Ascend and M1X Complete Stellar's First Institutional Repo, Rolled Hourly for 3 Days
The loan was backed by a Treasury-secured Marshall Islands bond, priced at SOFR plus 10 basis points, and renewed itself every hour, weekend included. No loan size was disclosed.
By Fueled Crypto Newsroom · AI-assisted · 3 min read
A repo is a short-term loan backed by securities: one side hands over bonds, gets cash, and buys the bonds back later at a slightly higher price. It's one of the biggest and least glamorous markets in finance, and it mostly runs on bank hours.
The Stellar Development Foundation shared the announcement on X:
A milestone for institutional capital markets on Stellar.@AscendFi and @M1XGlobal completed the network's first institutional repo transaction, using USDM1, a sovereign bond secured by U.S. Treasuries, as collateral.https://t.co/kdDOU9toyj
Rolled over 72 times in a row, once an hour, from Oct. 16 to 19, including overnight and over the weekend, "without manual intervention."
Was priced at SOFR plus 10 basis points, which worked out to 3.98% a year, with interest accruing daily. SOFR is the benchmark overnight rate for loans backed by Treasuries.
Used a 2% haircut, meaning the loan could be worth up to 98% of the collateral's value.
Settled in USDC and used Stellar Asset Contract tokens for both legs.
Used Chainlink's new USDC data feeds on Stellar as the price oracle, along with USDM1's published redemption value.
Ran under signed SIFMA repo agreements, the standard industry contracts, with fees attributable to Ascend's U.S. broker-dealer subsidiary.
The companies said network fees for all 72 rolls "added up to a fraction of a cent." They called it "a demonstration," and the release doesn't say how much money was lent. Ascend is a subsidiary of PSG Digital Labs. The repo ended with the loan repaid and the USDM1 returned.
Securities Finance Times, which covers the repo and securities-lending industry, reported the same terms.
What USDM1 is
USDM1 is a dollar-denominated sovereign bond issued natively on-chain under New York law. The Treasuries backing it are held in a bankruptcy-remote structure, which is meant to keep them safe if something goes wrong with the issuer. Last month, institutional trading firm Nonco said it would accept USDM1 as collateral, so this isn't its first use as collateral, but it is its first repo on Stellar.
"Repo is fundamental to institutional capital markets, yet much of the infrastructure supporting it remains constrained by traditional settlement windows," Ascend CEO Dennis O'Connell said.
Tomer Weller, who works on product at the Stellar Development Foundation, put the size of the opportunity this way:
The US repo market accounts for more than $12 trillions in average daily exposures.
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