Arbitrum Ecosystem Spotlight: How Dolomite Powers Utility for USDY

Arbitrum is home to over $14b in DeFi TVL, establishing itself as a cornerstone of the evolving DeFi landscape. Part and parcel to this evolution is the ability to innovate atop existing financial tools with creative solutions enabled by blockchain rails. This includes a new exploration of utility for tokenized treasuries.

The recent deployment of USDY, Ondo’s permissionless US Treasuries-backed token, on the Arbitrum Network, introduces a deviceful new lever to the mature DeFi ecosystem. In deploying composable, tokenized, versions of stable, yield-bearing RWAs, platforms like Dolomite, a money market protocol on Arbitrum, become the fertile ground for these new levers to be pulled.

US Treasuries have been historically “Buy-and-Hold” assets - but let’s take a look at how the deployment of USDY on Dolomite marks a step forward in the way tokenized RWAs can be leveraged as flexible financial assets.

Dolomite: A New Canvas for Tokenized Treasuries

Dolomite is an emerging money market on Arbitrum with an active user base and deep liquidity that has seen nearly $500m in total volume and is nearly 300% overcollateralized, with functionality to support over 1,000 unique assets.

Its modular architecture is composed of two layers - the immutable core layer and the module layer, with the core layer enabling the groundwork for secure, immutable contracts, paired with much-needed modularity to adapt to new environments, trends, and paradigms as DeFi continues to evolve. This model enables a breadth of unique ways to tap into Dolomite's lending protocol. Some examples include:

Pair trading
Volatility trading
Trading within Dolomite while still earning lending yield at the same time
Trading with external sources of liquidity through an aggregator or native DEX adapter
Borrowing against diverse assets while continuing to earn boosted rewards

A broad suite of utility for the market-leading yieldcoin awaits.

Leveraging USDY on Dolomite for Additional Yield

With USDY now available on Dolomite, users can deposit their tokenized treasuries into the platform’s lending pools. This not only allows them to earn interest from borrowers but also provides an additional layer of yield from the underlying US Treasury returns. In essence, users can stack yields: earning interest from borrowers paying lending fees on Dolomite while simultaneously benefiting from the native yield USDY inherently accrues.

Borrowing Against USDY

Dolomite enables users to borrow other assets by collateralizing their USDY holdings. This opens up avenues for liquidity without needing to sell USDY, allowing users to maintain exposure to its yield-bearing properties while accessing capital to deploy elsewhere in the DeFi ecosystem. Consider the native yield an offset for lending rates in most cases. As such, yield bearing stablecoin alternatives are quietly becoming a primary choice in stable asset strategies.

Borrowing USDY

Distinct opportunities in lending markets like Dolomite often arise during periods of high market volatility, when there is typically greater demand for stable withdrawals. With this demand comes the development of opportunities to earn yield on the cost to borrow stables, as demand climbs to untenable levels. USDY can be borrowed and sold into stablecoins to normalize rates. The arbitrage on these rates is passed on to the USDY depositor through lending fees.

Maximizing Opportunities with USDY on Dolomite

The integration of USDY on Dolomite is relatively simple and straightforward. USDY being integrated into a robust financial market like Dolomite opens up a toolbox of levers, enabling users to participate in sophisticated strategies such as leveraged yield farming, where they can borrow against USDY to invest in other yield-generating assets or liquidity pools on Arbitrum.

Tokenized US Treasuries, once solely called upon to generate yield as a comprehensive “buy-and-hold” strategy, have become a tool to be used broadly, composably, with 24/7 access and liquidity. This is the value proposition of tokenized treasuries. The flexibility of a composable token that accrues native yield, paired with the unique features of Dolomite’s money market, create a powerful synergy for both USDY holders and Dolomite users looking to tap into robust DeFi strategies.

The Bigger Picture

For users, this deployment onto the Arbitrum Network isn’t just about holding Ondo’s market-leading tokenized RWAs onchain —it’s about unlocking new opportunities that exist to earn, borrow, and strategically position themselves within the ever-evolving Arbitrum DeFi ecosystem.

For tokenized RWAs, specifically, the deployment of USDY on Dolomite, on Arbitrum, represents a clear evolution in the way RWAs can be viewed as financial tools, and a cornerstone of the future of composable finance.

⚠️ NOTE: USDY is not, and may not be, offered, sold, or otherwise made available in the US or to US persons. USDY has not been registered under the US Securities Act ("Act") or pursuant to securities laws of any other jurisdiction, and may not be offered, sold or otherwise transferred in the US or to US persons unless registered under the Act or an exemption or exclusion from the registration requirements thereof is available. Additional restrictions may apply.

Nothing herein constitutes any offer to sell, or any solicitation of an offer to buy, USDY. Acquiring USDY involves risks. A USDY holder may incur losses, including total loss of their funding to acquire USDY tokens. Past performance is not an indication of future results.

Ondo does not endorse, Ondo does not make any representation or warranty whatsoever (express or implied, including but not limited to any warranty of merchantability, fitness for a particular purpose, or non-infringement) regarding, and ONDO SHALL NOT HAVE ANY LIABILITY WHATSOEVER WITH RESPECT TO ANYONE'S USE OF, any third-party products, services, or technologies referenced herein. Additional terms apply. Visit ondo.finance/usdy for details.