Understanding Matrixdock: A Guide for Beginners

Introduction

In 2023, Real World Assets (RWA) initiated a new narrative in the cryptocurrency market, with numerous institutions and projects beginning to lay out and pivot towards RWA operations. The roots of this shift can be traced to the downward trend in the cryptocurrency market in 2023, which led to a continuous outflow of market funds. RWAs, valued in the trillions, became a focal point for investors. Additionally, the regulatory constraints of traditional finance made it difficult for institutions to invest or seek loans. In contrast, the cryptocurrency market, lacking real-world assets, offered more lenient conditions, allowing institutions to fill the gap in the RWA sector. Moreover, these businesses are relatively mature in traditional finance, attempting to utilize RWA to find new growth opportunities in the cryptocurrency market.

The cryptocurrency market exhibits a clear Matthew effect, with many sectors dominated by oligopolies. Many projects operate similarly regarding overall business operations and product design, leading users to often choose protocols with strong liquidity, good business data, and a certain reputation. Given the characteristics of RWAs, early market entrants are likely to have more advantages than newcomers. Many veteran blue-chip DeFi users have noticed this, progressively integrating RWA operations. For instance, MakerDAO has introduced RWA-related operations, and the founder of Compound has embarked on a second venture, establishing an RWA company. Due to these leading protocols’ existing user bases and strong liquidity, they have certain first-mover advantages, making the competition in the RWA sector even fiercer.

Matrixdock provides RWA tokenization services for institutions and investors verified through KYC, focusing on U.S. short-term treasury bills (T-bills) risk exposure. The team has an excellent background, and the project has integrated Chainlink’s Proof of Reserve (PoR) system, supported by Chainlink’s endorsement. After the product launch, the business has developed rapidly. This article elaborates on its RWA token, STBT, detailing its business logic and risk management mechanisms, and analyzes the current development status of the project.

What is Matrixdock?

Matrixdock is a wholly-owned subsidiary of Matrixport, which has secured a total financing amount of $138 million, backed by well-known industry investors such as Paradigm and Dragonfly. The team members, including Wu Jihan and Wu Mengxia, boast impressive backgrounds and extensive experience in traditional finance and cryptocurrencies.

Founded in February 2023, Matrixdock is dedicated to investing in the RWA (Real World Assets) government bond market. It offers KYC-certified investors the opportunity to purchase short-term U.S. Treasury bond tokens (STBTs) while employing third-party custodial services to manage these government bonds. In July of the previous year, the protocol announced its integration with Chainlink’s PoR (Proof of Reserve) off-chain asset verification system, significantly enhancing the transparency of its RWA operations. Since its product launch, the business has grown rapidly, and as of now, it has not issued any native governance tokens.

STBT Token

The STBT (Short-term Treasury Bill Token) is a product of real-world tokenization launched by the Martridock protocol, complying with the ERC-1400 standard as an RWA (Real World Asset) token. Each STBT token is pegged to the yield of a six-month U.S. Treasury bill (T-bill), with its yield varying accordingly. According to the official website, approximately 467 million STBT tokens have been minted, with 98.03% of the assets backing these tokens being reverse repurchase agreements of government bonds. The process for purchasing and redeeming STBT tokens is straightforward, with direct access available on the official website for both transactions, and trading can be conducted anytime after KYC verification. Since STBT tokens adhere to the ERC-1400 standard, purchases and transfers can only occur between whitelisted addresses.

Source: matrixdock

Below is the detailed process for purchasing and redeeming:

Purchasing STBT

Matridock requires users to be accredited investors and pass KYC verification to buy STBT, with an initial investment of $100,000. Channels for purchasing include the Matridock official website, as well as platforms like Curve and 1inch.

Eligible investors need to pay stablecoins (such as USDC, USDT, DAI, etc.) to the protocol, which then deposits these stablecoins into a government bond account managed by a professional third-party custodian that directly trades with the bond market. This enables the conversion of stablecoin holdings into T-bills. Once the T-bills are confirmed purchased, Matridock uses smart contracts to mint the corresponding amount of STBT to the investor’s account.

A service fee of 0.1% of the total APY is charged during the purchase.

Source: Matrixdock

Redeeming STBT

The redemption process works in reverse to the purchasing process. Investors return STBT to the Matridock protocol, which is responsible for destroying the tokens, and instructs the third-party custodian to redeem and sell the corresponding T-bill positions, obtaining stablecoins, which are then returned to the investors.

The stablecoin redemption process typically requires a waiting period of three to five days.

Source: matrixdock

During redemption, a fee of 0.1% of the STBT is charged as a redemption fee, and investors also pay up to 0.2% of APY as a custodial fee for the underlying assets.

Risk Management

The uniqueness of the RWA business necessitates enhanced risk management protocols, with the primary concern being centralized catastrophic risk. In Matrixdock’s design, investors do not directly participate in the flow of funds; instead, funds must pass through the team and custodians. Consequently, it is essential that the team and custodians are sufficiently motivated to ensure they do not manipulate the funds. On-chain, every minting and burning transaction of STBT is clearly recorded. However, off-chain, the opacity of third-party custodial services cannot be completely avoided. Therefore, Matrixdock integrates Chainlink’s Proof of Reserve (PoR) system for off-chain monitoring and asset backing.

Source: Matrixdock

PoR is an oracle system launched by Chainlink specifically for monitoring off-chain assets. It is supported by data from multiple providers and audited by Chainlink officials. The main objective is to provide value proof for RWA assets. Essentially, Chainlink verifies the reserve balance of off-chain assets, then packages and uploads the data to the blockchain, which is integrated into Dapp contracts. Several projects have already integrated PoR, such as wBTC.

Source: Data Chain Link

Chainlink’s endorsement significantly enhances the authenticity of off-chain assets, thereby increasing the transparency of the RWA business within Matrixdock. Additionally, the team regularly uploads asset-proof documents on their official website, each recorded on the blockchain with a corresponding hash value and updated frequently. The documents include detailed information on assets like T-bills and reverse repurchase agreements.

Source: Matrixdock

Due to compliance and regulatory requirements, Matrixdock currently does not provide products and services to Asia (including mainland China, Hong Kong, Singapore, Japan, and Myanmar), the Americas (including the United States and Canada), or Europe (including Russia).

From the above, it is evident that Matrixdock has invested considerable effort in business transparency, disclosing on-chain transaction records, providing proof of off-chain assets, and integrating Chainlink’s PoR system for endorsement, thus managing risks effectively.

Current Development Status

When Matrixdock was launched, it experienced rapid growth, reaching a Total Value Locked (TVL) of over $50 million within two months. After integrating Chainlink’s Proof of Reserve (PoR), the funds’ scale increased, with the TVL surpassing $100 million. Currently, the TVL is approximately $47 million.

Source: Defillama

According to data from the official website, the current supply of STBT tokens is approximately $46.68 million, with an Annual Percentage Yield (APY) of 4.90%.

Source: Matrixdock

Observing the minting and burning records of STBT, there was a higher quantity of tokens minted during the initial stages of the launch, followed by a decrease. Significant proportions of tokens were burned in August 2023 and, more recently, likely due to the cycles of T-bills, which resulted in the corresponding destruction of STBT tokens.

Source: Dune

Generally, the yield rate of STBT has been stable between 4% and 5%. Influenced by liquidity and market sentiment, there was increased volatility in the first half of 2023, with the yield rate peaking at over 10%. The rates stabilized in the latter half of the year.

Source: Dune

Conclusion

As a platform investing in Real World Assets (RWA) tokens, Matrixdock offers opportunities to invest in short-term U.S. T-bills for investors who have passed KYC verification. The team has a strong background, and although the project has not yet issued its tokens, the APY of the RWA token STBT is between 4%-5%. Due to the unique nature of the RWA business, the team has put significant effort into business transparency and has integrated Chainlink’s PoR system for endorsement, ensuring better risk management. The rapid business growth upon product launch, with TVL surpassing $100 million, demonstrates a strong performance in its sector.