Ondo Finance is a decentralized finance (DeFi) protocol specializing in the tokenization of real-world assets (RWAs) through blockchain technology. It builds infrastructure and services for tokenized financial products, having expanded to eight networks, achieved over 80 integrations, and managed more than $600 million in total value locked (TVL).
The platform operates through two main divisions: an asset management arm that creates and manages tokenized financial products, and a technology division that develops decentralized protocols. Each protocol is governed separately via its own web interface and independent entity, ensuring operational autonomy.
Backed by prominent firms like BlackRock, Founders Fund, Coinbase, and Pantera, Ondo offers several institutional-grade products. Its two primary offerings are USDY, a tokenized note backed by short-term U.S. Treasury bonds and bank deposits, and OUSG, which provides liquid exposure to short-term U.S. Treasury securities.
How Does Ondo Finance Work?
Ondo Finance bridges traditional finance and blockchain by offering cash-equivalent tokenized products like OUSG and USDY, tailored to different investor needs and regulatory frameworks. Here’s how it works:
- Asset Tokenization: Both OUSG and USDY are backed by short-term U.S. Treasury bonds and bank deposits. OUSG emphasizes exposure to money market funds managed by BlackRock, while USDY incorporates additional security through share subordination.
- Yield Mechanism: OUSG accumulates yield through the increasing Net Asset Value (NAV) of its underlying assets, reflecting reinvested interest payments. USDY offers a variable interest rate set by Ondo Finance, avoiding principal volatility.
- Investor Eligibility: OUSG is available globally to institutional investors classified as Qualified Purchasers. USDY is accessible to both retail and institutional investors in eligible non-U.S. jurisdictions without accreditation requirements.
- Trading and Accessibility: OUSG is tradable on secondary markets for investors who complete onboarding. USDY has an initial lock-up period before becoming freely tradable among eligible participants.
How to Use Ondo Finance
Getting started with Ondo Finance is straightforward. Begin by completing the onboarding process, which includes eligibility verification, Know Your Customer (KYC) checks, and connecting your cryptocurrency wallet.
Once approved, you can invest by depositing USDC, USDT, or USD bank transfers. These funds can be used to mint tokens like USDY or OUSG. You can track your assets directly in your connected wallet.
For redemptions or conversions, Ondo’s platform offers user-friendly options to manage and transfer your investments securely. 👉 Explore more strategies for managing tokenized assets
Ondo Finance Products
Ondo Finance provides a suite of tokenized financial products designed to bridge traditional finance and blockchain technology, offering secure, compliant, and accessible investment opportunities.
USDY: Tokenized Yield with Accessibility
USDY (US Dollar Yield Token) is a tokenized note and yield-bearing stablecoin backed by short-term U.S. Treasury bonds and bank deposits. It provides stable, dollar-denominated yield to non-U.S. retail and institutional investors.
- Yield Options: Available in two versions: USDY (Accreting), with yield reflected in token price appreciation, and rUSDY (Rebasing), with yield distributed as additional tokens daily.
- Regulatory Compliance: Requires a 40–50 day lock-up period before tokens become transferable, ensuring compliance with U.S. regulatory requirements.
- Ease of Use: Investors can convert between USDY and rUSDY seamlessly on Ondo’s platform without slippage.
- DeFi Metrics: Offers a 4.35% APY and has $450 million in total value locked.
OUSG: Exposure to US Treasuries
OUSG (Ondo Short-Term US Government Treasuries) provides tokenized exposure to short-term U.S. Treasury securities, enabling instant subscriptions and redemptions via USDC.
- Flexible Yield Options: Available in both accreting (OUSG) and rebasing (rOUSG) versions.
- Instant Liquidity: 24/7 minting and redemption enabled through integration with BlackRock’s BUIDL token.
- Low Entry Threshold: Minimum investment of $5,000 for instant transactions.
- Multi-Chain Availability: Compatible with Ethereum, Solana, and Polygon.
- DeFi Metrics: Offers a 4.33% APY and has $167 million in TVL.
Flux Finance: On-Chain Lending and Borrowing
Flux Finance is an overcollateralized lending and borrowing platform supporting both permissioned and permissionless assets.
- Dual Asset Support: Allows lending and borrowing of assets like USDC and OUSG under specific permissions.
- fTokens for Yield: Lenders mint fTokens to earn interest, reflected in the token’s exchange rate.
- Governance: Managed by the Ondo DAO.
- DeFi Metrics: Offers an average lending APY of 4.77% with around $39 million in TVL.
Ondo Token Bridge: Cross-Chain Transfers
The Ondo Token Bridge enables the minting and burning of USDY across chains using the LayerZero protocol.
- Decentralized Verification: Relies on multiple independent verifiers (DVNs) like Polyhedra and Axelar for security.
- Fee Limitations: Ensures controlled transaction volumes for security and compliance.
- Chain Support: Currently supports Ethereum, Mantle, and Arbitrum, with plans for expansion.
Ondo Token Converter: Investor Flexibility
The Ondo Token Converter allows easy conversion between accreting and rebasing token versions.
- No Slippage: Instant conversion between token types without loss of value.
- Investor Convenience: Choose the token form that best suits investment goals, such as yield-bearing or collateralized exchanges.
ONDO Tokenomics
The ONDO token, launched in January 2024 on Ethereum, is the utility token powering the Ondo Finance ecosystem. It has a maximum supply of 10 billion tokens with the following allocations:
- Community Access Sale: 198,884,411 tokens (~2%) distributed to early followers via CoinList, with ~90% unlocked at launch.
- Ecosystem Growth: 5,210,869,545 tokens (~52.1%) for airdrops, contributor incentives, and expansion. 24% unlocked at launch, with the rest vested over five years.
- Protocol Development: 3,300,000,000 tokens (~33%) allocated for infrastructure and product creation, locked for at least 12 months and gradually unlocked over five years.
- Private Sales: 1,290,246,044 tokens (~12.9%) delivered to seed and Series A investors, locked for at least 12 months with incremental releases over five years.
Investors, including CoinList participants, seed, and Series A investors, are subject to a minimum 12-month lock-up period followed by 18–48 months of vesting, ensuring long-term commitment to Ondo’s growth.
Ondo Finance and BlackRock Partnership
BlackRock partnered with Ondo Finance in March 2024, leveraging Securitize’s tokenization platform to launch BUIDL, a tokenized U.S. Treasury fund.
Ondo Finance, the largest holder of BUIDL with 223 million tokens valued at $223 million, integrated it into its OUSG product. This reduced the investment threshold from BUIDL’s minimum of $5 million to $100,000.
Additionally, Circle facilitated real-time USDC redemptions with a $100 million reserve, enhancing liquidity and usability for both entities and DeFi markets.
Founder and Governance
Ondo Finance was founded in 2021 by Nathan Allman, formerly a Vice President at Goldman Sachs specializing in structured products. Nathan led initiatives on cryptocurrencies and blockchain at Goldman Sachs, bringing expertise in financial structuring for institutional clients.
The project is now managed by the Ondo Foundation, a non-profit organization based in the Cayman Islands. The foundation is dedicated to promoting financial inclusion and market efficiency through institutional-quality onchain financial products and services.
Frequently Asked Questions
What is the main purpose of Ondo Finance?
Ondo Finance aims to bridge traditional finance and blockchain by tokenizing real-world assets like U.S. Treasuries. It offers institutional-grade products such as USDY and OUSG, providing investors with compliant, yield-generating opportunities in the DeFi space.
How does Ondo Finance ensure regulatory compliance?
Ondo ensures compliance through measures like lock-up periods for tokens, eligibility checks for investors, and partnerships with regulated entities. Its products are designed to align with U.S. securities regulations and global financial standards.
What makes Ondo Finance different from other RWA platforms?
Ondo stands out due to its institutional backing, partnerships with firms like BlackRock, and its focus on liquidity and accessibility. Its multi-chain approach and low entry thresholds make it unique among tokenized asset platforms.
Can retail investors participate in Ondo Finance?
Yes, retail investors can access certain products like USDY in eligible jurisdictions. However, some offerings, such as OUSG, are restricted to Qualified Purchasers or institutional investors based on regulatory requirements.
How does Ondo Finance generate yield for investors?
Yield is generated through interest from underlying assets like U.S. Treasury bonds and bank deposits. This yield is distributed to token holders either through price appreciation (accreting tokens) or daily distributions (rebasing tokens).
Is Ondo Finance secure?
Ondo prioritizes security through decentralized verification, smart contract audits, and partnerships with established financial institutions. Its integration with BlackRock’s BUIDL and Circle’s USDC further enhances its security and reliability.
Conclusion
Ondo Finance was the fastest-growing real-world asset (RWA) platform in 2024, scaling its tokenized financial products across multiple blockchains and attracting significant institutional backing, particularly from BlackRock.
In 2025, it plans to leverage this momentum with initiatives like the Ondo Summit and the launch of Ondo Global Markets, expanding its reach to both institutions and everyday onchain users. 👉 View real-time tools for asset tokenization