Trust & Transparency
How do I know my funds are safe / protected?
USDY has been designed with transparency and investor protection in mind.
First, USDY has been structured to maximize bankruptcy-remoteness, including issuance from a separate legal entity managed by a distinct Board of Directors with an independent director, segregation of assets from Ondo Finance, Inc., and separate books and accounts.
Second, Ondo Finance has over-collateralized the USDY notes, providing a 3% first-loss position that absorbs short-term fluctuations in US Treasuries prices.
Third, investors in USDY have what's known as a “first security interest” in USDY's underlying bank deposits and Treasuries, with Ankura Trust acting as the collateral agent. As part of maintaining these security interests, we have entered into control agreements with Ankura Trust and each of the banks and custodians holding assets backing USDY. These agreements give Ankura the legal right and obligation in its role as Collateral Agent, subject to USDY Tokenholder approval, to take control of USDY's assets and repay Tokenholders upon the occurrence of certain events of default and upon acceleration of the loans by the vote of USDY holders. The events that trigger such an action include a failure to repay redemptions, a failure to keep USDY adequately capitalized, or Ondo USDY LLC filing for bankruptcy.
Finally, in its additional capacity as Verification Agent, Ankura Trust will also provide daily transparency reports with detailed asset holdings beginning 60 days after launch.
These mechanisms ensure an institutional-grade level of investor protections that most Tokens, including traditional stablecoins, lack.
How do you ensure adequate reserves to ensure you can always redeem all Tokens you issue?
The first is overcollateralization with a minimum 3% first-loss position. This means that if we issue a total of $100 worth of USDY, it will always be secured by at least $103 worth of bank deposits and Treasury bills. This collateralization ratio will be monitored daily and must exceed this minimum threshold at the end of every quarter.
How do you invest the reserves?
In general, we aim to maintain an allocation of 99%+ short-term US Treasuries.
Where are the assets backing USDY held?
The US Treasuries are held in accounts at highly regarded, regulated institutions. We have onboarded with two US banks to accept deposits for USDY—one is a US Globally Systemically Important Bank (G-SIB) with an S&P (long-term) rating of A+, the other is a US bank with an S&P (long-term) rating of BBB+. Ankura Trust acts as Verification Agent to verify the existence of such deposits on a daily basis.
What kind of reporting will you provide?
Within 60 days of accepting our first deposits, we will start providing daily reports on the status of our reserves. These reports will be reviewed by our independent, third-party Verification Agent, Ankura Trust. Ankura will then, in accordance with the relevant governing documents, confirm the eligible investments. This information will be made public and posted on our website. Reporting for a given day will be posted within three business days. (E.g. the report for Monday will be posted by end of day Thursday.) On a monthly basis, we will also provide more detailed reconciliation reports by the 20th of the following month; this report will also be reviewed by Ankura in accordance with the relevant governing documents.
What happens to USDY if Ondo Finance files for bankruptcy?
While it is unlikely that Ondo Finance would go bankrupt in the next several years due to its strong capitalization, Ondo USDY LLC itself is a separate entity that isolates investor funds. In the unlikely event of an Ondo Finance bankruptcy, Ondo USDY has been structured in a manner to minimize the risk of consolidating the Ondo USDY assets into an Ondo Finance bankruptcy. See more under How do I know my funds are safe / protected?
What is the legal structure of Ondo? What's the difference between Ondo Finance, Inc. and Ondo USDY LLC?
Ondo Finance is a technology company building software to support institutional financial market infrastructure. Ondo Finance has raised $24MM from Founders Fund, Pantera, and other venture capital and angel investors. Ondo USDY LLC, the issuer of USDY, is an entity designed for bankruptcy-remoteness, with Ondo Finance acting as its servicer and with rights to appoint the Board of Directors of Ondo USDY LLC. In addition, Ondo Finance holds membership interests in Ondo USDY LLC.
Who is on the Ondo USDY LLC Board of Directors?
Nathan Allman
Nathan is the Founder and Chief Executive Officer at Ondo Finance. He previously worked at Goldman Sachs on the Digital Assets team. He also has a background in private credit investing at Prospect Capital Management. Nathan has an A.B. from Brown University.
Justin Schmidt
Justin is the President and Chief Operating Officer at Ondo Finance. He previous was the Head of Strategy at Talos, the former Head of Digital Assets at Goldman Sachs, and has over 20 years of investing and capital markets experience. Justin holds a Bachelor's and Master's degree in Computer Science from MIT.
Sébastien Derivaux
Sébastien is the Co-Founder and Chef at Steakhouse Financial. He previously created Real-World Finance, the first Core Unit of MakerDAO, where he shepherded financial reporting and Real-World Asset investing. Sébastien holds a PhD in Data Science from Strasbourg University.
USDY Legal Disclaimer
USDY tokens have not been registered under the US Securities Act of 1933, as amended ("Act") or the securities or financial instrument laws of any other jurisdiction, and may not be offered or sold in the US or to US persons unless registered under the Act or an exemption from the registration requirements thereof is available. The Tokens are offered and sold in the European Economic Area and the United Kingdom solely to qualified investors, and in Switzerland solely to professional clients. Other jurisdiction-based prohibitions and restrictions apply. Ondo USDY LLC, the issuer of USDY, is not registered as an investment company under the US Investment Company Act of 1940, as amended, or as an Alternative Investment Fund or Undertaking for Collective Investment in Transferable Securities in the European Economic Area, or under the securities or financial instrument laws of any other jurisdiction. Nothing herein constitutes any offer to sell, or any solicitation of an offer to buy, USDY. Nothing herein constitutes investing advice. Acquiring USDY involves risks. A USDY holder may incur losses, including total loss of their purchase price. Past performance is not an indication of future results. Additional terms apply. See docs.ondo.finance/legal/terms-of-service, docs.ondo.finance/general-access-products/usdy and ondo.finance/usdy (opens in a new tab) for details.