According to Cointelegraph, Ondo Finance, a real-world asset protocol, is extending access to its Ondo US Dollar Yield Token (USDY) to the Arbitrum network, an Ethereum layer-2 scaling solution. This move, announced in an August 27 blog post, aims to enhance the utility of USDY, which offers up to 5.35% annual percentage return (APR) on stablecoins like US Dollar Coin (USDC). Each USDY token is backed by bank deposits and short-term treasury bills.
Katie Wheeler, Ondo’s vice president of partnerships, stated that this launch paves the way for significant decentralized finance applications to leverage Ondo’s tokenized US Treasuries. Currently, USDY has a total value locked (TVL) of $364 million and is available on eight blockchain networks, including Ethereum and Solana. Ondo also provides another tokenized treasury product, Ondo Short-Term US Government Treasuries (OUSD).
Tokenized treasury products, designed to offer low-risk yields similar to conventional money market funds or high-yield savings accounts, are becoming increasingly popular on blockchain networks. Data from RWA.xyz and Cointelegraph Research indicates that the total market capitalization for these products has surged by 150% year-to-date and is expected to reach $3 billion by the end of 2024. The largest players in this market include Blackrock USD Institutional Digital Liquidity Fund (BUIDL) and Franklin OnChain US Government Money Fund (FOBXX), with market capitalizations of $509 million and $428 million, respectively.
Arbitrum has been gaining traction in the tokenized real-world assets (RWA) space, including tokenized treasury yield products. On August 8, asset manager Franklin Templeton announced the expansion of FOBXX to the Arbitrum network. Ondo operates out of the United States, and USDY is subject to Regulation S, making it unavailable to US investors and restricting transfers for 40 days.
Colin Butler, Polygon’s global head of institutional capital, highlighted the significant market potential for tokenized RWAs, estimating it to be a $30-trillion opportunity globally.
