Author
Superstate Inc., the Investment Manager on behalf of Superstate Crypto Carry Fund (USCC)
Summary
This proposal seeks to introduce USCC (Superstate Crypto Carry Fund) as collateral backing Frax USD (frxUSD), delivering stability, liquidity, and market-neutral yield as reserves behind the stablecoin.
USCC is a tokenized (ERC-20) crypto cash and carry fund that allows decentralized stablecoins to benefit from the stability of market-neutral positions while generating market-neutral on the assets backing the stablecoin as part of a diversified portfolio.
USCC has daily liquidity, low management fees, no performance fee, transparent holdings, institutional custody, bankruptcy-remote structure, and crypto-native features that make it appealing as an asset behind Frax USD.
This proposal looks to introduce USCC as a collateral asset with an initial cap of $20mm.
Background and Motivations
[Please Check out the forum post for this section]
USCC Overview
For years, the crypto cash-and-carry trade has been one of the best risk-adjusted opportunities, consistently producing double-digit returns with minimal directional market exposure.
Despite volatile swings and the operational complexity of setting up this trade, the potential returns are extremely attractive. Consistent yield generation in a crypto basis requires active management and has historically only been accessible to highly sophisticated investors, until now.
Spreads between spot and future prices for an asset create opportunities for investors to exploit. Basis (or ‘cash-and-carry’) trades involve an investor buying an asset (long leg) and shorting the corresponding future (short leg), or the reverse. These offsetting positions reduce directional market exposure and, if held to expiry, generate a predictable return as the two legs converge.
In crypto, liquid futures markets exist in both Bitcoin (BTC) and Ether (ETH), providing ample opportunity for crypto basis trading. In addition, long Ether positions can be staked to generate additional yield on deployed capital.
However, in order to execute this strategy effectively, investors need multiple counterparties and have to regularly monitor positions. Frax benefits from investing in USCC to get exposure to this market neutral yield strategy to optimize the reserves and yield backing frxUSD.
Flexible and market-neutral, USCC's investment strategy optimizes the yield and risk of crypto cash-and-carry trades.
Leveraging Superstate’s deep crypto markets expertise, USCC allocates capital to the best risk-adjusted opportunities at any time across:
- Bitcoin basis
- Ether basis, including staking Ether
- Cash and Treasury Bill products, and
- Basis in crypto commodities approved by CFTC in the future
When the crypto basis is meaningfully above the Federal Funds Rate, USCC will allocate accordingly. Otherwise, USCC will invest in Treasury Bill products until the next material opportunity is presented. As the basis changes, the Fund will adjust exposures and can trade backwardation if the futures curve inverts (e.g. when spot price > futures price).
USCC does not use leverage.
USCC is a simple, transparent, and compliant product for qualified purchasers to access crypto basis.
Investors can subscribe to and redeem from the Fund in USD or USDC, and shares can either be held in book-entry form or be tokenized as an ERC-20 token, which will, in the future, enable transfers between other shareholders for collateral or settlement purposes.
USCC is U.S.-based and structured as a bankruptcy-remote private fund. All trades are executed through top-tier domestic Prime Brokers, and assets are custodied by Anchorage Digital Bank (when spot is not held as margin with a Prime Broker). USCC is also audited annually by Ernst & Young, and NAV Fund Services produces the daily NAV (displayed publicly on the USCC fund page) and monthly statements. See 'Service Provider' overview below for more details.
Other Key Details:
- Daily liquidity, no lock-ups
- 75bps Management Fee, no performance fee
- Daily NAV on USCC fund page
- Weekly holdings on USCC fund page
- Monthly statements and annual K1s
- Purchase with USD or USDC
- ERC-20 Tokens or Book Entry shares
- USCC does not use leverage
- Compliant, audited fund for institutional investors:
- Bankruptcy-remote Trust
- 3c7 private fund
USCC’s Investment Mandate
[Please Check out the forum post for this section]
Detailed Holdings
As of December 13, 2024, the table below outlines the current holdings. Full details are available on USCC's Fund page.
| Asset | Quantity | Implied Yield | Notional Value | Portfolio % |
|---|---|---|---|---|
| USDC | 0.02 | 0.00% | $0.02 | 0.00% |
| USTB | 861,726.82 | 4.63% | $9,016,948.34 | 9.47% |
| Bitcoin (Custody) | 170.48 | 0.00% | $18,343,318.08 | 19.27% |
| Bitcoin (Collateral) | 115.56 | 0.00% | $12,434,252.76 | 13.06% |
| Ether (Custody) | 366.33 | 0.00% | $1,494,258.96 | 1.57% |
| Ether (Collateral) | 2,049.20 | 0.00% | $8,358,686.80 | 8.78% |
| Ether (Staked) | 10,080.00 | 2.87% | $41,116,320.00 | 43.20% |
| Liquid Collective Staked Ether (lsETH) | 1,014.27 | 3.06% | $4,410,273.88 | 4.63% |
| ETH Forward 27DEC24 | -8,720.00 | 18.37% | -$35,760,720.00 | -37.57% |
| ETH Forward 31JAN24 | -1,350.00 | 15.46% | -$5,613,300.00 | -5.90% |
| ETH Forward 28MAR25 | -2,301.00 | 14.83% | -$9,773,727.60 | -10.27% |
| ETH Forward 27JUN25 | -1,000.00 | 13.92% | -$4,378,600.00 | -4.60% |
| BTC Forward 20DEC24 | -20.00 | 17.52% | -$2,155,840 | -2.27% |
| BTC Forward 27DEC24 | -166.38 | 18.67% | -$18,000,652.20 | -18.91% |
| BTC Forward 28MAR25 | -90.15 | 14.63% | -$10,095,537.90 | -10.61% |
| Portfolio | 17.28% |
Income
Income generated by the Fund will be accumulated and reinvested by the Fund. There are not expected to be any distributions or dividends to the shareholders other than redemptions of Fund Shares.
Yield accrues to Fund NAV, determined as of the close of regular trading (17h ET) on each day that both the New York Stock Exchange and the Federal Reserve Bank of Philadelphia are open.
USCC Investor Eligibility
USCC is only open to Qualified Purchasers who must be KYC’d. Finres has already been deemed eligible to invest in this fund.
KYC/AML Compliance and Whitelist
The Fund and USCC tokens are available to "whitelisted" (aka Allowlist) investors who have passed checks for suitability, AML/KYC verification and register their corresponding addresses. Only the whitelisted users can subscribe for or acquire tokens on the secondary market. The Allowlist address check is part of the USCC token’s code and occurs each time a transaction is attempted. If the receiving or sending address is not present on the Allowlist, the transaction will fail.
Legal / Operational Details
Legal Structure USCC is a separate series of Superstate Asset Trust (a Delaware Statutory Trust). USCC is a private fund pursuant to Section 3(c)(7) of the Investment Company Act. USCC is only available to a limited subset of potential investors that meet the criteria outlined in the Private Placement Memorandum. Investors must undergo AML, KYC, and sanctions compliance checks.
Fund Mechanics Investors may purchase Shares of USCC via USDC or USD (“cash”) which may be issued in the form of ERC-20 tokens. This tokenized ownership is composable and transferable where one Share is represented by one USCC token on Ethereum. Transferring the USCC token effectively transfers ownership of the underlying share of the Fund. Investors who complete onboarding may identify Ethereum addresses to an AllowList, a smart contract managed by Superstate Inc. that approves KYC’d entities to interact with USCC tokens.
Investors may redeem Shares of USCC by burning USCC tokens (sending them back to the token contract address) and receive either USDC or USD (“cash”).
AUM, NAV per Share, transparent holdings, yield, and more are available via USCC's Fund page.
Purchases and Redemption
[Please Check out the forum post for this section]
Yield Considerations
[Please Check out the forum post for this section]
Fees
[Please Check out the forum post for this section]
Investor Portal
[Please Check out the forum post for this section]
Service Providers Overview
[Please Check out the forum post for this section]
About Superstate
[Please Check out the forum post for this section]
Key Personnel Biographies
[Please Check out the forum post for this section]
Voting:
- For: Invest USD or USDC reserves in USCC to back Frax USD with an initial cap of $20mm.
- Against: Do nothing.
Off-Chain Vote
Timeline
Dec 26, 2024Proposal created
Dec 26, 2024Proposal vote started
Dec 31, 2024Proposal vote ended
Nov 21, 2025Proposal updated