What is Ondo US Dollar Yield (USDY)?

Deep Dive

1. Purpose & Value Proposition

USDY bridges decentralized finance (DeFi) and traditional finance by tokenizing U.S. Treasuries, enabling global investors to earn yield on a stable-value asset. Unlike standard stablecoins, USDY generates returns through its underlying collateral of government-backed securities and demand deposits, distributing yield daily to holders (Ondo Finance).

2. Technology & Architecture

Built on Arbitrum (Ethereum Layer 2) for scalability, USDY leverages smart contracts to automate yield distribution and enforce transfer restrictions during a 40–50 day cohort period. It integrates with protocols like Flux Finance for lending/borrowing and uses Chainlink oracles for real-time asset valuation.

3. Key Differentiators

• Yield transparency: Yield is calculated based on actual Treasury returns, net of fees (~4.25% APY as of July 2025).
• Institutional safeguards: Assets are held by regulated custodians like Zodia Custody, with redemption guarantees enforced by an independent trust agent.
• Multi-chain flexibility: Operates natively on 10+ chains, including Solana and Sei, enabling use as collateral, payment rails, or yield primitives in DeFi (Sei Network).

Conclusion

USDY reimagines stablecoins by embedding yield directly into its design, backed by low-risk U.S. Treasuries and optimized for cross-chain utility. As regulatory frameworks evolve, will USDY’s compliance-first approach become the standard for tokenized real-world assets?