When thinking about the USD1+ OTF product, the first word that comes to mind is Yu'ebao. It's not that they are the same; rather, their underlying logic is very similar. Both take users' idle funds for diversified allocation and provide users with relatively stable returns.
However, what Lorenzo is doing is more complex than Yu'ebao, as they not only place funds in the money market but also run strategies across RWA, CeFi, and DeFi simultaneously. They then package the returns from these three layers into a single token, allowing users to participate in three different investments by purchasing this token.
USD1+ OTF will be launched on the BNB Chain mainnet on July 22, 2025, accepting three stablecoins: USD1, USDT, and USDC, with a minimum deposit of $50. After depositing, you will receive the yield token sUSD1+, which is non-rebasing, meaning the quantity will not change, but the value will increase.
Why design it as non-rebasing? Because rebasing tokens have the issue that every time the quantity changes, it may trigger a taxable event, and many DeFi protocols have poor compatibility with rebasing tokens, which can easily lead to bugs. Lorenzo chose non-rebasing to avoid these problems.
Now, let's break down the three-layer yield structure of USD1+ OTF. The first layer is RWA (real-world assets). Lorenzo collaborates with OpenEden to integrate the tokenized USDO, which is backed by real U.S. government bonds. The yield is approximately 5% annually, with very low risk.
This 5% may not seem high, but in the cryptocurrency market, having such a stable and low-risk source of yield is rare. Most DeFi protocols have volatile yields; today it may be 20%, but tomorrow it could be 5% or even zero. The introduction of RWA provides an anchor, a relatively certain underlying yield.
The second layer is CeFi quantitative strategies, which are relatively specialized. Lorenzo collaborates with some quantitative teams to implement delta-neutral arbitrage. What does this mean? It means building positions simultaneously in the spot and futures markets to profit from price differences, regardless of whether BTC rises or falls, as long as the price difference exists, profit can be made.
Such strategies are quite common in traditional finance and are often used by hedge funds, but in the cryptocurrency market, few teams can execute them well due to the need for a strong algorithmic trading system and risk control capabilities, as well as sufficient capital to dilute slippage and fees.
The fact that Lorenzo can achieve this yield layer indicates that they either have their own quantitative team or have a cooperative relationship with professional quantitative institutions. This part of the yield may be between 10% and 15%, depending on market volatility.
The third layer is DeFi lending and liquidity mining. This part has the highest yield, possibly over 20%, but the risks are also relatively high because smart contracts may have vulnerabilities, protocols may be attacked, and liquidity may dry up. Lorenzo controls this part to a certain proportion and will not all-in on high-risk strategies.
The key is that the ratio of these three layers is not fixed but dynamically adjusted. Lorenzo has an investment committee that meets every two weeks to review the current market situation and decide whether to adjust the allocation of funds. For example, when the market is good, they allocate more to DeFi, and when the market is bad, they allocate more to RWA.
This committee is not decided by the Lorenzo team alone but is elected by BANK token holders. Each committee member must stake a certain amount of BANK as collateral. If decisions harm user interests, the collateral may be forfeited. This incentive mechanism ensures that committee members act responsibly.
From the product design perspective, USD1+ OTF is actually mimicking actively managed funds in traditional finance, such as Fidelity's money market fund, where fund managers select stocks and adjust allocations. USD1+ follows this logic, only the fund manager has become the on-chain investment committee, and the holdings are now DeFi protocols.
The advantage of this design is that it can optimize yields because a professional committee understands better than ordinary users how to allocate funds across different protocols. The downside is that it introduces a certain degree of centralization risk. If the committee acts maliciously or makes poor judgments, users' funds may be harmed.
However, Lorenzo has implemented some checks and balances in this area. First, the committee's decisions must be executed on-chain, and everyone can see the flow of funds. Second, major decisions require voting from BANK holders, not just the committee's say. Finally, committee members have collateral constraints and will not take reckless actions.
From the actual data, USD1+ OTF has developed well since its launch. The current circulating supply of sUSD1+ is 82.51 million tokens. Based on a price of $1.013, the TVL is approximately $83.59 million. Although this number is small compared to enzoBTC's $475 million, considering USD1+ has been live for less than six months, this growth rate is already quite fast.
Moreover, the growth of USD1+ mainly occurred in early December because Binance launched spot and futures trading for USD1. The overall liquidity and recognition of USD1 have improved. Lorenzo, as the largest yield optimization product in the USD1 ecosystem, naturally benefited from this wave of dividends.
Lorenzo stated in the announcement that the annualized yield of USD1+ OTF over 7 days can reach 40%. This number seems exaggerated, but you have to note that this is a 7-day instantaneous yield, not a long-term stable yield. It may be due to a particular period when the yield from the DeFi layer was particularly high, pulling up the overall level.
In the long run, the comprehensive yield of USD1+ should be between 15% and 25%, depending on the performance of the three layers of income and the committee's allocation ability. This yield is higher than traditional stablecoin lending but also more stable than pure DeFi mining.
Lorenzo also plans to expand USD1+ OTF to Ethereum and Solana by 2026. If this can be achieved, the scale of USD1+ may reach a new level, as the DeFi ecosystems on Ethereum and Solana are more mature than that of BNB Chain, and the user base is larger.
However, there are challenges in expanding to other chains. First, there is the security of cross-chain transactions. Funds flow between different chains, and each cross-chain transfer requires a bridge, which is a risk point. Second, the protocol ecosystems on different chains are not the same. Using Venus's strategy on BNB Chain may require switching to Aave on Ethereum, which necessitates redevelopment and testing.
Another concern is regulatory risk. USD1+ OTF is essentially a money market fund, which in the eyes of the SEC in the United States requires registration. Lorenzo may still be under regulatory radar, but if the TVL reaches tens of billions of dollars, regulatory issues will undoubtedly arise. How to respond to this challenge is a major test.
Lorenzo's RWA expansion plan is also worth noting. They said they would increase private credit and real estate RWA by mid-2026. If this can be achieved, the sources of yield for USD1+ will become more diversified and the risks more dispersed @Lorenzo Protocol $BANK
