A tokenized Treasury product can advertise “Treasury yield” while the investor receives materially less. The missing yield can be spread across fund expenses, liquidity cash, performance fees, subscription and redemption friction, and settlement timing.
What Matters
The yield on the Treasury bill and the yield received by the token holder are not the same number. Between the government security and the investor can sit an asset manager, fund wrapper, liquidity buffer, stablecoin conversion, performance fee, subscription/redemption charge and idle settlement period.
DN defines Tokenized Treasury Yield Leakage as the difference between a clearly specified Treasury or portfolio reference yield and the investor's realized net yield after every economically relevant layer.
The right question is not “Which tokenized Treasury has the highest APY?” It is “How much of the underlying government yield actually survives the wrapper?”
DN Evidence Block
The Treasury reference is a comparison anchor, not a claim that every product holds a 3-month Treasury bill directly. DN separates the reference-rate gap from line-item leakage to avoid false precision.
The Signal: Tokenization Does Not Create Yield
Tokenization can improve transferability, collateral utility, settlement, programmability and access. It does not manufacture the underlying Treasury return.
If a short-term Treasury benchmark is 4.22% and a token holder receives 3.57%, the visible gap is 65 basis points. But it would be wrong to label all 65 bps a “fee.” Portfolio maturities, reverse repo, cash balances, liquidity reserves, expenses and timing can all contribute.
The DN Yield Leakage Stack
Asset Yield
The return generated by underlying Treasury bills, government securities, reverse repo or government money-market holdings.
Portfolio Mix
Cash, USDC and bank deposits held for liquidity can earn less than the highest-yielding underlying asset.
Wrapper Expenses
Management fees, expense ratios, custody, administration and fund operating costs reduce investor return.
Performance Fees
Some products charge a percentage of the yield instead of a fixed percentage of assets.
Entry / Exit Friction
Subscription and redemption charges become disproportionately important for shorter holding periods.
Settlement Drag
Capital waiting to mint, redeem or move into the earning state can spend part of its holding window earning less or nothing.
DN Yield Retention Ratio
If the reference is 4.22% and investor yield is 3.57%, the simple retention ratio is approximately 84.6%. This says how much of the chosen reference appears in the net yield; it does not tell us where every missing basis point went.
DN Reference-Rate Leakage
The U.S. Treasury published a 3-month constant-maturity rate of 4.22% on 23 October 2026. Franklin Templeton's FOBXX/BENJI listed a 3.57% 7-day current yield in September 2026. The roughly 65-bp gap is useful context, but the dates and portfolios are not identical, so DN classifies this as a reference-rate gap rather than direct fee attribution.
BENJI / FOBXX: The Cleanest Expense-Ratio Example
Franklin Templeton currently lists a 0.22% gross expense ratio and 0.20% net expense ratio for the Franklin OnChain U.S. Government Money Fund. It reported a 3.57% 7-day current yield and 3.63% 7-day effective yield in September 2026.
Franklin Templeton — FOBXX/BENJI
The blockchain token does not make regulated fund expenses disappear. It changes the recordkeeping and transfer layer around a fund that still has operating costs.
OUSG: Portfolio Layering Changes the Economics
Ondo's OUSG holds a portfolio of tokenized Treasury and money-market products plus liquidity assets. Recent disclosures have included State Street Galaxy SWEEP, BlackRock BUIDL, Franklin BENJI, Fidelity FYOXX, USDC and bank deposits.
Ondo states that OUSG fund expenses are capped at 0.15% and management fees are capped at 0.15%, with the management fee currently waived until 1 January 2027. The product has recently shown APY in the mid-3.5% range. Ondo — OUSG
This creates several economic layers: the yields of underlying funds, the portfolio weights, liquidity assets, OUSG-level expenses and the future management fee after the waiver expires.
DN Layering Leakage
This does not mean every layer automatically charges a separate fee to the investor. The metric exists to force analysis of where yield is generated and where it is retained.
USYC: A Performance Fee Behaves Differently
Circle currently publishes a 10% performance fee on yield for USYC. Its standard subscription fee is 0.04% and redemption fee 0.03%, while the first $1 million of combined daily volume is currently subject to fee waivers within the stated thresholds. The investment minimum is $100,000. Circle — USYC
If pre-fee yield is 4%, a 10% performance fee represents about 40 bps. If pre-fee yield is 2%, it represents about 20 bps. A percentage-of-yield charge therefore changes with the rate environment.
Cash Drag Can Be the Price of Liquidity
If 10% of a portfolio earns 3.0% instead of 4.2%, the modeled drag is 12 bps a year. That can be economically rational if the reserve supports instant redemptions.
This is where the index connects with DN's Redemption Friction Index. Yield sacrificed for liquidity is not automatically waste; it is a cost that should be matched to a benefit.
Short Holding Periods Magnify Small Fees
A 4-bp subscription charge plus 3-bp redemption charge is only 7 bps round trip. But on a 30-day holding period, the annualized equivalent is about 85.2 bps.
This matters for exchange collateral and treasury buffers that move in and out frequently.
Observed Product Snapshot
| Product | Recent published economics | Fee architecture | Key question |
|---|---|---|---|
| BENJI / FOBXX | 3.57% 7-day current yield; 3.63% effective yield | 0.20% net expense ratio | How much yield survives the money-market wrapper? |
| OUSG | Recent APY around 3.5%–3.6% | Management fee waived to 1 Jan 2027; expenses up to 0.15% | Fee drag vs portfolio-mix and liquidity drag. |
| USYC | Dynamic issuer-published gross/net yield | 10% performance fee; 4bp subscription and 3bp redemption standard fees above waiver thresholds | How performance fees scale as rates change. |
| BUIDL | Institutional tokenized money-market structure | DN does not assign leakage until a comparable current fee/yield disclosure is directly verified | Avoid false precision. |
DN Tokenized Treasury Net Yield Calculator
Tokenized Treasury Net Yield Calculator
Model how much of a Treasury-style reference yield survives portfolio liquidity, expenses, performance fees, transaction friction and idle settlement time.
Underlying Yield
Portfolio Mix
Wrapper Economics
Entry, Exit & Timing
DN Yield Analysis
This tool isolates modeled leakage rather than assigning an investment score.
Why This Is Not a Risk-Adjusted Yield Ranking
Yield leakage asks where the underlying return went. Risk-adjusted yield asks what return is adequate for the risk. A low-fee wrapper can still carry meaningful issuer, liquidity or smart-contract risk, while a higher-cost wrapper can provide valuable regulated custody or instant liquidity.
The Future DN Dataset
timestamp_utc product issuer reference_rate reference_rate_type published_gross_yield published_net_yield expense_ratio management_fee performance_fee_pct liquidity_allocation_pct subscription_fee_bps redemption_fee_bps settlement_idle_days holding_period_days yield_retention_ratio reference_rate_leakage_bps attributed_leakage_bps unattributed_gap_bps evidence_class methodology_version
Falsification Test
The thesis becomes less useful if tokenized Treasury yields consistently track comparable Treasury benchmarks after trivial, transparent expenses, liquidity drag becomes negligible, entry and redemption costs disappear, and settlement delays cease to matter. If the data shows that, DN should publish that result.
Frequently Asked Questions
What is tokenized Treasury yield leakage?
It is the difference between a defined Treasury or portfolio reference yield and the return received by the token holder after relevant wrapper economics, liquidity drag and transaction friction.
Why can a tokenized Treasury yield be below the Treasury rate?
Possible reasons include fund expenses, management fees, portfolio maturity differences, cash or stablecoin liquidity reserves, performance fees, repo exposure, transaction costs and settlement timing.
Does lower yield mean a worse product?
No. Some yield can be exchanged for liquidity, collateral utility, compliance, transferability or operational convenience.
What is DN Yield Retention Ratio?
Investor net yield divided by the named reference yield, expressed as a percentage.
DN Alpha Thesis
Tokenized Treasuries are becoming an onchain cash-management layer. As adoption grows, headline yield will matter less than yield conversion efficiency.
An autonomous treasury should eventually compare the live Treasury benchmark, product net yield, wrapper fees, liquidity cost, holding period and collateral utility before allocating capital. That turns tokenized Treasury selection into an execution-quality problem.
Final Verdict
The Treasury creates the yield. The tokenized wrapper determines how efficiently that yield reaches the investor.
Reference-Rate LeakageYield Retention RatioLiquidity Reserve DragPerformance-Fee LeakageHolding-Period LeakageIdle-Time Leakage
Continue the DN Tokenized Treasury Research Stack
Tokenized US Treasuries ComparedRedemption Friction IndexStablecoin Payment Rail Cost IndexPrimary Source Ledger
- U.S. Treasury — Daily Treasury Rates
- Franklin Templeton — FOBXX/BENJI
- Ondo Finance — OUSG
- Circle — USYC
Methodology: DN-TYLI v1.0 · Last verified: 25 October 2026
Risk disclosure: Tokenized Treasury products are not U.S. Treasury securities themselves. They can involve fund, issuer, custody, smart-contract, liquidity, regulatory and redemption risks. Yields change. Educational content only; not financial, tax, legal or investment advice.
