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Glo Dollar is backed by cash and US Treasuries
Treasuries are highly liquid, extremely safe investments. They’re what enable us to create basic income for people in extreme poverty. Here's what that means in terms of risk and yield.
June 26, 2023
Articles
Treasuries
Glo Dollar is backed by cash and US Treasuries
Treasuries are highly liquid, extremely safe investments. They’re what enable us to create basic income for people in extreme poverty. Here's what that means in terms of risk and yield.
June 26, 2023
Glo Dollar is a fiat-backed stablecoin. For every $1 of Glo Dollar in circulation, there is at least $1 of backing reserve assets. Those reserve assets are conservatively held in a mix of cash and US Treasuries to ensure ample liquidity.
Fiat-backed stablecoins generally operate this way (in contrast to decentralized stablecoins like DAI, or so-called algorithmic stablecoins).
The business model of issuing a fiat-backed stablecoin is to earn interest on the reserve.
Our issuing partner, Brale, invests Glo Dollar’s backing assets in cash and US Treasuries.
Brale is a FinCEN-registered Money Services Business (MSB), NMLS ID #2376957.
Brale will back Glo Dollar solely with cash and US Treasuries, which are debt instruments issued by the United States government to finance its operations.
Treasuries are generally considered very low-risk.
No investment is truly risk-free, but Treasuries are generally easily convertible to cash, i.e. liquid, have an active secondary market where they are bought and sold, and are secured by the full faith and credit of the United States.
Holding liquid assets ensures that fiat-backed stablecoins remain readily redeemable for cash, i.e. selling a Glo Dollar back to Brale for $1.
Treasury yields vary over time, but average 3-4%.
Treasury Bills, which are defined as short-term US Treasuries, provide an average return of about 3.37%. Longer-term treasuries tend to have higher returns than short-term Treasuries (though not always). Treasuries tend to provide higher returns in times of higher interest rates, which we’re in right now.
In the short- and medium-term, we expect the return on investment from cash equivalents to be higher than their historical average. In the long-run, we expect the historical average.
For more on how the assets backing Glo Dollar create revenue for basic income programs, see how Glo works.
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In this program, GiveDirectly identifies impoverished African villages to give their citizens $30 per month, transferred via mobile money technology, for 3-5 years. For people living on less than $2/day this is a transformational amount.
Glo's economic model is to invest its reserve in short-term Treasury bills and give the proceeds away entirely to GiveDirectly.
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Glo Dollar is a fiat-backed stablecoin. For every $1 of Glo Dollar in circulation, there is at least $1 of backing reserve assets. Those reserve assets are conservatively held in a mix of cash and US Treasuries to ensure ample liquidity.
Fiat-backed stablecoins generally operate this way (in contrast to decentralized stablecoins like DAI, or so-called algorithmic stablecoins).
The business model of issuing a fiat-backed stablecoin is to earn interest on the reserve.
Our issuing partner, Brale, invests Glo Dollar’s backing assets in cash and US Treasuries.
Brale is a FinCEN-registered Money Services Business (MSB), NMLS ID #2376957.
Brale will back Glo Dollar solely with cash and US Treasuries, which are debt instruments issued by the United States government to finance its operations.
Treasuries are generally considered very low-risk.
No investment is truly risk-free, but Treasuries are generally easily convertible to cash, i.e. liquid, have an active secondary market where they are bought and sold, and are secured by the full faith and credit of the United States.
Holding liquid assets ensures that fiat-backed stablecoins remain readily redeemable for cash, i.e. selling a Glo Dollar back to Brale for $1.
Treasury yields vary over time, but average 3-4%.
Treasury Bills, which are defined as short-term US Treasuries, provide an average return of about 3.37%. Longer-term treasuries tend to have higher returns than short-term Treasuries (though not always). Treasuries tend to provide higher returns in times of higher interest rates, which we’re in right now.
In the short- and medium-term, we expect the return on investment from cash equivalents to be higher than their historical average. In the long-run, we expect the historical average.
For more on how the assets backing Glo Dollar create revenue for basic income programs, see how Glo works.
Worldwide • Full remote
Worldwide • Full remote
Worldwide • Full remote
