USDY, the Ondo US Dollar Yield token, is a tokenised note issued by Ondo USDY LLC, a subsidiary of Ondo Finance, representing a claim on a portfolio of short-term US Treasuries and bank demand deposits. Launched in 2023, it's built for a specific gap in the market: non-US individuals and institutions who want dollar-denominated, yield-bearing exposure on-chain without going through US brokerage onboarding, since USDY, unlike BlackRock's BUIDL, is available to non-US retail investors, though it remains restricted for US persons under its offering terms.
What it does
USDY accrues value daily as the underlying Treasury and deposit portfolio earns interest, reflected either as a rebasing token (rUSDY) whose balance grows over time, or as an appreciating token (USDY) whose price rises relative to the dollar rather than the token count changing — investors can choose whichever accounting behaviour suits their use case. There's a 40-45 day lock-up before newly minted USDY can transfer freely, intended to deter short-term arbitrage against the underlying Treasury settlement cycle.
The token trades on Ethereum and several other chains including Solana, Aptos, Sui and Mantle, and has found use as collateral within a number of DeFi protocols, letting holders combine a Treasury-yield base layer with on-chain lending or trading strategies. Ondo Finance has positioned itself broadly across the RWA space, also running Ondo Global Markets for tokenised equities and Ondo Chain, a layer-1 aimed specifically at institutional RWA settlement, announced in 2024.
Risks
USDY holders are exposed to Ondo USDY LLC and its custodial and banking partners as counterparties — the token's value depends entirely on that entity honestly managing and reporting the underlying Treasury and deposit portfolio, verified through periodic attestations rather than the kind of continuous, trustless proof crypto natives often assume. The US-persons restriction limits its addressable market and creates friction, and compliance risk, for platforms that integrate it without adequate geofencing.
Regulatory clarity for tokenised securities like USDY is still developing, and as with any Treasury-backed instrument, its yield will fall if and when interest rates come down, making the product materially less attractive in a low-rate environment than it has been through the higher-rate cycle of the mid-2020s.