Grove Basin: Request for Builders

If a business needs cash for a day or a week, it can borrow against its Treasuries and repay the loan when that temporary need passes. It gets liquidity without giving up the underlying position.

Two constraints have kept T-bill repo from working onchain.

First, most DeFi borrowing has been open-term and variable-rate. A borrower cannot know up front what a short-term financing transaction will cost when the rate can change throughout the loan.

Second, if a borrower defaults, the lender or liquidation mechanism needs to turn the Treasury collateral back into the stablecoin that was lent. Tokenized T-bills complicate that process because primary redemptions are not instant, and transfer restrictions can limit who can take possession of the collateral.

Morpho Midnight addresses the first by introducing fixed-rate, fixed-term lending. Basin addresses the second.

A liquidation transaction can send eligible tokenized T-bills to Basin and receive stablecoins in one block, rather than waiting for the issuer's primary redemption to settle.

Combine fixed-rate lending with that liquidation primitive, and an onchain market starts to look much more like Treasury repo: predictable short-term financing secured by Treasury assets, with a credible path from collateral back to cash.

3. Tokenized T-bill collateral on DeFi perps exchanges

Treasury bills work as collateral in traditional derivatives markets because they are liquid, low-risk assets that convert to cash predictably.

Tokenized T-bills should play a similar role for onchain derivatives markets. Today, that is difficult.

A derivatives exchange needs more than a stable price from its collateral. Its liquidation engine also needs to realize the value of that collateral quickly and predictably when a position falls below its maintenance margin.

Tokenized T-bills fail that test on two counts. Many are permissioned assets with allowlisted holders and transfer restrictions, so a liquidator cannot necessarily receive the asset. Waiting until T+1 for a primary redemption is incompatible with a liquidation process that needs to complete in seconds.

Basin changes the liquidation path.

Instead of requiring a liquidator to take possession of the tokenized T-bill, the exchange can redeem it through Basin and receive a freely transferable stablecoin such as USDC or USDS immediately.

For an exchange such as Hyperliquid, traders could hold yield-bearing Treasury assets as collateral while the liquidation engine keeps access to stablecoin liquidity when it needs it.

Where Basin goes from here

Basin solves the liquidity issue that has been a bottleneck for tokenized real-world assets. The three features outlined above are just a starting point for ways we can supercharge the asset class.

Building something that sounds similar? Have a different integration idea?

We invite all builders to reach out to basin@grove.finance for more information.