How Ondo Finance Is Turning US Treasuries Into 24/7 Yield Tokens | Credits: Hameem Sarwar
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Key Takeaways
Ondo turns short-term U.S. Treasuries into interoperable, yield-bearing tokens that trade 24/7 across top blockchains.
Stable returns around 5 % come from Treasury funds and are either reinvested or paid out via rebasing.
Regulatory uncertainty, especially from U.S. authorities, limits participation and shapes global strategy.
Liquidity gaps remain a challenge as trading volume grows; partnerships with chains like Solana address this gradually.
Ondo Finance is transforming traditional U.S. Treasuries into digital tokens that trade 24/7 on blockchain networks, providing low-risk yields.
Ondo is an early leader in tokenized real-world assets (RWAs). With over $1.4 billion in tokenized Treasuries under management as of July 2025, it is redefining how investors access institutional-grade finance.
But how exactly does it work, and what challenges lie ahead?
This article explores the world of Ondo Finance and its flagship offerings, OUSG and Ondo US Dollar Yield Token (USDY) and it uncovers the future of yield in decentralized finance (DeFi).
What Is Ondo Finance?
Ondo Finance is a DeFi platform that tokenizes short-term U.S.Treasuries, making them accessible on-chain for investors.
These tokens provide stable, real-world yield without traditional market limits, such as weekday-only trading hours or delayed settlement.
It is as if Wall Street’s safest bets, short-term Treasuries and reimagined them for the blockchain era, with the promise of liquidity, transparency, and composability within DeFi ecosystems, where financial applications connect and interact without intermediaries.
Over $90 trillion in value exists in US Treasuries and US stocks, with only a fraction accessible onchain.
Ondo Finance was the first to bring US Treasuries onchain at scale. Now we’re doing the same for hundreds, soon thousands, of stocks.
Backed by partnerships like BlackRock and supported by custodians like Fireblocks, Ondo is positioning itself as a leader in the tokenized asset revolution. Forecasts predict the market could hit $16 trillion by 2030.
Ondo Finance’s Core Offering: Tokenized US Treasuries (OUSG and USDY)
At the heart of Ondo’s ecosystem are two standout products: USDY and OUSG.
These products provide direct, on-chain access to some of traditional finance’s most established assets.
As of July 2025, Ondo Finance has reached $1.378 billion in total value locked (TVL), meaning that over a billion dollars’ worth of assets are now managed through its tokenized Treasury products.
As the next image shows, the native token, ONDO, is trading at $0.95 (at the time of writing), with a 24-hour trading volume of $182.36 million. Its market cap is now $3.003 billion, and the fully diluted valuation sits at $9.507 billion.
Ondo Finance TVL growth | Source: DeFi Llama
The chart shows steady growth in TVL since early 2024, with a sharp jump around mid-2025. That growth reflects increased demand for yield-bearing Treasury tokens like OUSG and USDY.
Ondo Short-Term US Government Treasuries Fund (OUSG)
OUSG is like a digital passport to Treasury yields. This tokenized fund invests in short-term U.S. Treasuries, primarily through BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). It aims to ensure institutional-grade security and integrates with Ondo’s Flux Finance protocol, where users can lend OUSG or borrow against it for additional DeFi opportunities.
OUSG on Ondo | Source: Ondo
Stable returns: OUSG offers investors exposure to low-risk, government-backed assets with yields around 5%.
24/7 liquidity: Investors can mint or redeem OUSG using stablecoins like Ripple’s RLUSD, with daily interest accruals, low fees, and 24/7 availability.
Multi-chain availability: OUSG is available on Ethereum, Polygon, Solana, and the XRP Ledger, making it accessible across major DeFi ecosystems using smart contracts.
OUSG is designed for:
Collateral: Institutions and protocols can use OUSG as secure backing for loans or margin positions.
Dollar yield: It delivers steady, real-world returns from U.S.Treasuries in token form.
Cash management: Treasurers and funds can hold OUSG to earn interest while keeping liquidity.
Settlement: OUSG can be used in fast, on-chain settlement systems that require stable, trusted assets.
Liquidity: Traders and protocols can rely on OUSG for on-demand access to capital across DeFi platforms.
US Dollar Yield (USDY)
USDY is a permissionless token that delivers daily yield while maintaining price stability. It is designed to serve as collateral in DeFi.
As of July 2025, it trades at $1.0999, offers a 4.29% APY, and has $690.61 million in TLV.
It is available on high-performance blockchains, including Ethereum, Solana, Sei, Mantle, Sui, Aptos, and the XRP Ledger.
USDY is designed for a wide range of on-chain financial use cases, including:
Savings: Users can hold USDY to earn daily interest without the volatility of most crypto assets.
Payments: It can be used for direct transactions while still earning yield.
Collateral: Platforms can accept USDY in lending protocols as secure backing for loans.
Remittances: It enables low-cost, cross-border transfers that also generate interest.
DeFi: USDY integrates with decentralized apps for staking, farming, and liquidity provision.
Lending and borrowing: Users can lend USDY to earn or borrow against it using smart contracts.
Financial access: Individuals in emerging markets can access yield-bearing dollars without banks.
Crypto capital markets: Institutions can use USDY to participate in structured products and tokenized finance.
However, it is important to note that USDY is not available in the United States or to U.S. persons.
Rebasing OUSG ( rOUSG)
Ondo also offers rOUSG, a rebasing version of OUSG that maintains a stable price of $1 by distributing yield as additional tokens.
Unlike OUSG, which reinvests earnings to increase its value, rOUSG pays out daily returns through token balance adjustments. It can be converted to and from OUSG directly on Ondo’s platform, providing an option for users who prefer price stability while earning yield.
How Ondo Tokenizes Treasuries
Ondo turns short-term U.S. Treasuries into blockchain-based assets through a combination of smart contracts, secure custody, and regulatory controls. The process links traditional securities with programmable on-chain tokens built for DeFi use.
Here’s how it works:
Token standards: Ondo uses ERC-20 tokens (and equivalents on other blockchains like Solana and XRP Ledger) to represent ownership in its funds. These tokens are programmable, enabling seamless transfers and interactions with DeFi protocols. For example, OUSG and USDY can be used in peer-to-pool lending on Flux Finance, where users supply tokens to a shared pool and borrowers draw from it, with algorithmically determined interest rates.
Custody partners: Ondo partners with top-tier custodians like Fireblocks and Zodia Custody to safeguard underlying assets. Fireblocks ensures regulatory compliance, while Zodia Custody supports USDY and plans to include OUSG, offering institutional-grade protection. These custodians handle the physical Treasuries and bank deposits, ensuring the tokens are fully backed.
Legal structures: Ondo operates within existing regulatory frameworks outside the U.S., where tokenized assets are covered by exemptions. Investors must pass Know Your Customer (KYC) and Anti-Money Laundering (AML) checks and hold tokens for at least 40 days before transferring. This compliance-first approach aligns with jurisdictions like Hong Kong, where regulators are embracing RWA tokenization.
The process is straightforward: Ondo invests in short-term Treasuries (e.g., via BlackRock’s SHV ETF for OUSG), tokenizes the ownership, and issues digital tokens to investors. These tokens are then tradable on-chain, offering unparalleled flexibility compared to traditional finance.
24/7 Access to Yield
Ondo offers nonstop access to U.S. Treasury yields. Unlike traditional Treasuries, which trade only during market hours, OUSG and USDY are available 24/7 on both decentralized and centralized exchanges.
This around-the-clock model benefits global users, especially in regions like Latin America, where USDY helps protect against currency instability.
Tokens accrue interest daily. Users can mint, redeem, or trade them at any time, even on weekends or holidays.
Platforms like Alchemy Pay expand access further. Non-U.S. users in 173 countries can buy USDY using local fiat through Visa, Mastercard, or bank transfers. This constant access gives retail users a way to earn a stable yield.
Challenges and Considerations
Ondo operates in a fragmented global regulatory environment, where tokenized assets still lack clear legal frameworks. Key issues include:
Regulatory barriers in the U.S.: American investors cannot access USDY or OUSG due to the Securities and Exchange Commission’s (SEC) unclear stance on tokenized securities. Ondo addresses this by focusing on non-U.S. markets and enforcing strict KYC/AML procedures.
Jurisdictional fragmentation: While some regions like Hong Kong provide clearer rules, such as the HKMA’s guidance on governance and risk for tokenization firms, most markets remain inconsistent, slowing cross-border adoption.
Compliance vs. innovation: Ondo must balance fast growth in DeFi with strict regulatory compliance, as the SEC’s Crypto Task Force could either support broader adoption or impose restrictions that limit future expansion.
However, Ondo’s expansion faces additional risks beyond regulation. These include:
Rising competition: Other platforms like Goldfinch and Ripple are also building in the real-world asset space, increasing pressure on Ondo to differentiate.
Market risk: Volatility affects adoption. Some analysts expect it to reach $2.16 within a year if institutional demand grows, but nothing is guaranteed.
Liquidity constraints: While USDY and OUSG trade 24/7, they sometimes lack market depth, meaning there aren’t enough buyers or sellers at certain times. This can cause pricing gaps. Ondo’s partnerships, including Sei and Solana, aim to improve liquidity, but scaling remains a core challenge.
Conclusion
Ondo Finance brings short-term U.S. Treasuries onto blockchains through its tokens OUSG and USDY. These instruments offer daily yield, multi-chain access, and instant trading, which are functions traditionally limited to institutional finance.
Through partnerships with custodians and DeFi platforms, Ondo supports global access to low-risk assets. That access still faces regulatory limits in the U.S. and liquidity remains uneven across markets.
Still, the combined effort to bridge TradFi and DeFi shows clear signs of momentum. With clear governance, partnerships, and continued adoption, Ondo could become a blueprint for tokenized real-world finance.
What happens to yield if price updates are delayed?
If a daily price update or rebase is missed, yield is retroactively paid with the next update. Redemptions before an update exclude that day’s yield.
How often can investors trade OUSG and USDY?
Investors can mint, redeem, or trade tokens any time, every day of the week, including weekends and holidays.
What provides backing and security for Ondo’s tokens?
Custody partners like Fireblocks and Zodia Custody safeguard Treasury assets. That ensures tokens remain fully backed at all times.
What limits liquidity for USDY and OUSG?
Limited market depth can lead to price gaps when few users trade. Partnerships with Solana and Sei aim to boost liquidity over time.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Dr. Lorena Nessi is an award-winning journalist and media technology expert with 15 years of experience in digital culture and communication. Based in Oxfordshire, UK, she combines academic insight with hands-on media practice.
She holds a PhD in Communication, Sociology, and Digital Cultures, and an MA in Globalization, Identity, and Technology.
Lorena has taught at Fairleigh Dickinson University, Nottingham Trent University, and the University of Oxford. She is a former producer for the BBC in London, with additional experience creating television content in Mexico and Japan.
Her research focuses on digital cultures, social media, technology, capitalism, and the societal impact of blockchain innovation.
She has written extensively on digital media and emerging technologies, with her work featured in both academic and media platforms. Her Web3 expertise explores how blockchain technologies shape culture, economics, and decentralized systems.
Outside of work, Lorena enjoys reading science fiction, playing strategic board games, traveling, and chasing adventures that get her heart racing. A perfect day ends with a relaxing spa and a good family meal.
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