TLDR:
- Ondo Finance’s USDY yieldcoin launched on Arbitrum Layer 2 network
- USDY offers 5.35% APY backed by US Treasuries for non-US investors
- Now integrated with Arbitrum DeFi protocols like Camelot and Dolomite
- Represents 17% of Arbitrum DAO’s treasury investment
- Part of growing trend of tokenized real-world assets (RWAs) in DeFi
Ondo Finance has launched its USDY yieldcoin on Arbitrum, a major Ethereum Layer 2 scaling network, marking a significant expansion of real-world assets (RWAs) in decentralized finance (DeFi).
USDY, a tokenized US Treasury product, is now available to non-US investors on one of the largest DeFi ecosystems.
USDY currently offers a 5.35% annual percentage yield (APY) and has over $350 million in total value locked (TVL) across 8 blockchains. It allows global individual and institutional investors to access the stability of stablecoins combined with attractive yields and institutional-grade protections.
The launch on Arbitrum comes as the network exceeds $15.5 billion in TVL and $4.5 billion in stablecoins. Arbitrum uses Optimistic Rollup technology to scale Ethereum transactions while maintaining security.
As part of the launch, the Arbitrum DAO’s STEP Committee decided to diversify 6 million ARB tokens from its treasury into Ondo’s USDY.
This represents 17% of Arbitrum’s $36 billion total treasury investment, making it the second-largest allocation after BlackRock’s BUIDL fund.
USDY is now integrated with leading Arbitrum DeFi protocols. On Camelot, Arbitrum’s largest decentralized exchange (DEX), users can swap into and out of USDY or provide liquidity to earn trading fees. Dolomite, a major lending protocol, allows users to lend or borrow USDY.
Katie Wheeler, VP of Partnerships at Ondo Finance, stated:
“We are thrilled to see USDY launch on Arbitrum, paving the way for some of the largest decentralized finance applications to leverage our tokenized US Treasuries.”
Luke Xiao from Offchain Labs, which developed Arbitrum, added:
“This integration adds a new asset to serve DeFi users, further expanding the opportunities available on Arbitrum. The inclusion of Ondo products in the Arbitrum DAO STEP program further highlights the growing demand for real-world assets onchain.”
Non-US investors can acquire USDY directly from Ondo or within the Arbitrum ecosystem. After swapping stablecoins for USDY, holders immediately start earning the current 5.35% APY, backed by US Treasury Bills.
To support the integration, Pyth will provide oracle price feeds for USDY on Arbitrum. This includes both primary market prices reflecting direct purchases from Ondo, and secondary market prices from all liquidity sources.
USDY is designed as a tokenized note secured by US Treasuries, aiming for bankruptcy remoteness.
Key features include broad accessibility for non-US investors, yield-bearing nature, high-quality collateral, regulatory compliance, and bankruptcy-remote design.
The launch of USDY on Arbitrum is part of a broader trend of tokenized treasury products gaining traction in blockchain networks.
According to data from RWA.xyz and Cointelegraph Research, the total market cap for such products has grown 150% year-to-date and is predicted to reach $3 billion by the end of 2024.
Major players in this space include BlackRock’s USD Institutional Digital Liquidity Fund and Franklin Templeton’s OnChain US Government Money Fund (FOBXX), with market caps of $509 million and $428 million respectively. Franklin Templeton also recently expanded FOBXX to Arbitrum.
