Introduction
As unsustainable high-APY projects fade in the bear market and DeFi TVL contracts, RWA (Real-World Assets) narratives—led by MakerDAO—have gained traction. Investors now focus on low-risk, yield-generating assets like U.S. Treasuries, with Ondo Finance emerging as a top RWA project.
Recently, Coinbase added Ondo Finance ($ONDO) to its listing roadmap following Ondo Foundation’s announcement of an 18th January token unlock. This move aims to boost liquidity and incentives for the ecosystem.
While Ondo has carved a niche in tokenized Treasuries (ranking 3rd with $125M in assets under management), this article explores its offerings, challenges, and future potential.
1. Ondo Finance Overview
Ondo Finance is an RWA tokenization protocol launched in January 2023. It provides institutional-grade investment opportunities by bridging on-chain users to off-chain assets like U.S. Treasuries and money market funds.
Key Stats (RWA.xyz):
- Total RWA Treasury Market Cap: $863M (excluding MakerDAO’s $2B+).
- Ondo’s AUM: $125M (3rd place behind Franklin Templeton and Mountain Protocol).
2. Ondo’s Tokenized Products
Ondo converts traditional funds into on-chain tokens, charging a 0.15% annual management fee.
2.1 Yield-Bearing Stablecoin ($USDY)
- Collateral: Short-term Treasuries + bank deposits.
- Target Users: Non-U.S. KYC-compliant investors.
- TVL: $65.37M.
- Structure: Issued via bankruptcy-remote SPV (Ondo USDY LLC).
2.2 Tokenized Treasury Fund ($OUSG)
- Underlying Asset: BlackRock iShares Short Treasury Bond ETF.
- TVL: $114M.
- Flow: USDC → Coinbase → Clear Street (custodian) → ETF purchases.
2.3 Money Market Fund ($OMMF)
Details remain sparse, but it likely mirrors SEC-compliant funds (e.g., Superstate’s rebase model).
2.4 Flux Finance: Enabling Permissionless Access
A Compound V2-forked lending protocol that lets DeFi users borrow against Ondo’s KYC-gated tokens (e.g., $OUSG).
- TVL: $24.32M.
- Loans Outstanding: $14.11M.
3. Ondo’s Funding and Tokenomics
3.1 Capital Raised
- Seed Round (2021): $4M (Pantera Capital-led).
- Series A (2022): $20M (Founders Fund + Pantera).
- CoinList ICO (2022): $10M at $0.03–$0.055/token.
3.2 $ONDO Token Distribution
- Total Supply: 10B tokens.
- Initial Circulation: 14.27% (1.43B).
- Lockup: 85% vested over 1–5 years.
Allocation:
- Ecosystem: 52.1%.
- Protocol Development: 33%.
- Private Investors: 12.9%.
4. Challenges and Opportunities
Strengths:
- Elite Team: Ex-Goldman Sachs, MakerDAO, and Bridgewater alumni.
- Regulatory Compliance: Rigorous audits and SPV structures.
Risks:
- Competition: Mountain Protocol ($MNT) surpassed Ondo’s TVL in 4 months; Centrifuge partners with Aave/Frax.
- Product Depth: Over-reliance on Treasuries—needs diversification (e.g., equities, commodities).
👉 Explore Ondo’s Latest Partnerships
FAQs
Q1: Is Ondo Finance regulated?
A: Yes, its products require KYC and comply with U.S. securities laws.
Q2: How does $USDY differ from USDC?
A: $USDY generates yield from Treasuries; USDC does not.
Q3: Can U.S. investors use Ondo?
A: Most products are restricted to non-U.S. persons.
Q4: What’s Flux Finance’s role?
A: It enables DeFi users to lend/borrow against Ondo’s tokens without KYC.
Conclusion
Ondo’s early bet on Treasuries was prescient, but long-term success demands broader RWA offerings and strategic integrations. With 85% of $ONDO still locked, its ability to incentivize growth—while fending off rivals—will be critical.