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.
What is the Ondo US Dollar Yield (USDY) Token?
The US Dollar Yield Token (USDY) is a yield-bearing stablecoin offered by Ondo USDY LLC, part of the Ondo Finance DeFi solutions provider. USDY’s value tracks that of the US dollar, and it’s backed by Treasury bills and demand deposit reserves. The coin issuer’s parent company, Ondo Finance, specializes in institutional-grade crypto solutions. Ondo aims to make on-chain institutional-grade finance tools and infrastructure accessible to anyone.
USDY was launched in August 2023. As of April 2025, the stablecoin has become available on Ethereum (ETH), Solana (SOL), Arbitrum (ARB), Sui (SUI), Aptos (APT), Mantle Network (MNT), Plume Network (PLUME) and Noble — a level of multichain coverage that few other stablecoins can match.
While USDY’s price tracks the US dollar’s, its rate is typically somewhat higher than $1 because yields earned by each unit of the stablecoin are added to it, increasing its nominal value.
The Ondo USDY is backed by traditional real-world assets (RWAs), primarily Treasury bills, although some portion of the reserves may also be represented by bank demand deposits. Both of these financial asset types are considered cash equivalents.
To ensure the Ondo ecosystem's security, Ondo backs each $100 equivalent of USDY with reserves worth $104, maintaining a 4% overcollateralization rate at all times.
Ondo Finance takes the transparency of USDY seriously. The company has established a bankruptcy-remote mechanism, with a separate corporate entity controlling the issuance and oversight of the stablecoin in various ways, including a board of directors with an independent director, and segregation of assets and reporting from Ondo.
USDY is a fully composable asset that can be used in the DeFi ecosystems of its host blockchains for various purposes, such as collateral, lending, borrowing, yield farming, payments and derivatives trading.
Benefits of Ondo US Dollar Yield (USDY)
USDY provides several significant benefits for its holders. First, it allows eligible individual and institutional investors to earn dollar-denominated yield. This is in contrast to traditional stablecoins, which provide no yield opportunities at all. While other yield-bearing stablecoins also generate returns for holders, some of these pay the yields in volatile cryptocurrencies, rather than high-quality assets.
Thanks to its dollar peg, USDY offers both yield and relative stability. Additionally, it’s fully composable, creating opportunities for use across various DeFi protocols. USDY is available on seven blockchains, providing access to more DeFi opportunities than most yield-bearing stablecoins.
The coin may also be used for passive holding, growing in value over time as yields accrue. In this capacity, USDY represents a good low-risk, on-chain investment opportunity.
Finally, USDY’s overcollateralization and backing by high-quality TradFi assets, Treasury bills and demand deposits make it one of the most secure yield-bearing stablecoins on the market.
How does Ondo US Dollar Yield (USDY) work?
Individuals and institutional entities need to undergo an onboarding process to acquire USDY, during which they submit relevant identity, legal and tax documents. Ondo diligently applies know your customer (KYC) and anti-money laundering (AML) checks in order to adhere to US securities laws, the Investment Company Act of 1940 and other relevant regulations.
US and UK residents cannot apply to buy USDY, although you may be eligible if you’re a US or UK citizen and reside abroad.
If your application is approved, you can be issued USDY 40 to 50 days after your initial deposit date, although you’ll start earning yield from the first day of your investment. The minimum amount for investment or redemption is $500. You can buy USDY from Ondo using the USDC stablecoin. US dollar wire transfers are also supported for amounts over $100,000.
Redemptions are only transferred in US dollars to bank accounts outside the US. You can redeem your USDY investment at any time, and the typical timeline to receive your funds is about 2–3 business days from the date of your request.
USDY accrues yield daily. The stablecoin’s yields are structured not to incur any US federal tax obligations. Ondo doesn’t charge any performance or management fees for USDY yields. However, the company earns income from a portion of yields generated by the underlying assets backing USDY.
USDY vs. rUSDY
As noted earlier, USDY’s yields accrue to each unit of the token. Therefore, the value of one USDY is usually above $1. For instance, the average value of USDY as of the time of this writing (Apr 30, 2025) is $1.11.
Source: CoinGecko
For investors who prefer a fixed $1 rate for the stablecoin, Ondo offers the rebasing version, called rUSDY. Yields for rUSDY are paid to your wallet in the form of additional tokens by increasing the supply of the crypto, while the principal remains at (or very close to) $1. This is known as rebasing. USDY and rUSDY are freely convertible between each other.
The rebased version of the coin might be useful to those who need to ensure rate stability (for example, for B2B payments of agreed-upon contractual amounts) while also earning yields from their investments.
Where to buy Ondo US Dollar Yield (USDY)
You can buy USDY on Bybit's Spot market as a swap pair with the USDT stablecoin.
Closing thoughts
USDY boasts numerous benefits for investors — low-risk yields from high-quality traditional assets, wide multichain coverage, regulatory compliance, transparency, composability and rate stability. The combination of all these benefits is quite rare in the crypto market, and the investor community is definitely taking note: USDY is already the third-highest-ranked yield-bearing stablecoin by market cap as of late April 2025.
Since the yield-bearing stablecoin niche is expanding, the advantages of the USDY are likely to attract further interest, both among the institutional crowd and with individuals keen to access high-quality, institutional-grade crypto products.
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