T-bills, where the yield from those T-bills flows not to a corporation, but to public participants in the protocol.
Today, Circle earns billions in Treasury yield on USDC reserves. Holders of USDC get none of it. This protocol inverts that: anyone can buy a share of the protocol’s future revenue, stake it, and receive yield generated by the underlying collateral. Early participants acquire their share cheaply. As TVL grows, that share represents a claim on yield from an increasingly large pool of T-bills.
For stablecoin holders, the value proposition is straightforward: every stablecoin is backed by tokenized T-bills held by the protocol and redeemable on-chain at any time, permissionlessly. No centralized issuer stands between the holder and the collateral.
Protocol Equity: Own the Yield
At the heart of the protocol is an equity token: a fixed-supply token representing ownership of protocol revenue. It is minted once at deployment and never again. The entire supply is deposited into a Uniswap v4 liquidity pool paired with the protocol’s stablecoin, and the protocol retains ownership of the liquidity position.
Anyone can buy shares from the pool, and stake them to receive a pro-rata share of all protocol revenue:
- T-bill yield. As the underlying collateral appreciates, the protocol becomes overcollateralized. New stablecoin is minted against this excess and distributed to stakers.
- Liquidity pool fees. The protocol owns the stablecoin/equity LP position. Trading fees generated by the pool are harvested and distributed to stakers. The protocol sends some yield to a liquidity vault that can seed additional liquidity pools on external AMMs (Curve, Uniswap, etc.) and return profits to the protocol for distribution to stakers.
- Mint and redemption fees. Small fees on stablecoin minting and redemption flow to stakers.
- External revenue. External revenue sources (frontend fees, integrations, etc.) can be sent to the protocol for distribution to stakers.
The initial pool size is a deliberate design parameter. A smaller initial supply (e.g. 100,000 shares) means early believers can acquire meaningful protocol equity for modest capital. A larger supply raises the cost of early entry. The protocol operator sets this parameter at deployment, transparently defining the incentive structure for early participants.
An example. An early participant acquires 5% of the equity supply for a few thousand dollars. The protocol grows to $50M TVL in tokenized T-bills yielding ~5%. That participant now receives 5% of the yield on $50M – roughly $125,000/year – for a modest initial outlay. This is not a speculative token play; it’s a claim on real, sustainable yield from U.S. government debt.
How It Works
The protocol consists of a core contract, a staking vault, a liquidity vault, and a Uniswap v4 liquidity pool.
Deployment. The protocol mints N stablecoin and N equity tokens (where N is the configured initial supply), deposits both into a Uniswap v4 pool at a 1:1 price, and retains the LP position. This initial stablecoin is not counted toward collateral ratio because it cannot be extracted from the pool – all shares begin in the pool, and the only way to withdraw stablecoin is to supply shares, which you can only obtain by first depositing stablecoin. The AMM invariant ensures you never pull out more than you put in.
Zero-capital bootstrap. Because both sides of the liquidity pool are minted by the protocol itself, no initial capital is required to launch. The protocol creates its own deep liquidity pool from nothing – the stablecoin in the pool has no collateral obligation behind it, and the shares in the pool are the entire fixed supply. Real collateral enters the system only when the first user mints stablecoin by depositing T-bills. This means the protocol can launch with a fully functional trading pool on day one, without requiring seed funding or pre-sales.
Minting. A user deposits $1 of tokenized T-bills (at oracle price) and receives 1 stablecoin, minus a small fee. The T-bills are held by the protocol as collateral.
Redemption. A user returns stablecoin to the protocol and receives the equivalent value in T-bill collateral, minus a small fee. The returned stablecoin is burned.
Buying shares. Users who want protocol equity mint stablecoin (by depositing T-bills), then use that stablecoin to purchase shares from the Uniswap pool. They stake their shares to begin earning yield. This process itself generates trading fees for the protocol.
Yield distribution. Anyone can call harvestFees() to trigger fee collection and yield distribution. The caller receives a small reward (default: 50 bps of harvested amount) – this eliminates the need for a keeper bot. Harvested fees are split according to configurable policy: a portion is burned (improving collateral ratio), a portion goes to the liquidity vault (for seeding additional liquidity on external AMMs), and the remainder is distributed to stakers.
At scale, MEV bots will call harvestFees() frequently – this is desirable, as it means fees are distributed to stakers consistently. The caller reward is capped to bound the cost per harvest. Alternatively, the harvest function can be restricted to the protocol operator, turning it into a built-in revenue source – the choice between public and restricted harvesting is a business decision, not a technical constraint.
Overcollateralization minting. When T-bill collateral appreciates and the protocol’s collateral ratio exceeds the target, new stablecoin is minted during harvestFees() to bring the ratio back to target. This newly minted stablecoin is distributed to stakers and the liquidity vault – it’s the primary mechanism by which T-bill yield reaches equity holders.
Protocol-only liquidity. A Uniswap v4 hook enforces that only the protocol can provide liquidity to the equity pool, preventing third parties from extracting trading fees or manipulating pool pricing.
Policy Levers
The protocol operator controls several parameters that shape how the protocol behaves. These are dynamically configurable throughout the lifecycle of the protocol. Each is bounded by an immutable constant to prevent the operator from setting values that could endanger the protocol.
Target collateral ratio. Determines when overcollateralization minting kicks in. A higher target means the protocol hoards collateral and distributes less yield. A lower target means more stablecoin is minted and more yield flows to stakers. An immutable floor prevents this from ever being set low enough to endanger solvency.
Stablecoin burn ratio. Controls what fraction of harvested yield is burned rather than distributed. Burning stablecoin improves the collateral ratio over time, strengthening the peg. Distributing more rewards stakers. The operator balances long-term protocol health against staker yield.
Liquidity allocation. Controls what fraction of revenue is diverted to the liquidity vault for seeding external liquidity pools. More liquidity vault funding means deeper stablecoin liquidity on external AMMs, which makes the stablecoin more useful. Less means more yield to stakers. An immutable cap ensures the majority of revenue always flows to stakers.
Mint and redemption fees. Small fees charged on minting and redeeming stablecoin. These exist primarily to discourage oracle lag arbitrage – if the oracle updates slowly, an attacker could mint or redeem at a stale price for risk-free profit. Higher fees close that window but add friction for legitimate users. Both are capped by immutable constants.
Caller reward. The incentive paid to whoever calls harvestFees(). A higher reward means more frequent harvests but more value extracted per call. A lower reward means the protocol retains more yield but harvests may be less frequent. Capped to bound the maximum extraction.
Open Questions
Oracle. The protocol requires a reliable price oracle for the underlying T-bill collateral. The oracle implementation is intentionally stubbed – the appropriate solution depends on which tokenized T-bill product is used as collateral and what on-chain price feeds are available for it. Oracle reliability is the single most critical dependency for the protocol’s safety.
Regulatory classification. The equity token is likely a security under most current frameworks. The protocol’s viability depends on the evolving regulatory landscape for tokenized assets and DeFi participation tokens.
Collateral access. It is not yet clear how the general public will acquire tokenized T-bills to deposit into the protocol. Existing products have significant barriers: OpenEden’s TBILL is restricted to accredited investors, Ondo’s USDY has limited DEX liquidity, and BlackRock’s BUIDL is institutional-only. The protocol assumes a future state where tokenized T-bill products are widely accessible and liquid – a reasonable bet given regulatory momentum (e.g. the GENIUS Act), but not yet a reality, nor a guarantee.
Liquidity vault. The liquidity vault is designed to seed external liquidity pools (Curve, Uniswap, etc.) for the stablecoin, increasing its utility and tradability and generating additional yield for the protocol. The full implementation of liquidity vault strategy is deferred.
Repository
A reference implementation (not production-ready) is available at https://github.com/daren47/stablecoin-v0. The protocol is written in Solidity 0.8.28, integrates with Uniswap v4, and uses OpenZeppelin libraries for access control and token safety.
The reference implementation is provided as an npm package with integration tests that can be run against a forked mainnet with a few simple commands.