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How does OUSG earn yield?

The significant majority of OUSG’s underlying assets are currently in the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), with the remainder in BlackRock’s FedFund (TFDXX), bank deposits, and USDC for liquidity purposes. The portfolio may, in the future, include other US Treasury funds and/or direct investments in US Treasuries. As these investments accrue yield daily, we recognized this yield by increasing the Net Asset Value (NAV) of the underlying fund, thereby increasing the NAV per OUSG token. For rOUSG, we pay out that yield to rOUSG token holders through rebasing.

How long after investing do I start earning yield/interest?

Since yield is effectively incorporated into the price of OUSG — or paid out in additional tokens, in the case of rOUSG — whenever we update the price of OUSG onchain, you start earning yield either the day of your subscription or the next, according to whether you subscribed before or after the price update for the day.

The only exceptions to this are weekends and holidays, since the next price update will not happen until the next Business Day. For example, say you subscribe on Friday after the price update. Since the next price update after that will not happen until Monday, you will not start receiving interest until Monday.

(Technical note: because of the way we’ve implemented the fund mechanics, if you are subscribed prior to the price update on Friday, during that update you will actually receive the expected yield for both Friday and Saturday. If you subscribe any time between immediately after the price update on Friday and the next price update the following Monday, you will receive the yield for both Sunday and Monday.)

How frequently (and when) do you update the onchain OUSG token price / NAV?

We typically update the price once every Business Day. We typically aim to do this sometime around 6pm ET but, because this is a manual process, it may sometimes take longer.

How often does OUSG / rOUSG pay out yield?

We aim to pay out yield every Business Day based on the net income received.

In the event that we are unable to update the price or rebase on a given Business Day, investors holding their tokens will still receive the yield from the ‘missed’ day at the time of the next update. Note that tokenholders who submit a redemption request prior to a price update or rebase on a given day are not paid yield on those tokens for that day. Please also note yield is paid to the holder of the tokens at the time of update; if you have already transferred or redeemed your tokens, you will not receive yield on them. Note that OUSG holders are not ‘paid out’ yield per se; instead, that yield is reinvested into fund, thereby increasing the value of their existing OUSG tokens.

In what currency/token does rOUSG pay out yield?

Yield is paid out in the form of additional rOUSG tokens (or fractions thereof). rOUSG holders are paid yield through a process called rebasing. (Compare this to OUSG holders, who are are not ‘paid out’ yield per se; instead, that OUSG yield is reinvested into fund, thereby increasing the value of the existing OUSG tokens.)

How is the amount of yield determined?

The amount of yield paid out on a given day is based upon the Net Income received as of the end of the previous Business Day. This Net Income is then allocated ratably across all OUSG and rOUSG holders (e.g. if you held 100% of the OUSG and rOUSG tokens, you’d be allocated 100% of the net income; if you held 25% of the OUSG and rOUSG tokens, you’d be allocated 25% of the net income, etc).

To ensure timely price updates, each Business Day the Fund makes a conservative estimate of the Net Income it expects to receive for the day (including, if immediately followed by a weekend or holiday, any income it expects to accrue to it over those non-business days) based upon historical data. When the Fund then receives final information on the actual income received from its holdings, it makes an additional adjustment to its Net Income on the following Business Day. It does this in order to provide more consistent updates to the OUSG price, since daily net income reporting is not yet available for BUIDL.

How can I check to ensure I’m getting the right amount of yield for rOUSG?

You can calculate your expected account balance by taking your account balance on any given day and multiplying it by the rebasing factor. In the example below, this investor invested $500K before the rebase on Nov 1. The rebasing factor applied on Nov 2 was 1.00014191. 500,000 * 1.00014191 is 500,070.96. So, if this investor hadn’t done anything else, after the rebase they would expect to see 500,070.96. And so on:

Rebasing FactorNot Relevant1.000141911.000177311.000423251.000117821.00000000

If this investor had submitted a redemption request of 100K OUSG before the rebase on Tuesday, remember that they would not earn yield on those 100K tokens for Tuesday; at the end of Tuesday they would have 400,070.96 tokens, and that token base is the number of tokens that would be rebased:

Rebasing FactorNot Relevant1.000141911.000177311.000423251.000117821.00000000
Tokens after Rebase400,070.96400,141.89400,311.26400,358.42400,358.42

To do a ‘sanity check’ by converting the rebasing factor into an annualized yield, you can calculate (RebasingFactor-1)*365