Product Structuring

USYC token is issued by Hashnote International Short Duration Yield Fund (SDYF). SDYF is regulated as a Cayman Island Monetary Authority (CIMA) mutual fund.

Tokens represent shares in the fund, thus all token holders need to be onboarded and KYC/AML’d by Hashnote to be able to own SDYF shares. The fund administrator moves shares in the SDYF share registry to reflect movements in the USYC token.

Subscription Workflow

Once an investor is onboarded to an eligible Hashnote Fund, their wallet address is added to the Allowlist, and permission is granted to hold USYC. The investor either wires fiat (USD) or sends stablecoin (USDC, USDT, or PYUSD) with our Smart Contract Teller into the Fund they onboarded. Hashnote then transfers the investor's funds to its Prime Brokerage to invest into T-Bills and enter repo/reverse-repo agreements.

The investor's ownership of this fund is reflected on a blockchain via a permissioned ERC-20 smart contract. Hashnote mints into the investor's wallet an amount of USYC tokens equivalent to the number of shares the investor has in the SDYF.

Whether the investor chooses to purchase with fiat or stablecoin, the amount of USYC the investor receives is equal to the deposit amount divided by the current Price of USYC.

Redemption Workflow

Any client wallet on the Allowlist and granted permission to hold USYC can also burn USYC for fund share redemption into fiat (i.e. USD) or stablecoin (i.e. USDC, USDT, pyUSD) with Smart Contract Teller.

The client's burning (or Hashnote burning on behalf of the client) of the token will be reflected in the fund registry by our fund administrator. Hashnote will emit stablecoin or start the process of retrieving fiat funds for wire back to the client.

Ledger

Ownership in SDYF is represented as shares at the Transfer Agent, and whose digital twins are represented on-chain as a Smart Contract token (ERC-20 specification). The on-chain representation introduces additional utility beyond what has been historically possible in traditional finance.

Entitlements

Entitlements are the gatekeepers to most of the functionality of USYC. The wallets associated with KYC’ed entities receive a Role that entitles them to hold and transfer the token.

The USYC Smart Contracts queries the Entitlements contract to verify the caller of a transaction has the appropriate permissions to perform a transfer or to receive the token.

Sanctions Check

In addition to checking that a wallet is permissioned, the Entitlements contract also performs OFAC sanctions checks by querying an on-chain oracle for matches to sanctioned addresses. The oracle is maintained by Chainalysis.

System Halt

The Entitlements contract can also freeze all transactions involving USYC. As every type of action involving USYC verifies the Role of the sender, the Allowlist is positioned to revert all transactions. In the event there is suspicious activity, Hashnote has the ability to prevent any transaction from being completed. Only after the situation has been resolved, will the Allowlist be put back into a state that allows the token to be transacted on.

Smart Contract Teller

To help investors enter and exit their positions efficiently, we provide a Smart Contract Teller to facilitate investing in the fund and liquidating the asset on-chain.

Minting

Through the Teller, investors of Hashnote can subscribe to USYC with USDC or PYUSD during regular market hours. Each stablecoin has an after-hours threshold, and any after-hours subscription will be subscribed at the next business day's price. This price is calculated in advance based on the current interest rate generated by the fund.

Redemption

The Teller provides USYC holders immediate liquidity for USYC. At any time of the day, investors can redeem USYC at the latest reported price through the Teller. You can view the liquidity available on the USYC page in real time. The liquidity provider rebalances the assets frequently to ensure maximum capacity to meet the needs.

For larger transactions, investors may use market makers such as Cumberland to close a position through an over-the-counter (OTC) deal. If you require more liquidity on a specific day, please contact us at [e-mail].