Comparison to Stablecoins
USDY is not classified as a traditional stablecoin; instead, it is a tokenized secured note. Like stablecoins, USDY operates as a bearer asset that can be transferred to investors without their needing to be onboarded with the issuer, although onboarding is necessary for minting or redeeming. However, unlike with stablecoins, USDY holders earn almost all of the yield from the assets that back USDY.
Below is a table that compares stablecoins and USDY:
| Stablecoins | USDY | |
|---|---|---|
| Bankruptcy-remoteness | Stablecoins are generally issued out of operating companies. If a stablecoin issuer went bankrupt, including for reasons unrelated to operating their respective stablecoins, holders may be unable to redeem | USDY is issued by Ondo USDY LLC, a company that is designed to be bankruptcy-remote from any other entities, including Ondo operating companies |
| Yield | Stablecoin holders receive no direct interest | USDY holders receive yield generated from the underlying assets (less amounts to satisfy fees, obligations, and expenses) in the form of increasing redemption value |
| Secured by high-quality assets | Stablecoins are generally unsecured liabilities of their issuers with no security interest in the assets that back them and are at risk of being subordinated to the claims of other creditors | USDY holders have a security interest in the assets that back it, and USDY is the only debt of Ondo USDY LLC |
| Regulatory status | Stablecoins exist in a regulatory gray area and are not structured in a way to be able to pay holders a yield | USDY will be issued in compliance with US federal and state securities and financial crime compliance laws |
| Third-party oversight | Stablecoin issuers can, in many cases, unilaterally change the type of assets that back them | Ankura Trust Company protects USDY holders as Verification Agent and Collateral Agent, enforcing narrow eligibility criteria and is able to force a wind-down in an event of non-compliance |
| Timely redemptions | If stablecoin issuers fail to meet redemption requests within a timely manner, there would be no Event of Default nor automatic wind-down process. Rather, stablecoin holders would likely need to litigate in court to recover their assets | If Ondo USDY LLC fails to meet a redemption request in a timely manner, an Event of Default will occur, mandating Ankura Trust to liquidate the investment portfolio and repay token holders, subject to USDY holder approval |
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.