Liquidity
Stablecoins and tokenized hedge funds may appear similar in today's digital asset landscape, but they differ fundamentally in several key aspects. One of the most critical distinctions is their liquidity profile. This section details how Noon, as a stablecoin, addresses the issue of liquidity.
Why Liquidity Matters
Stablecoins must maintain immediate liquidity as a core feature of their utility. Their composability, the ability to seamlessly integrate across DeFi protocols, is severely compromised if redemptions require extended timelines. While tokenised hedge funds traditionally operate with longer redemption windows, we believe stablecoins must take a more conservative and prudent approach when it comes to liquidity.
Our Liquidity Commitment
At Noon, we ensure that 100% of our Total Value Locked (TVL) is liquid within T+5, meaning redemption requests are fully processed within 5 calendar days, at the most. This commitment positions us at the intersection of traditional fund flexibility and stablecoin-like accessibility.
We achieve this through careful strategy selection, incorporating liquidity profiles as a primary factor in our deployment analysis from day one.
Strategy-Specific Liquidity Profiles
Each deployment strategy maintains distinct liquidity characteristics:
A. TradFi deployments
U.S. Treasury Bills: T+0 to T+3 liquidity
Noon only deploys into short-term U.S. Treasury bills, which ensures ease and speed of redemptions. However deploying into TradFi assets have certain limitations, especially when it comes to redemptions and liquidity. TradFi takes time, and moves at a pace different from the digital asset space. For instance, TradFi markets have opening and closing hours daily - and do not transact over weekends or on specific holidays. This means that our U.S. Treasury Bill positions could be liquid same-day (T+0), but, depending on the timing of the redemption request and the amount being redeemed, could also take up to 3 days (T+3, Friday to Monday, for example) for liquidity.
CLOs (Collateralized Loan Obligations): T+0 to T+3 liquidity
Noon only deploys into the most liquid, publicly traded CLO, Janus Henderson’s JAAA ETF. This ensures that within the CLO asset class, Noon has the quickest path to liquidity. However deploying into TradFi assets have certain limitations, especially when it comes to redemptions and liquidity. TradFi takes time, and moves at a pace different from the digital asset space. For instance, TradFi markets have opening and closing hours daily - and do not transact over weekends or on specific holidays. This means that our CLO positions could be liquid same-day (T+0), but, depending on the timing of the redemption request and the amount being redeemed, could also take up to 3 days (T+3, Friday to Monday, for example) for liquidity.
Private Credit: T+3 months liquidity
Noon has worked closely with one of the world’s top asset managers, Fasanara, to deploy into Fasanara’s Tactical Credit (FTAC) fund. FTAC, like most other private credit funds, has a redemption window of 3 months. This is due to the nature of the underlying assets the Fund deploys assets into - namely, short and medium tenor loans. Naturally, this is the position that is most difficult to obtain swift liquidity for - please see below for more details on how Noon achieves this.
B. Centralised Finance (CeFi) deployments
Funding Rate Arbitrage: T+0 to T+3 liquidity
Noon and its team have extensive experience with the funding rate arbitrage strategy, having built and managed positions worth hundreds of millions of dollars. Typically, the ease of taking off this position varies with the market, and the resulting spread available. Noon has the ability to aggressively take off this position, accepting higher slippage, spread, etc - or choose to slow down to reduce execution costs. Noon is well positioned to manage liquidity from this deployment strategy.
C. Decentralised Finance (DeFi) deployments
Lending: T+0 liquidity
Noon only deploys in highly liquid lending pools, and limits its deployment size per pool to the total size of the pool above the kink in the interest rate curve. This ensures ease of exit for all of Noon’s positions in DeFi Lending, with immediate withdrawal capabilities from Noon’s selected lending protocols.
PT Tokens (Principal Tokens): T+0 liquidity
Noon only deploys in highly liquid PT tokens, and limits its deployment size per pool to ensure ease of liquidity. Through active secondary markets, Noon can choose to exit its positions immediately, albeit with some slippage.
PT Looping: T+0 liquidity
Noon only uses highly liquid PT tokens as the base asset for this deployment strategy, and only accesses leverage on blue-chip lending protocols. While unwinding leverage can be operationally complex and time consuming - and exiting PT positions can incur slippage, Noon has extensive experience with both to ensure T+0 liquidity.via protocol unwinding mechanisms.
Proprietary Liquidity Management Strategy (PLMS)
Noon has developed a Proprietary Liquidity Management Strategy (PLMS) structured as a multi-party agreement. This framework enables us to meet 100% of redemption requests within T+5, regardless of the underlying liquidity timelines of individual strategies. Noon has tested its PLMS extensively, with every asset in its deployment basket. This is where our training in the precision of TradFi helps us, and allows us to bring the best of finance to our users.
Due to strict confidentiality clauses, Noon is not able to disclose the specific parties involved in Noon’s PLMS.
Liquidity Waterfall
Our baseline liquidity waterfall maintains the following availability:
T+0
20% of TVL immediately accessible
T+3
60% of TVL liquid
T+5
100% of TVL fully liquid
Continuous Improvement
While we believe this liquidity profile is market-leading for tokenised funds, we remain committed to continuous enhancement. As markets evolve and new opportunities emerge, we'll continue refining our approach to provide even greater flexibility to our token holders.
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