Ondo Finance Expands Access to Its USDY Yield Token to Arbitrum Network

Ondo Finance, a real-world asset (RWA) protocol, is expanding access to Ondo US Dollar Yield Token (USDY) to Arbitrum, an Ethereum layer-2 scaling network

Blockchain technology is enabling a new wave of financial innovation, and one area that is attracting a lot of attention is the tokenization of real-world assets (RWAs).

Ondo Finance, a pioneer in this space, is now expanding access to its flagship product, the Ondo US Dollar Yield Token (USDY), by integrating with Arbitrum, a prominent Ethereum layer-2 scaling network.

The integration will allow users on Arbitrum to easily acquire and utilize USDY, opening up new possibilities for earning stablecoin yield.

According to a blog post published on Aug. 27 by Ondo Finance, the move is part of a broader strategy to enhance the reach and utility of USDY.

The token, which is designed to provide users with an annual percentage return of up to 5.35%, is already available on several blockchain networks, including Ethereum, Solana, Avalanche, Celo, Oasis, Fantom, Arbitrum and Optimism.

Each USDY token is backed by a篮筐of bank deposits and short-term treasury bills, offering a stable and low-risk yield-generating instrument.

The launch of USDY on Arbitrum is expected to pave the way for large-scale decentralized finance (DeFi) applications to integrate Ondo's tokenized treasury products.

In a statement, Katie Wheeler, vice president of partnerships at Ondo, highlighted the significance of the launch for Arbitrum users and the broader DeFi ecosystem.

“We're excited to announce the launch of USDY on Arbitrum, which paves the way for some of the largest decentralized finance applications to leverage our tokenized US Treasuries,” Wheeler said.

USDY has a total value locked (TVL) of over $364 million and is supported by a diverse range of fiat-pegged stablecoins, including Tether (USDT), TrueUSD (TUSD), Binance USD (BUSD) and Dai (DAI).

In addition to USDY, Ondo also offers another tokenized treasury product — the Ondo Short-Term US Government Treasuries (OUSD) token. Both tokens are designed to provide users with a convenient and accessible way to participate in the treasury market.

The tokenization of treasury products has emerged as a major trend within the DeFi sector, offering a unique value proposition for both institutional and retail investors.

These products are engineered to approximate the low-risk yield available in conventional money market funds or high-yield savings accounts, a characteristic that has historically attracted vast sums of capital.

According to data compiled by RWA.xyz and Cointelegraph Research, the total market capitalization for tokenized treasury products has surged by 150% year-to-date.

The market is now poised to reach $3 billion in total market cap by the end of 2024, highlighting the substantial growth potential and interest in this asset class.

Among the tokenized money market products, the largest are the BlackRock USD Institutional Digital Liquidity Fund and the Franklin OnChain US Government Money Fund (FOBXX), with $509 million and $428 million in market cap, respectively.

Arbitrum has been a key player in the tokenized RWA landscape, particularly for treasury yield products.

Earlier in August, asset manager Franklin Templeton announced that it was expanding FOBXX to Arbitrum, following its previous launches on Ethereum, Polygon and Avalanche.

The move is part of Franklin's broader strategy to enhance the accessibility and liquidity of its tokenized treasury product for users across multiple blockchain ecosystems.

Ondo Finance is notably headquartered in the United States, and USDY is subject to Regulation S.

As such, USDY is not available to U.S. investors and cannot be transferred for 40 days.