Ondo Finance is a company that issues tokenized versions of traditional financial assets, mainly short-term US Treasuries. Its products let holders earn Treasury yield through a token on a blockchain. ONDO is a separate governance token linked to the Ondo DAO. The Ondo Finance site lists the current products.
The company was founded in 2021 by Nathan Allman, who previously worked at Goldman Sachs. Its first tokenized Treasury product launched in January 2023.
What Tokenization Means
A tokenized asset is a blockchain token that represents a claim on something held off-chain. In Ondo's case, the underlying assets are US Treasury bills, money market fund shares and bank deposits.
The assets sit with regulated custodians and fund managers. A token on Ethereum or another chain records who owns a share of them. The yield comes from the interest paid on the underlying assets, not from token rewards or trading incentives.
This sector is often called real-world assets, or RWA. It grew quickly after US interest rates rose in 2022. Treasury bills started paying more than 4 percent while yields on many DeFi lending markets fell, so holding tokenized Treasuries became an attractive way to earn a return on idle on-chain dollars.
How the Process Works
An investor completes identity checks with Ondo. This is known as KYC, short for know your customer. The investor then sends US dollars or a stablecoin such as USDC. The issuer buys the underlying assets and mints tokens to the investor's wallet. To exit, the investor redeems tokens with the issuer for dollars.
Because of the identity checks and eligibility rules, these products are not open to everyone in the way a typical DeFi protocol is. Transfers of some tokens are limited to approved addresses.
Ondo's Main Products
The Ondo documentation describes each product and its eligibility rules.
- OUSG: a tokenized fund that gives exposure to short-term US Treasuries. It is limited to investors who meet US qualified purchaser and accredited investor standards. In 2024 Ondo moved a large part of the OUSG portfolio into BlackRock's tokenized Treasury fund, known as BUIDL. A rebasing version called rOUSG keeps its price near one dollar and pays yield as extra tokens.
- USDY: a tokenized note secured by short-term US Treasuries and bank deposits. It is aimed at individual and institutional investors outside the United States. It is not offered to US persons. USDY accrues yield, so it is not a standard stablecoin. A rebasing version is called rUSDY.
- Ondo Global Markets: a platform for tokenized US stocks and ETFs offered to eligible investors outside the United States.
Flux Finance is a lending protocol that was first developed by the Ondo team. It lets approved users borrow stablecoins against OUSG. It is governed by ONDO token holders through the Ondo DAO.
The ONDO Token
ONDO is the governance token of the Ondo DAO. Holders can vote on proposals, including decisions about Flux Finance. The Ondo Foundation supports the DAO.
Three points matter for anyone looking at the token:
- ONDO is not a claim on the Treasuries. Holding ONDO does not pay the yield that OUSG or USDY holders receive, and it does not give a share of the company's revenue.
- The total supply is 10 billion tokens. The token became freely transferable in January 2024.
- A large share of the supply was allocated to the team, early investors and ecosystem funds, with release schedules that run for years. As locked tokens vest, the circulating supply rises, which can add selling pressure.
Who Uses Tokenized Treasuries
- Crypto funds and DAOs that hold cash on-chain and want yield on it
- Stablecoin issuers and DeFi protocols that use tokenized Treasuries as reserve assets or collateral
- Investors outside the United States who want dollar yield without a US brokerage account
Other issuers compete in the same market, including BlackRock with BUIDL and Franklin Templeton with its on-chain money market fund.
Risks to Understand
- Counterparty risk: the assets are held off-chain. Token holders depend on the issuer, the custodians and the legal structure working as described.
- Regulatory risk: tokenized securities are subject to securities law, and the rules differ by country and can change.
- Access and transfer limits: eligibility checks and allowlists restrict who can hold, redeem or receive the tokens.
- Redemption terms: redemptions have minimum sizes and processing times. On a secondary market, a token can trade below the value of its underlying assets.
- Smart contract risk: the token contracts and any DeFi protocol that accepts them can contain bugs.
- Interest rate risk: the yield follows short-term US rates. If rates fall, the yield falls with them.
- ONDO price risk: the governance token is volatile and trades independently of the Treasury products.
Common Mistakes
- Assuming ONDO pays yield. It does not. The yield belongs to OUSG and USDY holders.
- Treating USDY as a regular stablecoin. Its price rises over time as yield accrues, and it carries eligibility restrictions.
- Ignoring vesting. Scheduled token releases are public, so check them before judging supply.
Nothing in this article is financial advice.
Key Ondo Facts
- Founded: 2021
- First tokenized Treasury product: January 2023
- ONDO total supply: 10 billion
- ONDO became transferable: January 2024
- Main products: OUSG and USDY
Track on CoinMarketGuy
The Ondo price page shows the live ONDO price, market cap, circulating supply and chart. The DEX page lists active liquidity pools with their volume and liquidity, and the homepage shows total market cap and the Fear and Greed reading for wider context.