What is Ondo US Dollar Yield (USDY) and how does it work?

Stablecoins, which are crypto assets pegged to a major fiat asset, have gained tremendous popularity and are helping investors deal with the typical volatility of the market. For many years, stablecoin cryptocurrencies have been used for payments, principal value storage, B2B transactions and more. However, traditional stablecoins have always lacked the ability to generate yield. These assets are fixed at a certain rate (e.g., $1) and, due to inflation, they don’t protect against your funds’ value erosion. 

For this reason, yield-bearing stablecoins have started to gain traction over the past several years. These "new generation" stablecoins, unlike their traditional counterparts, not only provide rate stability but also generate yields, growing your investment over time. One of the leading assets among yield-bearing stablecoins is US Dollar Yield (USDY), issued by Ondo USDY LLC, part of Ondo Finance (ONDO), a decentralized finance (DeFi) solutions provider.

Backed by low-risk traditional finance (TradFi) reserves, USDY generates yields and is a fully composable asset that can be used throughout the DeFi ecosystems of multiple blockchains. The reserves and issuance of the stablecoin are also subject to high regulatory controls. In the world of yield-bearing stablecoins, USDY is among the top choices in terms of popularity, regulation and security.

Key Takeaways:

• USDY is a yield-bearing stablecoin offered by Ondo Finance’s Ondo USDY LLC that’s backed by US Treasury bills and bank demand deposits.

• USDY offers yields (calculated daily) and offers composability, transparency, 104% overcollateralization and high levels of regulatory compliance.

• Yields from USDY accrue to each unit of the token, increasing its value. At the same time, Ondo Finance also offers rUSDY, the rebasing version of the stablecoin.