What is a Treasury Bills (T-Bills)?
Quick Definition
Treasury Bills (T-Bills) are short-term debt instruments issued by the US government, typically maturing in one year or less.
Full Definition
Treasury Bills are one of the most fundamental instruments in global finance. When the US government needs to raise short-term funds, it issues T-Bills. They are essentially IOUs that promise to repay the holder a fixed amount at a specific date in the future, usually within 4, 8, 13, 26, or 52 weeks. T-Bills don't pay interest in the traditional sense. Instead, they're sold at a discount to their face value, and the holder receives the full face value at maturity. The difference is the return.
T-Bills are backed by the US government, which is one of the reasons they're considered among the safest financial instruments in the world. The US Treasury market is also the deepest and most liquid debt market in the world, meaning T-Bills can be bought and sold in massive quantities without significantly moving the price.
Why we chose T-Bills
Three properties make T-Bills uniquely well-suited to backing stablecoins.
- Safety: The risk of the US government defaulting on a short-term obligation is extremely low.
- Liquidity: T-Bills can be sold quickly and at predictable prices, which is essential for meeting redemption requests.
- Yield: T-Bills generate a reliable return that reflects current short-term interest rates, providing a predictable income stream without exposing reserves to credit, duration, or market risk.
These properties are why T-Bills have become the foundation of most institutional-grade reserve-backed stablecoins, including Steady, and some of the newer entrants in the market.
T-Bills and Steady
T-Bills are the foundation of Steady's reserves. We chose them specifically for the combination of safety, liquidity, and reliable yield that they provide, exactly what a stablecoin should be built on. The yield generated by our T-Bill holdings is what powers Steady's rebase mechanism: up to 95% of that performance is given to the holders and automatically reflected through the growth of their position. The full composition of our T-Bill holdings is published and regularly updated on the Transparency Portal.
Related Terms
APY
ReadAPY, or Annual Percentage Yield, is the standardized rate of return an asset generates over a year, including the effect of compounding.
Off-chain Yield
ReadOff-chain yield refers to returns generated from assets managed outside the blockchain (typically traditional financial instruments) that accrue to whoever holds those underlying assets.
Reserve Assets
ReadReserve assets are the specific financial instruments held by a stablecoin issuer to back the tokens in circulation.
RWA (Real World Assets)
ReadReal World Assets (RWA) are tangible or financial assets from the traditional economy, such as bonds, real estate, or commodities that are brought on-chain through tokenization.
Yield
ReadYield refers to the income or return generated from an asset over time, usually expressed as a percentage of the asset's value.
Other Glossary Items
Learn about common and essential terms related to Steady and other stablecoin protocols.
Algorithmic Stablecoin
ReadAn algorithmic stablecoin attempts to maintain its value through automated rules that adjust token supply based on market demand, rather than holding equivalent reserve assets.
AML
ReadAML (Anti-Money Laundering) refers to the laws, regulations, and procedures designed to prevent the use of financial systems for laundering the proceeds of crime.
Arbitrum
ReadArbitrum is a Layer 2 blockchain network built on top of Ethereum, designed to offer faster and cheaper transactions while inheriting Ethereum's security and infrastructure.
Asset Backing
ReadAsset backing refers to the real-world or on-chain assets held by the issuer to support the value of every token in circulation.
Asset Locking
ReadAsset locking refers to restricting access to funds for a defined period or condition, during which they cannot be transferred or used.
Asset Segregation
ReadAsset segregation is the practice of keeping client or backing assets separate from the issuer's operational funds, protecting them from the issuer's other obligations.
Audit
ReadAn audit is an independent examination of a protocol's code, reserves, or operations by qualified third parties to verify accuracy and compliance with stated claims.
Backing
ReadBacking refers to the assets or mechanisms that support a stablecoin's value and help it maintain its intended reference value.
Blockchain Network
ReadA blockchain network is the system of connected participants and infrastructure that validates, records, and maintains data on a specific blockchain.
Blockchain
ReadA blockchain is a distributed digital ledger that records transactions across a network of computers in a secure, transparent, and tamper-resistant way.
Bridge
ReadA bridge is a mechanism that enables the transfer of assets or data between different blockchain networks.
Clarity Act
ReadThe Clarity Act is a proposed US legislative framework intended to clarify the regulatory treatment of digital assets, defining when they should be treated as securities versus commodities.
Collateralization / Over-collateralization
ReadCollateralization refers to the ratio between the value of assets held in reserve and the value of tokens issued. Over-collateralization means holding more in reserves than the value of tokens issued.
Composability
ReadComposability refers to the ability of different protocols, contracts, and tokens on a blockchain to interact and combine with each other seamlessly.
Counterparty Exposure
ReadCounterparty exposure refers to the risk that another party, such as a bank, custodian, broker, or service provider fails to fulfill its obligations, potentially affecting the assets or funds it holds.
LearnMoreAboutSteady
Transparency Portal
reserves, statements, audits, smart contract, and more.
FAQs
Discover the basics about Steady in our frequently asked questions.
Contact Us
questions, feel free to get in touch. We'll be happy to help.
