Stellar (XLM) Makes History With First Repo Backed by U.S. Debt

The pilot transaction, announced on October 23, 2026, involved interbank settlements using USDM1 bonds backed 1:1 by U.S. Treasury bills. This sets a precedent for direct collateral mobilization without centralized clearing systems, addressing limitations of traditional repo markets that are restricted by banking hours and require significant back-office resources.

Continuous Operation

The transaction ran continuously for three days from October 16 to 19, including weekends when standard banking infrastructure suspends operations. Over 72 hours, the algorithm executed 72 consecutive hourly rollovers without manual intervention, independently handling collateral locking, interest calculation, and clearing.

Total network fees for all cycles amounted to less than one U.S. cent, demonstrating the cost efficiency of blockchain-based operations compared to traditional financial systems.

Compliance Standards

The transaction aligned with SIFMA standards, using USDM1 bonds governed by New York law against USDC stablecoins. The rate was fixed at SOFR + 10 bps (3.98% per annum), with collateral value monitored by Chainlink oracles featuring a 2% haircut and 98% LTV limit.

Market Impact

By October 2026, Stellar had accumulated $3.64 billion in RWA assets, primarily from money market funds including Spicet Asset Management ($2.4 billion), Oasis ($557.92 million), and Franklin Templeton ($411.90 million). The USDM1 instrument introduced instant rehypothecation to this liquidity pool.

This breakthrough demonstrates that sovereign debt resources can be released and redistributed in 24/7/365 mode with near-zero operating costs, potentially transforming how institutional capital markets function in the digital asset space.