On November 26, LayerZero shared exciting news with Cointelegraph regarding a recent partnership with Ondo Finance, a protocol focused on tokenized real-world assets (RWAs).
This collaboration aims to upgrade the functionality of Ondo’s flagship yield-bearing stablecoin, the Ondo US Dollar Yield Token (USDY), allowing it to operate smoothly across various blockchain environments.
Enhancing USDY’s Functionality
Thanks to this integration, users can transact with USDY and the related tokenized U.S. Treasury offerings without having to mint new tokens or swap assets among different chains.
Ondo highlights that utilizing LayerZero’s Omnichain Fungible Token (OFT) standard presents a compelling option compared to established stablecoins such as USD Coin (USDC) and Tether (USDT).
Presently, USDY has achieved full fungibility across major networks such as Ethereum, Mantle, and Arbitrum, with imminent plans to support even more blockchain platforms.
This stablecoin is not just a regular asset; it is engineered to yield returns, promising users an annual percentage return (APR) of roughly 4.9%.
Each USDY token derives its backing from bank deposits along with short-term Treasury bills.
Market Impact
At this moment, USDY boasts a total value locked (TVL) of over $450 million and is operational across eight blockchain networks, including both Ethereum and Solana, as per reports from DefiLlama.
Additionally, Ondo offers another product in their lineup: the Ondo Short-Term US Government Treasurys (OUSD).
LayerZero’s OFT standard transforms the approach to omnichain transfers by removing tokens from the originating blockchain.
This innovative method ensures a stable supply across all linked networks, enabling token movement without the need for asset wrapping or reliance on intermediary layers or liquidity pools.
Growth of Tokenized RWAs
The market for tokenized Treasury products has gained significant momentum, with its market capitalization tripling in 2024 to nearly $2.5 billion as of the latest updates on November 26, according to insights from RWA.xyz.
Ondo Finance leads the charge as the top protocol for tokenized U.S. Treasuries, with a commanding total value locked of $650 million, outpacing competitors such as Securitize, Hashnote, and Franklin Templeton.
Globally, the potential market for tokenized RWAs is projected to be around a staggering $30 trillion, a figure highlighted by Colin Butler, the global head of institutional capital at Polygon, in a recent interview with Cointelegraph.
However, it’s essential for potential investors to be aware that USDY is not accessible to individuals based in the U.S., and there’s a 40-day transfer restriction tied to the token.
Source: Cointelegraph.com