Ondo Finance = TradFi meets Crypto

Since raising $24 million in rounds led by Pantera Capital, Ondo has trailblazed RWA tokenization and developed the Flux Finance protocol, which uses the ONDO token.

Blackrock's recent BUIDL token launch led to a re-pricing of the RWA sector, and Ondo has taken center stage 🧵

There are over $400 trillion in real-world assets.

Just over $1 billion is represented onchain today.

Ondo aims to change this paradigm and make institutional-grade financial products and services available to everyone. Today, they offer three tokens collateralized by RWAs:

Research /messari • Crypto explainooor 🧵 • Chicagoan nomading Latam 🌎

USDY

Collateralized largely by short-term US treasuries through Morgan Stanley and StoneX. USDY increases in value as yield is generated through its treasury collateral.

TVL = $127M
Yield = 5.10%
Native support = Ethereum, Mantle, Solana, Sui, with Aptos coming soon

OUSG

Collateralized largely by BlackRock's ERC-20 BUIDL token on Ethereum. OUSG increases in value as yield is generated through its treasury collateral.

TVL = $95 million
Yield = 4.96%
Native support = Ethereum, Polygon, and Solana

OMMF

Ondo Money Market Fund (OMMF) is not live on any network.

Still, OMMF is planned to be a rebasing token whereby tokenholders accrue additional OMMF tokens as they earn yield through money market fund collateral provided by a BlackRock ETF.

But Ondo isn’t just a centralized issuer of RWA tokens. Ondo has a suite of onchain protocols too. Namely, Flux Finance.

Flux Finance is a lending protocol on Ethereum that allows OUSG to be used as collateral to borrow stablecoins (USDC, USDT, DAI, and FRAX).

Users can lend stablecoins to earn yield from the OUSG depositors that borrow them.

Similar to LP tokens, users receive fTokens representing deposited or borrowed assets. fTokens can be used in protocols like Reserve Protocol
 and CoW Swap, or redeemed for the underlying assets.

Ondo has also built two other protocols.

The first is Ondo Bridge, which allows users to transfer natively supported Ondo tokens through a “burn and mint” bridging method similar to Circle's Cross-Chain Transfer Protocol (CCTP) for USDC.

Another is Ondo Converter, which allows swaps between (1) accumulating tokens (tokens increase in value) and (2) distributing tokens (additional tokens are distributed).

Swaps are only supported on Mantle between USDY (accumulating) and the white-labeled mUSD (distributing).

How does the ONDO token fit in?

ONDO is an ERC-20 token on Ethereum that can be used for (1) governance and (2) to earn points in the Ondo Points Program.

ONDO is used to govern Flux Finance and add new supported assets, pause markets, update interest rates, manage the treasury, etc.

Ondo Foundation is currently running an Ondo Points program.

ONDO tokenholders can earn points by holding ONDO onchain and delegating/voting on governance proposals.

Users can also earn points by lending on Flux, minting/holding USDY, participating in Galxe campaigns, etc.

~5.21 billion ONDO (~52% of the token supply) was allocated for “Ecosystem Growth.” This could include future airdrops + distributions to "Ondo contributors."

Ondo hasn't announced any incentive programs, but this allocation could power future growth and adoption for Ondo.

So what’s next for Ondo? Ondo Global Markets, aka Ondo GM.

A massive market of publicly traded securities is there for the taking to be brought onchain. Ondo GM is Ondo’s next major product offering that aims to tokenize publicly traded securities!

For example, Ondo GM could purchase TSLA stock using a stablecoin balance.

Then, the user receives tTSLA tokens onchain representing the underlying TSLA stock.

New tech like Solana's Token Extensions could enable compliance-related functionality for tokenized securities.

Ondo is here to stay as RWAs continue to be brought onchain by Ondo and competitors like Superstate and Securitize.

Want a deeper dive into Ondo's RWA product suite and the ONDO token? Our new Messari Diligence Report is live!

Ondo is here to stay as RWAs continue to be brought onchain by Ondo and competitors like Superstate and Securitize.

Want a deeper dive into Ondo's RWA product suite and the ONDO token? Our new Messari Diligence Report is live!

https://messari.io/project/ondo-finance/diligence-report

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It's a good question. 

BlackRock being the issuer and custodian of BUIDL is powerful. Already all of Ondo's OUSG collateral has been converted from a BlackRock ETF to BlackRock BUIDL! 

I could see Circle doing something similar for USDC's Treasury collateral.

are you bullish on tradfi asset issuers eg blackrock tokenizing things themself

or do you think RWAs can be better run by crypto native orgs that take other's assets and go tokenize them onchain (ie act as a custodian)

option 2 gives you dedicated focus (they only care about crypto) but another trust assumption