A Treasury bill, or T-bill, is a loan to the United States government.

When you buy a T-bill, you loan money to the US government. They pay back your entire loan, plus interest, over a specified length of time (e.g. 1 month, 3 months, 12 months).

Glo plans to invest most of its reserve in 3-month T-bills.

3-month T-bills strike the sweet spot of both providing meaningful yields—currently about 4.02% per year, relative to an historical average of 3.37%—and being fully liquid, which means they can easily be sold for cash. T-bills are government bonds guaranteed by “the full faith and credit of the U.S. government,” which makes them about the safest investment realistically available. 

Glo is a fully-backed stablecoin. This means that for every Glo token you hold, we have at least $1 sitting in our reserve.

We keep these dollars either in the form of actual cash, or as a short-term T-bill. The reason this works is, again, that short-term T-bills are easily convertible to cash, which is why they are typically classified as "cash and cash equivalents." 

Investing in T-bills is a standard strategy for long-term investors and stablecoins.

For instance, government bonds and cash equivalents typically comprise over a third of all public pension investments. Circle's USDC, the second-largest stablecoin by amount and one of our for-profit competitors, invests its reserves entirely in cash and short-term treasury bills. 

The amount of yield you can earn with T-bills varies throughout the years.

Over the decades, annual yield from 3-month T-bills has ranged anywhere between 0% and over 15%. At time of writing, it is 2.96%. The historical average is 3.37%.

The Glo reserve will not be 100% T-bills; we'll need to keep a part of it in the form of cash as well.  When we're making numerical estimates we'll mostly assume our cash / T-bill mix to be 20% / 80%, simply because this is what the for-profit stablecoin Circle (USDC) is currently doing. In these scenarios we'll assume our reserve yield to be 2.5% per year.

The exception is when we're making numerical estimates of scenarios with extremely high levels of Glo adoption. In such scenarios, we'll likely only have a tiny portion of the reserves in the form of actual cash. In these scenarios we'll assume our reserve yield to be 3% per year.