Ondo Finance

What is Ondo Finance?

Ondo Finance is a pioneering decentralized finance protocol that bridges traditional finance and blockchain by tokenizing real-world assets, specifically US Treasury securities. Founded in 2021, Ondo has quickly become the leading platform for bringing institutional-grade fixed income products on-chain, with over $600 million in total value locked across its products.

The protocol's flagship offerings—USDY (US Dollar Yield) and OUSG (Ondo US Government Bond Fund)—provide crypto-native users access to the same Treasury yields that institutional investors enjoy, all while maintaining the composability and transparency of blockchain technology. Ondo represents a paradigm shift in how yield is generated in DeFi, moving from volatile crypto-native sources to the stability of US government-backed securities.

How Ondo Finance Works

USDY - US Dollar Yield Token

USDY is a tokenized note secured by short-term US Treasuries and bank demand deposits. Key features:

• Yield-Bearing Stablecoin: Unlike traditional stablecoins, USDY accrues value over time
• Daily Rebasing: Token value increases daily as Treasury yields accumulate
• Backed by Treasuries: Secured by short-term T-bills and bank deposits
• Regulatory Compliant: Structured as a Reg D security for US investors

OUSG - Ondo US Government Bond Fund

OUSG provides exposure to short-term US Treasuries through tokenized fund shares:

• Institutional Grade: Built on BlackRock's iShares Short Treasury Bond ETF (SHV)
• Daily Liquidity: Mint and redeem during business hours
• $5M Minimum: Designed for institutional and accredited investors
• 1:1 Backing: Each OUSG token backed by actual Treasury ETF shares

The Ondo Architecture

1. Custody: Assets held by institutional custodians (Clear Street, Morgan Stanley)
2. Fund Structure: NAV calculated daily based on underlying Treasury values
3. Tokenization: Shares represented as ERC-20 tokens on Ethereum and other chains
4. Redemption: Convert tokens back to USD through regulated banking rails

Key Statistics

• Total Value Locked: $600M+ across all products
• USDY Market Cap: $400M+
• OUSG AUM: $200M+
• Current USDY APY: 4.5-5.0% (variable based on T-bill rates)
• Supported Chains: Ethereum, Polygon, Solana, Mantle, Sui
• Minimum Investment: $500 for USDY, $5M for OUSG
• Audit Status: Multiple audits from leading security firms

Yield Opportunities

USDY Strategies

Simply hold USDY and earn Treasury yields. The token appreciates in value daily, with no need to stake or lock tokens.

Use USDY as collateral in lending protocols or provide liquidity:

• Supply USDY on [Aave](/insights/protocols/aave) or [Morpho](/insights/protocols/morpho) for additional yield
• Pair USDY with other stablecoins for LP opportunities
• Use as collateral for borrowing strategies

OUSG Strategies

Hold OUSG for direct exposure to short-term Treasuries with institutional custody.

Combine OUSG exposure with DeFi strategies for enhanced returns while maintaining Treasury backing.

Getting Started with Ondo Finance

Step 1: Verify Eligibility

• USDY: Available to non-US persons and US accredited investors
• OUSG: Accredited investors with $5M+ minimum
• Complete KYC/AML verification on Ondo's platform

Step 2: Fund Your Account

• Connect wallet or create an Ondo account
• Deposit USDC or wire USD through banking partners
• Funds typically settle within 1-2 business days

Step 3: Mint Tokens

• Select USDY or OUSG based on eligibility
• Enter amount and confirm transaction
• Receive tokenized Treasury exposure in your wallet

Step 4: Monitor and Utilize

• Track yields through Ondo dashboard or Fensory
• Explore DeFi integrations for additional utility
• Redeem to USD when needed

Risk Considerations

As tokenized securities, Ondo products are subject to securities regulations. Changes in regulatory stance could affect availability.

While backed by Treasuries, users depend on Ondo's fund structure and custodial arrangements.

Token contracts have been audited but carry inherent smart contract risks.

Treasury yields fluctuate with Federal Reserve policy. Current high rates may not persist.

Large redemptions may require settlement periods. DeFi liquidity varies by market conditions.

Ondo vs Other RWA Protocols

Frequently Asked Questions

USDY is a yield-bearing token that increases in value over time. While backed by stable assets, it's technically a tokenized note rather than a traditional stablecoin. Its value grows daily based on Treasury yields.

US accredited investors can access USDY after completing verification. OUSG requires accredited status and $5M minimum. Non-accredited US residents cannot currently access Ondo products.

USDC is a traditional stablecoin maintaining a $1 peg with no yield. USDY starts near $1 and appreciates as Treasury yields accrue, providing passive income without additional DeFi complexity.

Ondo products are bankruptcy-remote with assets held by regulated custodians. In a worst-case scenario, underlying Treasuries would be liquidated to redeem token holders.

Submit a redemption request through Ondo's platform. Funds typically settle within 1-3 business days via wire transfer to your verified bank account.

[Explore Ondo Yields on Fensory →](https://www.fensory.com)