According to a blog post on August 27, Ondo Finance, a real-world asset (RWA) protocol, is extending access to the Ondo US Dollar Yield Token (USDY) to Arbitrum, an Ethereum layer 2 scaling network.
Ondo’s USDY is a yield token designed to allow users to earn up to 5.35% annual yield on stablecoins like USD Coin (USDC). According to Ondo, each USDY token is backed by bank deposits and short-term government bonds.
“This launch paves the way for some of the largest decentralized finance applications to leverage tokenized U.S. Treasuries,” Katie Wheeler, Ondo’s VP of partnerships, said in a statement.
USDY has a total locked value of $364 million and is available on eight blockchain networks, including Ethereum and Solana. Ondo also offers another tokenized treasury product, the Ondo Short-Term US Government Treasuries (OUSD).
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Tokenized government bond products that aim to approximate the low-risk returns available from traditional currency market funds or high-yield savings accounts are proliferating on blockchain networks.
According to data from RWA.xyz and Cointelegraph Research, the total market cap of tokenized treasury products has increased by 150% since the beginning of the year. It is expected to reach $3 billion by the end of 2024.
According to data from RWA.xyz, the largest tokenized financial market products are BlackRock USD Institutional Digital Liquidity Fund and Franklin OnChain US Government Money Fund (FOBXX), with market caps of $509 million and $428 million, respectively.
Arbitrum is gaining traction in tokenized RWAs, including tokenized treasury yield products. On August 8, asset manager Franklin Templeton announced the expansion of FOBXX to Arbitrum.
Ondo operates in the United States and USDY is subject to Regulation S. Therefore, USDY is not available to US investors and is not transferable for 40 days.
Colin Butler, Polygon’s global head of institutional capital, told Cointelegraph that tokenized RWA represents a $30 trillion market opportunity globally.
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