What is USDY?

Ondo is a pioneer in the tokenization of real world assets (RWAs) with a mission to make institutional-grade finance available to everyone. To accomplish this vision, Ondo builds high-quality assets, services, and infrastructure to bring traditional financial products onto public blockchains. The Ondo group is the first and one of the largest issuers of tokenized treasury bills with over $600m in TVL. Ondo entities currently issue yield-bearing assets called yieldcoins–tokens backed by real-world assets like US Treasuries that accrue or pay yield to token holders.

Tokenized Real-World Assets are traditional financial assets, such as cash, equities, commodities, bonds, property, credit, and more, that are tokenized and represented digitally in the blockchain ecosystem. But why bring RWAs onchain? RWAs represent one of the largest opportunities in blockchain, with the market size projected in the trillions of dollars. The tokenization of real-world assets aims to improve utility, accessibility, liquidity, and transparency of financial products. Depending on their design, tokenized RWAs can be leveraged in Decentralized Finance, such as lending and borrowing, collateralization, and more. By bringing assets onchain, Ondo aims to unlocks a new world of possibilities, improving how traditional financial assets are managed, exchanged, and accessed with the 24/7 global nature of the blockchain.

USDY, also known as US Dollar Yield token, is a yieldcoin, which means that it accrues yield (interest). USDY accrues yield daily, which means holders can earn yield everyday whether staking it, borrowing or lending it, pledging it as collateral, or just holding it within a wallet.  Because USDY accrues yield daily, the price of USDY increases over time. (Note that market dynamics ultimately determine the price of any asset, so there is no absolute guarantee that a holder will have a positive return on investment.) USDY has been deployed in over 70+ projects across 8 of the most widely-used blockchains, including Ethereum, Solana, Aptos, Sui, Arbitrum, Mantle, Mantra, and Cosmos via Noble.

USDY is backed by short-term US Treasuries and a very small amount of demand deposits in US banks, all of which earn US Dollar-denominated yield. US Treasuries are one of the safest investments as they are backed by the full faith and credit of the US government. The backing of USDY is in the form of a perfected, first-priority security interest that is held USDY’s collateral agent for the benefit of token holders. USDY is also designed for bankruptcy remoteness and over-collateralized (i.e. the assets of the USDY issuer exceed its liabilities), with third-party reserve attestations published daily for transparency.  These protections help safeguard the assets during unlikely events like bankruptcy, insolvency or operational failure.

Stablecoins are designed to hold a stable value but don’t pay yield, meaning holders lose purchasing power due to inflation on their idle balances.  But USDY accrues daily yield derived from the  US Treasuries that back it, providing protections against inflation and  market volatility.

How does this work? Traditional fiat-backed stablecoins are designed to be pegged to a currency like the US dollar and are redeemable 1:1 for US dollars. This means they are backed by reserves held in cash, short-dated US Treasuries and/or (in some instances) other instruments with short maturity dates. USDY, holds its reserves in US Treasuries and passes yield on to token holders.

Ondo’s tokenized treasury products provide yields and institutional-grade investor protections that are common in traditional finance, such as bankruptcy remote design.