USDY Basics

What is USDY?

USDY (US Dollar Yield Token) is a tokenized note secured by short-term US Treasuries and bank demand deposits. USDY is accessible to non-US individual and institutional investors and is designed to combine the accessibility of a stablecoin with high-quality, US dollar-denominated yield.

Creating a product that meets these requirements while also complying with applicable US laws and regulations does impose some limitations, however. For example, although you start earning interest as soon as we process your deposit, note that we can only mint your transferable USDY tokens between 40-50 days later (depending upon exactly when you invest). Furthermore, we can only redeem to USD via bank wire to non-US bank accounts.

USDY comes in two versions: an “accumulating” version (USDY) whose per-token price increases as yield accrues, and a “rebasing” version (rUSDY) whose price remains at US$1.00. Whereas the price of USDY tokens increases as the value of the underlying assets increase, with rUSDY you simply receive more rUSDY in your wallet; in effect the yield on the underlying assets accrues in the form of additional rUSDY tokens. For example, if you acquired 100 rUSDY tokens when the price per token of USDY was $1.00 – and then the price per token of USDY increased to US$1.01, the price per token of rUSDY would remain at $1.00, but your wallet would now hold 101 rUSDY tokens. This ‘rebasing’ happens automatically when the USDY price is updated each business day.

You can easily and instantly convert back and forth between USDY and rUSDY on our website at any time.

How does it work?

I. Onboarding

To onboard you must be eligible and complete our Know Your Customer (KYC) process, provide us with the wallet address where you would like to receive your Tokens, and sign the appropriate paperwork.

II. Investing

1. Deposit Funds. Once your onboarding is completed, you will receive an email stating when you are eligible to invest. From then on, you can deposit USDC at any time. (For deposits of $100K plus, USD bank wires are also possible. Contact us for more information). You will start earning interest as soon as we process your funds (typically within 2-3 Business Days).
2. Cohort Assignment. Your purchase will be assigned a cohort, which determines the date on which we can provide you with your tokens. This approach ensures compliance with legal and regulatory requirements.
3. Certificate Generation. As soon as we process your funds, you will receive a Temporary Global Certificate that entitles you to receive your actual tokens as soon as we're allowed to provide them to you. This is between 40 and 50 days after we process your deposit. This date is listed on your Temporary Global Certificate.
4. Token Minting. As soon as the required amount of time has passed, you will receive your tokens in your designated wallet. You are then free to transfer your tokens to anyone within eligible geographies.

Redeeming

Note that to comply with applicable US laws and regulations, we can only redeem USD via bank wire to non-US bank accounts. If you wish to redeem you will be required to provide us with such bank details before we can process a redemption request. Note that redemption for Temporary Global Certificates (i.e. prior to your token issuance) is only available for amounts greater than $100,000; for amounts less than this you will need to wait until your Tokens are minted.

For more information, see our How it Works page as well as the FAQ section of these docs.

Understanding rUSDY

rUSDY = A Type of ‘Wrapped’ USDY

It’s important to understand that each rUSDY still corresponds to some amount of “regular” USDY that is locked in a wrapper contract. This wrapper contract locks the USDY in the contract, mints the corresponding amount of rUSDY, and sends that rUSDY to your wallet. For example, if you had 1,000 USDY tokens worth $10 each — so, a total of $10,000 of value — the 1,000 USDY would be locked in the wrapper contract, which would then mint 10,000 rUSDY tokens and then send those to your wallet. Conversely, if you wanted to convert your rUSDY tokens back to USDY tokens, your rUSDY tokens would be sent to the wrapper contract. This wrapper would then burn the rUSDY tokens, “unlock” the corresponding number of USDY tokens, and send those USDY tokens to your wallet.

This means that the total supply of USDY is comprised of two ‘types’ of USDY:

• Wrapped USDY - i.e. USDY that is locked in the rUSDY wrapper contract and corresponds to the ‘reserve’ for the corresponding issued rUSDY.
• Non-Wrapped USDY — i.e. USDY that isn’t locked in the rUSDY wrapper contract.

There are three important implications of this:

• The “dollar value” that is represented by all rUSDY tokens is exactly equal to the amount of “dollar value” represented by all applicable wrapped USDY tokens. In other words, TVL_rUSDY = TVL_Wrapped_USDY → TVL_rUSDY = Num_Wrapped_USDY_Tokens * TokenReferencePrice_per_USDY (Token Reference Price is the ‘face value’ of the token. You can learn more about how the price of USDY is determined here)
• Because of this, if you were to add up the total amount of USDY and the amount of rUSDY, you would be double counting the value of the wrapped USDY, because some of that value is already represented by the rUSDY.
• Therefore, to properly calculate the TVL of USDY, the appropriate calculation is as follows:

Total USDY TVL (e.g. both versions) = Num_rUSDY_Tokens * $1.00 + Num_Non-Wrapped_USDY_Tokens * TokenReferencePrice_per_USDY

OR

Total USDY TVL (e.g. both versions) = (Num_Wrapped_USDY_Tokens + Num_Non-Wrapped_USDY_Tokens_ * TokenReferencePrice_per_USDY

i.e. the two calculations should result in the same number (adjusting for rounding).

rUSDY Price Stability via Rebasing

Rebasing is a mechanism through which the total supply of tokens is adjusted. The basic intuition is that, if we’re trying to keep the price per token at $1.00, as the value of rUSDY’s underlying assets increase in value, we need to increase the number of tokens such that the “value of assets” divided by the number of tokens remains constant. For tokens like USDY and rUSDY, the redemption value of the rUSDY token can be calculated by dividing the TVL of the rUSDY share class by the number of rUSDY tokens

TokenReferencePrice_per_rUSDY = TVL_rUSDY / Num_rUSDY_Tokens

From above, recall that TVL_rUSDY = Num_Wrapped_USDY_Tokens * TokenReferencePrice_per_USDY, so we have TokenReferencePrice_per_rUSDY = (Num_Wrapped_USDY_Tokens * TokenReferencePrice_per_USDY) / Num_rUSDY_Tokens Therefore, as TokenReferencePrice_per_USDY increases each day based on the Token yield rate for that month, TokenReferencePrice_per_rUSDY would also increase…unless we also increased Num_rUSDY_Tokens. Since we want to keep TokenReferencePrice_per_rUSDY at $1.00, this means that we must increase Num_rUSDY_Tokens to keep the price at $1.00.

For more technical details on how rebasing works, you can read more here. For more detailed information about USDY, please refer to the rest of these support docs or reach out to us at support@ondo.finance

Legal Notice

These pages are provided solely to facilitate your understanding of certain key features and terms of USDY and its issuer, and is qualified in all respects by the Tokenized Credit and Security Agreement, your Subscription Agreement, the Borrowing and Lending Memorandum, and the Limited Liability Company Agreement of Ondo USDY LLC.

For the purposes of these pages, the capitalized term “Token” shall refer to the transferrable USDY token.

Neither these pages, nor any related links or discussions, nor any portion hereof or thereof, constitutes any offer to sell, or any solicitation of an offer to buy, any securities, including but not limited to USDY Tokens.

Neither these pages, nor any related links or discussions, nor any portion hereof of thereof, constitutes any representation, warranty or covenant on the part of Ondo Finance Inc., Ondo USDY LLC or any other person.

These pages and their links contain, and officers, agents or representatives of Ondo Finance Inc. or Ondo USDY LLC may from time to time make, "forward-looking statements". Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on current beliefs, expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the control of Ondo Finance Inc., Ondo USDY LLC and their respective officers, agents and representatives. Actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

Acquiring USDY Tokens is speculative and involves substantial risks. There can be no assurances that a USDY Token holder will not incur losses, including total loss of their investment in USDY Tokens.

The USDY Tokens are not offered OR SOLD, and will not be offered OR SOLD, in the United States or to US persons. In addition, the USDY Tokens have not been registered under the Securities Act of 1933, as amended (the “Act”) or the securities laws of any other jurisdiction, and may not be offered, sold or otherwise transferred in the United States or to US persons unless the securities are registered under the Act, or an exemption from the registration requirements of the Act is available. Additional limitations on transfer also apply.