Yield Mechanics

Treasuries · Lesson 4.3

Income on a tokenized Treasury fund comes from the bills and other short-term instruments the fund holds. Interest accrues as they earn and roll over, and products pass it to holders in one of two main ways. Stable-price funds, such as BlackRock's BUIDL and Franklin Templeton's BENJI, keep each token at about one dollar and pay income as additional tokens. Accumulating tokens, such as Ondo's USDY and OUSG, keep the income inside the product, so each token's price rises over time. When holders receive income depends on the product's distribution schedule.

Wally’s note: the token takes credit for the group project

The token reports the yield. The Treasury bills underneath earn it.

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