Ondo unveils bridge to move treasuries-backed USDY stablecoin across chains

Quick Take

  • Ondo Finance has partnered with Axelar to launch the Ondo bridge, incorporating ideas from Circle’s CCTP.
  • The bridge has been designed to support the issuance of native tokens, including USDY, on networks that Axelar supports.

Ondo Finance, the issuer of tokenized secure notes and on-chain treasuries, collaborated with Axelar to introduce Ondo bridge, a cross-chain solution inspired by Circle’s cross-chain transfer protocol. The bridge will support the issuance of native tokens, including Ondo’s USDY, across blockchain networks supported by Axelar AXL -1.98% .

USDY is a tokenized note from Ondo secured by short-term U.S. treasuries and bank demand deposits. It aims to simplify the movement of Ondo tokens representing real-world assets, such as the recently introduced yield-bearing stablecoin USDY, across different blockchain networks.

“Demand for better stablecoins is growing – and it isn’t limited to a single web3 ecosystem,” said Nathan Allman, founder and CEO of Ondo. “The Ondo Bridge enables us to meet that demand wherever it exists, with a superior and safer yield-generating stablecoin.”

Ondo’s first core products are tokenized cash equivalents that deliver yield backed by assets like U.S. treasuries, money market funds and similar instruments. The objective is to offer users alternative to stablecoins where holders rather than issuers earn the majority of the underlying asset yield.

Ondo Finance tops the tokenized securities niche with approximately 50% market share, according to a Steakhouse Financial Dune Analytics dashboard, and has legally structured USDY as a tokenized bearer instrument. Ondo has over $200 million in total value locked, according to DeFiLlama.


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Axelar’s cross-chain utilization

In this context, Axelar’s programmable cross-chain network will allow Ondo to manage USDY supply across chains, burning tokenized representations of its real-world assets on one chain to mint them on another. The initial deployment will rely on Squid, a cross-chain liquidity router built on Axelar, to transfer USDY between some chain pairs, including Mantle.

This integration ensures that tokens transferred between networks remain native, using a “burn-and-mint” mechanism to avoid bridging risks associated with wrapped assets, according to the team. Additionally, the integration will enable unified secondary market liquidity, allowing traders to capitalize on token price arbitrage across various decentralized exchanges, maintaining price stability.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Vishal Chawla is The Block’s crypto ecosystems editor and has spent over six years covering tech protocols, cybersecurity, artificial intelligence and cloud computing. Vishal likes to delve deep into blockchain intricacies to ensure readers are well-informed about the continuously evolving crypto landscape. He is also a staunch advocate for rigorous security practices in the space. Before joining The Block, Vishal held positions at IDG ComputerWorld, CIO, and Crypto Briefing. He can be reached on Twitter at @vishal4c and via email at [email protected]