Ascend and M1X Complete Stellar Blockchain Repo Test with Sovereign Debt

On October 23, Ascend and M1X Global announced the completion of an institutional repurchase transaction utilizing the Stellar blockchain and an onchain sovereign bond known as USDM1. This transaction involved 72 consecutive hourly rolls conducted between October 16 and October 19.

The transaction was facilitated through an institutional credit facility and onchain smart contracts, which managed the pledging, funding, repayment, and return of collateral. This development serves as a concrete demonstration of financing capabilities rather than a forecast for a new lending market.

According to the firms, the financing was priced at SOFR plus 10 basis points, equating to a 3.98% annualized rate at the time, with a two-percent collateral haircut and a maximum loan-to-value ratio of 98 percent. USDM1 is a US-dollar sovereign bond issued by the Republic of the Marshall Islands, secured by short-duration US Treasury instruments.

The significance of this test lies in its combination of legally specified debt collateral with blockchain execution, supported by Chainlink data feeds for price information. However, investors are advised to differentiate between announced milestones and immediate asset value changes, as the actual impact on token trading remains uncertain.

Looking ahead, the next steps involve repeating this process with independent counterparties and varying collateral conditions, along with transparent reporting of end-to-end costs. This will help assess the scalability and risk controls necessary for the repo market to function effectively.