Ondo’s Role in Unlocking Market Opportunities through Tokenisation

Greythorn Asset Management
9 min readJun 17, 2024


Market Opportunity

BlackRock’s CEO, Larry Fink, views tokenisation as the future of finance and the next evolution of markets, showing a commitment that could influence other major players. As highlighted in our previous research on the Dusk Network, Real World Assets (RWA) are becoming a significant asset class within the cryptocurrency industry. By May 2024, the RWA market had exceeded $6.6 billion, reflecting growing investor interest in this innovative financial product. Tokenising RWAs and bringing them on-chain can provide yield opportunities within DeFi. The asset tokenisation market is projected to reach $10 trillion by 2030.

Source: Roland Berge

The primary reason this emerging market is so promising goes beyond providing yield opportunities within DeFi. By digitising assets as tokens, it enables breaking down assets like treasuries, stocks, and real estate into smaller shares. This process enhances liquidity and opens up investment opportunities to a wider range of investors with varying capital levels.

The illustration below demonstrates how asset tokenisation operates, as explained by Chainlink. The main benefits include increased liquidity through interoperable tokenised assets and improved accessibility, allowing smaller investors to invest in higher-upside assets with relatively low capital. Additionally, it enhances transparency due to the public nature of many blockchains and improves composability by connecting the value of real-world assets to the DeFi ecosystem.

Source: Chainlink

The market capitalisation of U.S. tokenized government bonds also grew from $114 million to $845 million in 2023, with Franklin Templeton being the largest issuer of this asset class, accounting for about 38% of the market.

Recent research from EY reveals that 64% of high net worth investors and 33% of institutional investors intend to boost their investments in tokenised treasuries by the end of 2024.

Source: EY

While still in its infancy, asset tokenisation represents one of the most promising and high-potential applications of blockchain technology. Ondo Finance is well-positioned to capitalise on this trend with its treasury tokenisation services, as investor interest continues to grow

Ondo Technology

Ondo is transforming finance with its decentralised protocol, offering institutional-grade products via blockchain. By tokenising stable assets from traditional finance, Ondo blends reliability with blockchain’s efficiency.

Ondo has two main divisions: asset management and technology. The asset management arm creates and oversees tokenised financial products, while the technology arm develops the protocols powering these offerings.

Currently, Ondo Finance offers two distinct investment options:

1. USDY (Ondo US Dollar Yield Token)

  • Tokenised note backed by short-term US Treasuries and bank deposits.
  • Offers 5.30% APY with a TVL of $315.35M.
  • Safer and more transparent than traditional stablecoins like USDT/USDC.
  • Managed by Ankura Trust Company for compliance and investor protection.
Source: Ondo Finance

2. OUSG (Ondo Short-Term US Government Treasuries)

  • Low-risk tokenized short-term US Treasuries for passive investors.
  • Offers 4.81% APY with a TVL of $221.32 million.
  • Shifted investments from BlackRock’s SHV to BUIDL in March 2024.
  • Ondo recently introduced a new version of OUSG, named rOUSG, providing yield through additional rOUSG tokens to investors.
Source: Ondo Finance

Ondo’s Flux Finance

Flux Finance, created by the Ondo Finance team, is a big step forward in decentralised lending. It’s based on Compound V2 but adds new features. It supports both open tokens like USDC and restricted tokens like OUSG (Ondo Short-Term US Government Bond Fund). This means you can freely lend USDC, but borrowing against OUSG requires meeting specific permissions for regulatory compliance and security.

Flux uses a peer-to-pool (p2pool) model, similar to Compound, allowing users to lend and borrow with over-collateralization. Lenders earn interest on stablecoins they supply, while borrowers can borrow stablecoins using their collateral, following the permissions of the assets. Flux Finance is governed by the Ondo DAO.


Given Ondo’s established relationship with giants like BlackRock, where Ondo invested $90M in the BlackRock Managed Fund BUILD, it appears Ondo is emerging as a key leader in the crypto RWA category within traditional finance, complementing other TradFi companies.

In the decentralised finance world, competition is growing. Centrifuge focuses on tokenising structured credit and issuing debt using NFTs. Ethena provides synthetic asset exposure, allowing users to trade assets without holding them. Maple Finance offers undercollateralized loans to institutions, emphasising credit assessment and lending. Pendle deals with tokenised yield trading, enabling users to separate and trade the yield component of assets.

Ondo Finance stands out for several reasons. It has a broad market reach by integrating traditional finance with blockchain, specifically targeting the massive US treasury market. Its complementary approach involves partnering with traditional finance giants like BlackRock, thus avoiding direct competition. Additionally, Ondo provides innovative products such as USDY and OUSG, offering safer and more transparent alternatives to traditional stablecoins.


ONDO Tokenomics Summary

  • Current Price: $1.87
  • Market Cap Rank: #54
  • Fully Diluted Valuation (FDV): $13.15B, Rank #16
  • Circulating Supply: 1.44 billion ONDO (14.27% of total supply)
  • Total Supply: 10 billion ONDO
  • Max Supply: 10 billion ONDO
  • Next Unlock: 1.67 million ONDO (~$2.19M) in 5-days

Token Allocation

Source: Dropstab

Upcoming Unlock Events

  • June 18, 2024: 1.67 million ONDO (~$2.19M)
  • July 18, 2024: 1.67 million ONDO (~$2.19M)
  • August 18, 2024: 1.67 million ONDO (~$2.19M)
  • September 18, 2024: 1.67 million ONDO (~$2.19M)
  • October 18, 2024: 1.67 million ONDO (~$2.19M)
  • November 18, 2024: 1.67 million ONDO (~$2.19M)
  • December 18, 2024: 1.67 million ONDO (~$2.19M)
  • January 18, 2025: 1.94 billion ONDO (~$2.55B)
  • January 18, 2026: 1.94 billion ONDO (~$2.55B)
  • January 18, 2027: 1.94 billion ONDO (~$2.55B)
  • January 18, 2028: 1.94 billion ONDO (~$2.55B)

Token Utility

The ONDO token is the governance token for Ondo Finance and its Flux Finance protocol. It grants holders the right to vote on various proposals within the Ondo DAO, ensuring that all decisions are made transparently on-chain.

To initiate a proposal, an individual must hold or be delegated a voting power of at least 100 million ONDO.

It remains to be seen if any additional utilities will be introduced for ONDO holders in the future.

Team, Fundraising and Ecosystem

The team at Ondo Finance boasts a diverse mix of personnel from both traditional finance and Web3 sectors. Founder and CEO Nathan Allman and President and COO Justin Schmidt both hail from Goldman Sachs. Katie Wheeler, another key member, comes from BlackRock. Additionally, the team includes developers from OpenSea, MakerDAO, and Boson Protocol. This combination of expertise aligns well with Ondo Finance’s unique vision and objectives.

Source: Ondo Finance

Fundraising Summary

  • Seed Round: In December 2021, Ondo Finance raised $4.00M at $0.013 per token, achieving a 99.87x ROI USD. 300M tokens (3% of total supply) were sold, led by Pantera Capital, with a 1-year initial lock followed by a 24-month release.
  • Public Sale Round: On May 12, 2022, $10.00M was raised at $0.03 per token, yielding a 43.28x ROI USD. 100M tokens (1% of total supply) were sold on Coinlist, featuring a 1-year lock-up and an 18-month release.
  • Series A: In April 2022, $20.00M was raised at $0.02 per token, with a 64.92x ROI USD. 1B tokens (10% of total supply) were sold, led by Founders Fund, with a 1-year initial lock followed by a 24-month release.


Ondo Finance has formed several key partnerships to strengthen its blockchain and financial services:

  • Aptos Foundation: Collaborating to integrate real-world assets with blockchain technology, starting with the tokenised US Treasuries product, USDY.
  • Thala Labs: Working together to launch USDY in Thala’s AMM pools and use it as collateral for collateralised debt positions (CDP), enhancing liquidity and DeFi solutions.
  • Wintermute: Partnering to boost the liquidity of the US Dollar Yield stablecoin, USDY, providing 24/7 liquidity across multiple blockchain platforms.
  • BlackRock: Demonstrated by a $95 million investment in BlackRock’s BUIDL fund, underscoring a commitment to expanding tokenisation efforts and integrating with Ondo’s products.

Adoption and Roadmap

Ondo Finance aims to bridge traditional and decentralised finance using public blockchain technology. Their focus is on creating secure, transparent, and compliant financial products.

Key Products:

  • OUSG: Tokenised BlackRock short-term US Treasuries ETF.
  • OMMF: Tokenised BlackRock money market fund.
  • USDY: Yield-bearing alternative to stablecoins.
  • Flux Finance: Protocol supporting tokenised securities as collateral.

These products have driven significant growth, with Ondo’s TVL increasing from $40 million to $534 million. Looking ahead, Ondo plans to expand the use of its tokenised cash equivalents by increasing adoption and liquidity for USDY, OUSG, and OMMF. This will involve forming partnerships and developing cross-chain tools to facilitate these processes.

Source: DeFillama

In the next phase, they aim to tokenise publicly traded securities, addressing the challenges related to liquidity and infrastructure that this entails. Ultimately, Ondo seeks to innovate within traditional finance by extending the benefits of blockchain to a wider range of financial services, using a combination of centralised and decentralised mechanisms. This approach will help bring the advantages of blockchain technology to a broader spectrum of financial operations.

Bullish Fundamental Factors

  • The tokenisation industry is set for significant growth, and Ondo Finance, in partnership with BlackRock, is strategically positioned to channel trillions of dollars into Web3.
  • Ondo Finance’s TVL has seen substantial growth since the start of 2024.
  • Real-World Assets represent a fresh and promising narrative in crypto, with strong potential for early adopters.
  • Ondo Finance is dedicated to evolving its product offerings to meet customer needs.
  • Most of OUSG’s investments initially were in BlackRock’s iShares Short Treasury Bond ETF (SHV). In March 2024, they shifted to BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), aligning with Ondo’s focus on asset tokenisation.
  • Ondo Finance is a leading player in the crypto RWA space and is becoming the preferred choice.
  • Ondo Finance holds about 38% of BUIDL’s current supply.

Bearish Fundamental Factors

  • The utility of the ONDO token shows a significant centralisation risk.
  • While all holders can participate in governance, the largest holders have the most influence.
  • Approximately 85% of the total ONDO supply is controlled by the Ondo Finance team.
  • Operating at the intersection of TradFi and crypto, Ondo Finance is venturing into a relatively uncharted market, with regulation posing a significant challenge.
  • Bad debt is a major risk for DeFi protocols, including Ondo Finance’s Flux. This occurs when a borrower’s collateral value falls below their debt. If a borrower’s equity turns negative, Flux uses its reserves to mitigate losses. To minimise volatility and reduce bad debt risk, Flux only accepts stable assets as collateral.


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