Ondo Finance, a real-world asset (RWA) protocol, announced the expansion of its USDY (US Dollar Yield Token) to Arbitrum, an Ethereum layer-2 scaling network, in an Aug. 27 blog post.
USDY is a yield token designed to provide users with up to a 5.35% annual percentage return on stablecoins like USD Coin. 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 some of the largest decentralized finance applications to utilize their tokenized US Treasuries.
USDY currently has a total value locked (TVL) 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).
Tokenized treasury products, designed to mirror the low-risk yield found in traditional money market funds or high-yield savings accounts, are becoming increasingly popular on blockchain networks. The total market capitalization for these products has risen by 150% year-to-date, with expectations to reach $3 billion by the end of 2024.
The largest players in the tokenized money market sector include the BlackRock USD Institutional Digital Liquidity Fund and the Franklin OnChain US Government Money Fund (FOBXX), with market capitalizations of $509 million and $428 million, respectively.
Read more: Tonchain Faces Turbulence as Liquidity Provider Sells All Tokens
Arbitrum has been gaining traction in tokenized RWAs, including treasury yield products. On Aug. 8, Franklin Templeton announced the expansion of FOBXX to Arbitrum.
Ondo, based in the United States, operates USDY under Regulation S, making it unavailable to US investors and restricting its transferability for 40 days.
Tokenized RWAs globally represent a $30-trillion market opportunity, as noted by Colin Butler, Polygon’s global head of institutional capital, in a recent interview with Cointelegraph.
Cre: cointelegraph.
I’m Jessi Lee, currently living in Singapore. I am currently working as a trader for AZCoin company, with 5 years of experience in the cryptocurrency market, I hope to bring you useful information and knowledge about virtual currency investment.
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