Ondo Partners with LayerZero to Make USDY Multichain-Compatible

Ondo Finance, a protocol specializing in tokenized real-world assets (RWAs), has partnered with LayerZero to enhance the interoperability of its flagship yield-bearing stablecoin, the Ondo US Dollar Yield Token (USDY). The integration with LayerZero’s technology allows USDY to become fully fungible across multiple blockchain ecosystems, according to a statement from LayerZero on November 26.

Seamless Multichain Access for USDY

This collaboration allows users to access USDY, along with its tokenized US Treasuries product, on several blockchain networks without the need to mint new tokens or swap assets between chains. Ondo emphasized that the integration of LayerZero’s Omnichain Fungible Token (OFT) standard enables USDY to function as a compelling alternative to traditional stablecoins like USD Coin (USDC) and Tether (USDT).

Currently, USDY is fully fungible across major networks such as Ethereum, Mantle, and Arbitrum, with plans to expand to additional blockchains in the near future.

USDY and Yield Generation

USDY is a yield-bearing stablecoin that allows users to earn an annual percentage return (APR) of approximately 4.9%. Each USDY token is backed by a combination of bank deposits and short-term US Treasury bills. As of now, USDY has a total value locked (TVL) exceeding $450 million and is available on eight blockchain networks, including Ethereum and Solana, according to data from DefiLlama.

In addition to USDY, Ondo offers other tokenized Treasury products, such as Ondo Short-Term US Government Treasurys (OUSD).

LayerZero’s Omnichain Fungibility

LayerZero’s OFT standard enables tokens to be transferred seamlessly across different blockchains without the need for asset wrapping, middlechains, or liquidity pools. This is achieved by burning tokens on the source chain whenever an omnichain transfer is initiated, which creates a unified supply across both networks.

Growth of Tokenized Treasuries

The market for tokenized Treasury products has seen significant growth, with its total market capitalization tripling in 2024 to reach approximately $2.5 billion as of November 26, according to data from RWA.xyz. Ondo has emerged as the leader in this space, with a TVL of $650 million, outpacing competitors like Securitize, Hashnote, and Franklin Templeton.

Tokenized RWAs represent a massive global market opportunity valued at around $30 trillion, according to Colin Butler, Global Head of Institutional Capital at Polygon.

Restrictions on USDY

It’s worth noting that USDY is not available to US investors, and tokens cannot be transferred for 40 days following their issuance