How to Earn Yield on USDY
USDY (Ondo Dollar Yield) is one of the most popular ways to earn treasury yields onchain. Backed by short-term U.S. Treasuries and bank deposits, USDY offers approximately 5.2% APY while maintaining the accessibility of a blockchain token. This guide covers everything you need to know about USDY.
What is USDY?
USDY is a yield-bearing stablecoin issued by Ondo Finance. Unlike regular stablecoins like USDC that sit idle, USDY automatically earns yield from the underlying treasury investments. The token value increases daily as yield accrues.
Key Features:- 5.2% APY (as of current rates)
- Multi-chain: Ethereum, Solana, Arbitrum, Optimism, Polygon, Mantle
- No minimum investment for retail
- Backed by U.S. Treasuries and bank deposits
- Daily yield accrual
Why Choose USDY?
vs Holding USDC:USDC earns 0% while USDY earns 5.2%. On $10,000, that is $520/year in yield you are missing.
vs Traditional Treasury ETFs:USDY offers 24/7 trading, DeFi composability, and global access without a U.S. brokerage account.
vs Other Yield Stablecoins:USDY has the largest TVL, most chain support, and deepest DeFi integrations among tokenized treasury products.
Eligibility Requirements
USDY is available to non-U.S. persons only due to U.S. securities regulations. You must:
- Be 18+ years old
- Reside outside the United States
- Complete KYC verification
- Not be on any sanctions lists
Understanding USDY Mechanics
How Yield Accrues:USDY is an appreciating token. If you buy 100 USDY at $1.00 each ($100), after one year at 5% APY you still have 100 USDY but each is worth $1.05 ($105 total).
Mint vs Buy:- Minting: Purchase directly from Ondo with fiat/USDC (40-day waiting period)
- Buying: Purchase on DEXs or exchanges (instant, market price)
Most users should buy on secondary market for immediate access.
DeFi Opportunities with USDY
USDY is increasingly integrated across DeFi:
As Collateral:- Morpho Blue: Borrow against USDY
- Aave (coming): Use USDY as collateral
- Maker: Some vaults accept USDY
- Curve: USDY/USDC pools on multiple chains
- Uniswap: USDY pairs available
- Orca (Solana): USDY pools
- Stack DeFi yields on top of treasury yield
- Example: USDY in Morpho earning 5.2% + lending yield
Tax Considerations
USDY yield is generally treated as interest income in most jurisdictions. The appreciating nature may also trigger capital gains on sale. Consult a tax professional familiar with digital assets.
Risks to Consider
Counterparty Risk: You trust Ondo to properly manage treasury assets Smart Contract Risk: Bug in contracts could affect funds Regulatory Risk: Rules for tokenized securities may change Geographic Risk: If you move to the U.S., you may need to exit Track your USDY position with Fensory. Monitor yield accrual and compare against other opportunities.[Start Earning →](https://www.fensory.com)
Step-by-Step Instructions
Get a Compatible Wallet
Set up a wallet that supports your preferred chain. MetaMask or Rabby work for Ethereum/Arbitrum. Phantom or Backpack work for Solana. Ensure you have some native token (ETH, SOL) for gas fees.
Tips
- ✓Rabby offers better multi-chain support than MetaMask
- ✓Hardware wallet recommended for larger amounts
- ✓Keep gas funds available for transactions
Acquire USDC or Other Stablecoins
If you do not already have stablecoins, purchase USDC through a centralized exchange (Coinbase, Kraken) or fiat on-ramp (MoonPay, Transak). Transfer to your non-custodial wallet.
Tips
- ✓USDC is most liquid for USDY swaps
- ✓Consider which chain has lowest swap fees
- ✓Arbitrum and Solana typically have lowest fees
Swap USDC for USDY
Use a DEX aggregator like Jupiter (Solana), 1inch (Ethereum/Arbitrum), or Odos to swap USDC for USDY. Compare rates across platforms for best execution.
Tips
- ✓Check slippage settings before swapping
- ✓Large orders may get better rates through RFQ
- ✓Verify you are receiving the correct USDY token contract
Warnings
- ⚠Verify token contract addresses on official Ondo documentation
- ⚠Be cautious of fake tokens with similar names
Verify Your Holdings
After swapping, confirm USDY appears in your wallet. If not visible, add the token manually using the contract address from Ondo official docs. Your USDY will now automatically earn yield.
Tips
- ✓USDY value increases daily - check after 24 hours
- ✓Track your position on Ondo dashboard or Fensory
- ✓No staking or additional action required
Optionally Deploy in DeFi (Advanced)
For additional yield, consider using USDY in DeFi protocols. Deposit as collateral on Morpho to borrow, or provide liquidity in USDY/USDC pools on Curve or Uniswap.
Tips
- ✓Start with simple holding before exploring DeFi
- ✓LP positions carry impermanent loss risk (minimal for stablecoin pairs)
- ✓Monitor borrowing positions to avoid liquidation
Warnings
- ⚠DeFi adds smart contract risk on top of USDY risk
- ⚠Only use audited, reputable protocols