Midas, a tokenization platform backed by Coinbase Ventures and others, has launched a new yield-bearing token called mBASIS.

mBASIS is a dollar-denominated ERC-20 token designed to deliver yield through a delta-neutral basis trading strategy, Midas said Thursday. Delta-neutral basis trading involves profiting from price gaps between the spot and perpetual futures markets. By going long in the spot market and short in the perpetual futures market for the same amount (or vice versa, if futures are lower than spot), the trade captures the price difference, or basis, as profit while maintaining a delta-neutral position.

The mBASIS token is similar to Ethena Labs' yield-bearing token, sUSDe (a staked version of its USDe "synthetic dollar"), which also uses a delta-neutral basis trading strategy to generate yield. Since launching earlier this year, sUSDe has quickly grown in popularity and currently leads the yield-bearing tokens category with a market cap of $1.65 billion, according to The Block's Data Dashboard.

Midas decided to launch mBASIS because it felt it could build a better product than Ethena ENA +3.08% Labs, Fabrice Grinda, executive chairman of Midas, told The Block.

Midas currently already offers mTBILL, a yield-bearing stablecoin backed by U.S. Treasurys, which is a more suitable product for bear markets. However, in bull markets, people seek yield beyond the risk-free rate that is offered by mTBILL, Grinda said.

"In bull markets, people expect the price of bitcoin and ether to rise in the future. You can generate yield by buying the spot and shorting futures. When the market is extraordinarily frothy as it was in March this generated annual returns upwards of 50%," Grinda, co-founder and former CEO of Aucland, Zingy and OLX, and a serial angel investor, said. 

mBASIS vs Ethena's sUSDe

mBASIS differs from Ethena's sUSDe in more ways than one, Midas founder Dennis Dinkelmeyer, a former investment research analyst at Goldman Sachs, told The Block. Dinkelmeyer said that, unlike Ethena's product, mBASIS is managed by "a leading, licensed asset manager who operates under a fiduciary duty, ensuring that the investment process aligns with the best interests of investors," declining to name the asset manager. He added that mBASIS has an independent regulated fund administrator, NAV Consulting.

mBASIS also provides bankruptcy protection, as client assets are held in a bankruptcy-protected special purpose vehicle, Dinkelmeyer said. In the event of a default, a security agent would distribute assets to creditors. 

The mBASIS token is "fully compliant with European securities regulations," according to Dinkelmeyer, who said this compliance ensures investor protection and legal certainty and makes mBASIS a "more transparent option compared to Ethena's product."

How mBASIS works

The mBASIS token dynamically adjusts basis positions across bitcoin, ether and the top 20 altcoins. While basis trading strategies typically perform well in bull markets due to positive funding rates, mBASIS switches to reverse basis trading or to mTBILL during adverse market conditions.

"This flexibility ensures mBASIS remains an attractive investment under various market conditions," Dinkelmeyer said. "In early June, the mBASIS APY [annual percentage yield] was around 20%. Currently, the APY is approximately 12%. The yield varies with market conditions," he added.

Overall, Dinkelmeyer said that mBASIS aims to achieve above-market returns by actively allocating to basis positions in the top 20 altcoins, which typically offer higher returns than bitcoin and ether.

mBASIS has already collected a seeding amount that is currently being invested, totaling "several million dollars" in total value locked (TVL), Dinkelmeyer said. He expects the TVL to exceed $100 million by this year's end for both of Midas' tokens, mBASIS and mTBILL. The latter currently has a TVL of about $7 million, according to Midas' website.

Both mBASIS and mTBILL are unavailable to U.S. persons and entities or those from sanctioned jurisdictions. The minimum investment amount currently for both products is 100,000 euros (over $107,000). Certain investors, such as qualified investors, may be able to invest at lower minimum amounts.

Midas is backed by high-profile investors, including Coinbase Ventures, GSR and BlockTower Capital. The Berlin, Germany-based startup raised $8.75 million in funding in March.