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Tokenized treasury products are increasingly being adopted across blockchain networks, with Ondo Finance expanding its Ondo US Dollar Yield Token (USDY) to the Arbitrum network, an Ethereum layer-2 scaling solution. This development was announced in a blog post on August 27.
The USDY token is designed to provide users with a return on stablecoins, such as USD Coin, offering up to 5.35% annual percentage yield. Each USDY token is underpinned by a combination of bank deposits and short-term treasury bills, as stated by Ondo Finance.
Katie Wheeler, Vice President of Partnerships at Ondo, noted that this launch facilitates the integration of tokenized US Treasuries into significant decentralized finance applications. USDY currently holds a total value of $364 million and is accessible on eight blockchain networks, including Ethereum and Solana.
Ondo’s USDY is a yield token designed to let users earn up to 5.35% annual percentage return on stablecoins such as USD Coin (USDC) .Ondo also offers another tokenized treasury product, the Ondo Short-Term US Government Treasuries (OUSD). These products aim to replicate the low-risk returns typically associated with traditional money market funds and high-yield savings accounts.
The market for tokenized treasury products has grown significantly, with a 150% increase in total market capitalization year-to-date. This sector is projected to reach $3 billion by the end of 2024, according to data from RWA.xyz and Cointelegraph Research. The largest players in the tokenized money market space include the BlackRock USD Institutional Digital Liquidity Fund and the Franklin OnChain US Government Money Fund, which have market capitalizations of $509 million and $428 million, respectively.
Arbitrum has seen growing interest in tokenized real-world assets (RWAs), including treasury yield products. On August 8, Franklin Templeton announced the expansion of its FOBXX product to the Arbitrum network.
Ondo Finance, based in the United States, operates USDY under Regulation S, meaning the token is not available to US-based participants and cannot be transferred for 40 days. Tokenized RWAs collectively represent a significant global market opportunity, valued at $30 trillion, as highlighted by Colin Butler, Global Head of Institutional Capital at Polygon.
