Perpetual Overnight Treasuries (PORTS):A New Proposal to Bring High-Quality Liquid Assets On-Chain

How about a new mousetrap for Treasury management? I am a liquidity hawk, so developments which might be helpful for the daily challenge of Cash Management will get my attention.

My thanks to Daniel Heller for sharing the news on this one.

When cash will not “do nicely”

Securities are better than cash! “Cash Management 101” tells us that long overnight cash balances with your correspodent bank or Nostro are not a good thing: some opportunity cost in terms of interest income lost and a whole bunch of risk. Those balances are unsecured receivables in the balance sheet. Messes up a whole bunch of ratios: risk weighted assets, leverage ratio. Standard practice is to sweep to a money market fund (MMF), or do a reverse repo. An outright securities buy might work too. A good old-fashioned money market deposit may add some yield, but does nothing for risk.

With the advent of things digital assets, we change rails but not the train. The daily challenge remains the same: avoid long cash balances. If you will humour me and allow that Stablecoins are a form of money market fund, then for a Cash Manager who is thinking about tomorrow’s world of digital assets a fundamental question is: are there assets out there which I can reverse repo, are there assets for these Stablecoins and other money market funds to buy?

Simply put, to make the liquidity of wholesale banking go around, we need a plentiful supply of very low risk aka Hiqh Quality Liquid Assets aka HQLA.

So, so as we move to a world of digital assets, anybody involved in Cash Management should be interested in two dynamics in regards to HQLA:

1) We need the supply to be on-chain.

2) We need plenty of it.

What’s changing?

As of February 2026, there are some on-chain money market funds aka tMMFs. For our new world that is a requirement, but not sufficient. Those tMMFs need to be able to easily invest. If those investments are on-chain too, then we don’t “break the chain” and go into fiat or legacy world. Whilst we could philosophise, allow the premise that “all on chain” would be a more efficient and effective solution than if for the “last mile” we had to rely on legacy rails.

The “plenty of it” dynamic I would put down to the rise of Stablecoins. Stablecoin issuers need to buy safe, short-duration assets. I have expanded in a recent post on some of the risks here, see: “Stablecoins and the “Pint Test”: What S&P’s USDT Rating Tells Us About Real-World Risk”. Simply put, all Stablecoins need to invest their funds. Ignoring regulation for a moment; if they do not invest, they do not get a return and so “the numbers will not add up”. Then comes the question of regulation; once regulated, things are prescriptive. What can be bought or held in the investment portfolio is limited.

Now back to the rails and train comparison. New rails, but to misquote Lez Zeppelin: “the train remains the same!” The needs of cash management tell us that in a new digital asset world, we will need at least the same options we have today: money market funds and repo, or rather reverse repo.

What might help?

This is where PORTS, Perpetual Overnight Rate Treasury Securities, come in. They are a suggestion from Prof. Darrell Duffie and Don Wilson, CEO of proprietary trading firm DRW. Generally, “Treasuries” are a reference to government issued debt and considered as HQLA with very low risk weightings. The idea of PORTS is that there is a daily auction, which sets the rate for the day, together with a daily redemption at par. And the assets are on-chain.

For my money, PORTS would meet the two needs I called out above. But there’s more. If you are in the US Treasury, then you might see a couple of extra angles to this. Firstly, since short-term borrowing rates are generally lower than long-term rates, if Uncle Sam can issue more short-term debt in place of its longer-term sibling, then that is a trade you will see US Treasury Secretary Scott Bessent do all day long. Probably worth a small tsunami of public attaboys on Truth Social from the Prez too. A more subtle benefit is simply that it opens a new channel; when you have as much debt to service as the US of A, more outlets are a good thing. For those of a certain generation, this would be like having the Starbucks store in the lobby of 55 Water Street.

Conclusion

An instrument like PORTS should be something which Treasurers and Cash Managers will welcome. Now, we still need to solve for the means of payments: tokenised deposits, Stablecoins each have their merits. Neither is a really great solution for mainstream operations in wholesale banking

Please feel free to get in contact via LiquidityFinder here.

Please feel free to get in contact via LiquidityFinder here.

Olaf is a liquidity and financial services expert. He is the founder of 3C Advisory

You can message Olaf directly here.