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Compound Founder Forms 'Superstate' to Create Bond Fund With Ethereum for Record-Keeping

The new fund will invest in short-term U.S. government bonds, relying on a traditional Wall Street transfer agent for keeping track of holders but using Ethereum as a secondary record-keeping source.

By Bradley Keoun|Edited by Stephen Alpher

Updated Jul 3, 2023, 3:42 p.m. Published Jun 28, 2023, 8:35 p.m.

Robert Leshner, CEO of decentralized lender Compound, submitted filings to U.S. securities regulators for "Superstate," a new company that will create a short-term government bond fund using the Ethereum blockchain as a secondary record-keeping tool.

According to a June 26 filing with the Securities and Exchange Commission, Superstate's fund will invest in "ultra-short duration government securities," including U.S. Treasury bonds, government agency securities and other government-backed instruments.

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The fund will rely on a traditional Wall Street "transfer agent" to keep ownership records of the holders of the fund, the filing states.

However, it the filing continues, "ownership of certain fund shares also will be recorded on one or more blockchains, initially the Ethereum blockchain, in the form of the Secondary Blockchain Records."

"The adviser believes that a blockchain-integrated recordkeeping system may provide operational efficiencies and enhance shareholder experience without negatively impacting the quality of the services provided by the fund's transfer agent," according to the filing. "In the future, the fund's shares may also be available for purchase, sale, or transfer from one shareholder to another shareholder (or potential shareholder) 'peer-to-peer' on a blockchain by utilizing Secondary Blockchain Records."

In that case, "the transfer agent's official record would be reconciled and matched routinely with the Secondary Blockchain Records to effect any peer-to-peer transfers of shares," the filing states.

A separate filing on June 16 by Superstate Inc. indicated a plan to sell as much as $3.75 million of securities in the category of "option, warrant or other right to acquire another security."

Leshner tweeted Wednesday that "this is the first step on a long journey to upgrade financial markets."

"Eventually, hundreds of trillions of 'offline' assets will find their way onto blockchains," Leshner wrote. "We plan to facilitate that migration."

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Bradley Keoun

Bradley Keoun is CoinDesk's managing editor of tech & protocols, where he oversees a team of reporters covering blockchain technology, and previously ran the global crypto markets team. A two-time Loeb Awards finalist, he previously was chief global finance and economic correspondent for TheStreet and before that worked as an editor and reporter for Bloomberg News in New York and Mexico City, reporting on Wall Street, emerging markets and the energy industry. He started out as a police-beat reporter for the Gainesville Sun in Florida and later worked as a general-assignment reporter for the Chicago Tribune. Originally from Fort Wayne, Indiana, he double-majored in electrical engineering and classical studies as an undergraduate at Duke University and later obtained a master's in journalism from the University of Florida. He is currently based in Austin, Texas, and in his spare time plays guitar, sings in a choir and hikes in the Texas Hill Country. He owns less than $1,000 each of several cryptocurrencies.