The Potential of Yield-Bearing Stablecoins
The market for yield-bearing stablecoins has the potential to surpass the demand for current stablecoins, according to Ondo COO Justin Schmidt. Schmidt believes that the total addressable market for yield-bearing stablecoins will be as large, if not larger, than the current market for stablecoins. Ondo offers two yield-bearing tokens: OUSG, which provides exposure to a short-term U.S. Treasurys ETF, and USDY, a stablecoin backed by bank deposits and U.S. Treasurys that generates yield from its underlying assets.
Benefits of Yield-Bearing Assets
Schmidt argues that holding dollar-denominated assets in yield-bearing assets is more capital efficient. Traditional finance often follows this approach. He also points out that current stablecoins are backed by Treasurys, meaning the issuer receives the yield instead of the token holder. By using a yield-bearing dollar, token holders can earn the yield themselves.
Introducing the ONDO Token
OUSG has accumulated $113 million in value since its launch in March 2023, while USDY has reached $71 million since its launch in November 2023. The project recently expanded to Solana and launched its own governance token, ONDO. The ONDO token faced some controversy due to its low initial float and token sale allocation. However, it helped revive interest in the project at a time when inflows were declining.
Challenges and Future Plans
OUSG experienced significant declines in inflows in Q4 2023, with a 30% month-over-month decline in November. The market capitalization of OUSG also decreased by approximately 30% between November and December. As for the ONDO token, it reached a market cap high of $430 million before retracing to its current $308 million market cap. Schmidt aims to make the ONDO token as widely supported and utilized as traditional stablecoins in the coming months.
Hot Take: The Potential of Yield-Bearing Stablecoins
The demand for yield-bearing stablecoins could surpass that of current stablecoins in the future. Ondo’s COO, Justin Schmidt, believes that the total addressable market for these types of stablecoins will be just as large or even larger than the current market. By offering yield from underlying assets, yield-bearing stablecoins provide a more capital efficient option for holders of dollar-denominated assets. Ondo’s tokens, OUSG and USDY, have gained value since their launch and the recent introduction of the ONDO token has revitalized interest in the project. Despite challenges and declines in inflows, Schmidt is focused on expanding support and adoption for the ONDO token.
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