What is Ondo Finance? ONDO token and USDY explained
RWA Signal Insight
U.S. TreasuriesOndo Finance operates as a dual-purpose platform that functions as both an asset manager for tokenized financial products and a technology provider for blockchain-based protocols. The platform has successfully tokenized approximately $4.0 billion in assets, including short-dated U.S. Treasuries, equities, and ETFs, which are backed by real-world securities held in custody. A critical distinction exists between these tokenized products and the ONDO governance token, which does not represent a claim on the underlying assets or their earnings. The ONDO token primarily grants voting rights within the Ondo DAO, which oversees the Flux Finance lending protocol. Access to Ondo’s tokenized products is strictly regulated, with significant restrictions for retail investors in jurisdictions like the European Economic Area and the United States. Furthermore, the platform utilizes total return trackers for equities, where dividends are reinvested after accounting for a 30 percent U.S. withholding tax. This structure highlights the complexities of bridging traditional finance with blockchain, particularly regarding regulatory compliance and the separation of governance tokens from asset-backed securities.
Key points
- Ondo Finance manages approximately $4.0 billion in tokenized U.S. Treasuries, equities, and ETFs.
- The ONDO governance token is distinct from the platform's asset-backed products and lacks profit-sharing rights.
- Tokenized equities are structured as total return trackers, reinvesting dividends after a 30% withholding tax.
- Ondo collaborated with Kinexys by J.P. Morgan, Mastercard, and Ripple for cross-border Treasury redemptions.
Background
Ondo Finance is a platform that bridges traditional financial assets to the blockchain by creating tokenized versions of bonds, equities, and ETFs. It functions by holding the underlying real-world assets in custody and issuing tokens that mirror their economic performance, allowing these assets to be utilized within decentralized finance protocols.