RWA (Real World Assets) is hailed as the key to the launch of DeFi 2.0, but it seems to be far away from most ordinary investors. After all, purchasing RWA products requires KYC and certain asset conditions, which is too high for most retail investors. How to seize the investment opportunity and get a share of the pie before the RWA track has fully erupted? One is to purchase tokens of RWA projects; the other is to purchase RWA products with lower threshold conditions.
US Treasury bonds, a low-risk, stable interest-bearing, and scalable asset, have undoubtedly become the focus of the market.
Ondo Finance is a leading RWA project that grew up in this context. In January 2024, the Ondo Foundation, a related organization of Ondo Finance, voted to approve the proposal to unlock ONDO tokens. ONDO tokens officially entered the circulation era on January 18th. Currently, Binance only provides perpetual contracts with ONDO 1-50 times U standard, and does not support ONDO spot trading.
The first has released an official announcement that it will launch ONDO in the spot market on May 8, 2024. Since its circulation, ONDO has swept the entire Crypto community with its impressive increase, becoming a hot topic in the X platform Crypto community. Now that The first is about to launch, what surprises will it bring? Let's take a look at its future economic value through its ecological value.
What is ONDO (Ondo Finance)?
Ondo Finance is an RWA tokenized investment protocol that launched Ondo v2, a tokenized US bond fund, in January 2023, dedicated to providing institutional-level investment opportunities for everyone. Ondo brings zero/low-risk, stable interest-bearing, scalable fund products (such as US Treasury bonds, money market funds, etc.) to the chain, providing an alternative to stablecoins for on-chain investors and allowing holders rather than publishers to earn most of the underlying assets.
According to RWA.XYZ data, the total market value of the RWA bond track has surged from $110 million earlier to $863 million today (not counting the $2 billion RWA bond volume of MakerDAO), among which Ondo's market size in the RWA bond market has reached $125 million, ranking third in the market, second only to Franklin OnChain U.S. Government Money Fund and Mountain Protocol.
Ondo Finance is an RWA tokenized investment protocol that launched Ondo v2, a tokenized US bond fund, in January 2023, dedicated to providing institutional-level investment opportunities for everyone. Ondo brings zero/low-risk, stable interest-bearing, scalable fund products (such as US Treasury bonds, money market funds, etc.) to the chain, providing an alternative to stablecoins for on-chain investors and allowing holders rather than publishers to earn most of the underlying assets.
According to RWA.XYZ data, the total market value of the RWA bond track has surged from $110 million earlier to $863 million today (not counting the $2 billion RWA bond volume of MakerDAO), among which Ondo's market size in the RWA bond market has reached $125 million, ranking third in the market, second only to Franklin OnChain U.S. Government Money Fund and Mountain Protocol.
Ondo Finance's TVL can rank third, thanks to its product design. RWA products are essentially not specially designed, but rather tokenize the underlying assets in traditional finance. The difficulty of designing RWA products lies in how to make the connection between reality and virtuality closer and more secure. The safety and standardization of the process for investors to purchase or redeem RWA assets are the goals of product design.
Ondo Finance currently offers three RWA products: OUSG, USDY, and OMMF.
OUSG (US Treasury):
- Asset Composition: OUSG is the main contribution product in Ondo Finance, with a TVL of 117 million USD. Most of the underlying assets come from BlackRock's short-term US Treasury Bond ETF - iShares Short Treasury Bond ETF (SHV), with a small portion being USDC and USD.
- ETF Information: Established in 2007, SHV ETF is an index fund for short-term government bonds with an investment cycle of less than 1 year. Currently, the opening price of SHV ETF is $110.42, the total assets are about $18.40 billion, the annualized return rate is 5.17%, and the S & P rating is AA.
- OUSG features: The current price of OUSG is $104.66, with an annualized return rate of 4.69%. It supports on-chain purchases on Ethereum, Polygon, and Solana. OUSG's SPV is Ondo I LP, which is beneficial for investors' risk isolation and helps users redeem shares in case of emergencies.
- Fees: OUSG charges a 0.15% fund management fee, up to 0.15% for payment to service providers such as fund managers and auditors, and a 0.15% ETF management fee charged by BlackRock.
- Purchase Requirements: KYC verification is a prerequisite for purchase, and the requirement of "Qualified Purchasers" must be met. The minimum purchase amount is 100,000 USDT.
USDY (US dollar interest rate): - Product description: USDY is a tokenized note guaranteed by short-term US Treasury bonds and bank demand deposits, aimed at ordinary investors. The purchase amount is over $500, and it is minted and transferred on the chain 40-50 days after purchase. The current price is $1.02, with an annualized return rate of 5.10% and TVL of $66.20 million.
- Structural design and regulatory approach: USDY is published by Ondo USDY LLC as an SPV. Assets are managed separately from Ondo Finance, maintaining separate books and accounts to ensure asset isolation. Measures such as over-collateralization, first priority, and daily Transparency Report are adopted to reduce risks and protect investor interests. Asset Allocation targets 65% of bank deposits and 35% of short-term US Treasury bonds.
- Investment threshold and purchase method: The purchase threshold is low, above $500. Purchase methods include on-chain USDC subscription and telegraphic transfer.
OMMF (US Government Money Market Fund): - Product introduction: OMMF is an RWA token based on the US Government Money Market Fund (MMF), which has not yet been officially released.
These products provide investors with a variety of choices in different ways, covering investment thresholds, risk management, and expected returns, to meet the needs of different investors.
II. ONDO Economic Tokenology
According to the Ondo Foundation's proposal, the total supply of ONDO is 10 billion, with an initial circulation of 1,426,647,567 (~ 14.3%). Over 85% of ONDO tokens will still be locked, and the locked tokens will be unlocked 12, 24, 36, 48, and 60 months after the initial token unlock.
Private investors (excluding CoinList round investors) and core contributors will be locked up for at least 12 months and released over the next four years (a total of five years); CoinList round investors (2%) will be fully unlocked, so their tokens account for a large part of the initial circulation supply.
Token allocation is:
CoinList round investors (2%)
Ecological incentives (52.1%)
Agreement development (33%)
Private equity investors (12.9%)
The elite characteristics of the Ondo project team and the endorsement of top capital support Ondo's position in the RWA US Treasury field. The compliance of the project is relatively in place, after multiple rounds of audits, and the trading structure of $USDY comes from the mature architecture of MakerDAO. Compared to some projects that only have one page of product description, it is much more solid.
Ondo's early entry into RWA US Treasury bonds can be described as a unique insight. US Treasury bonds, a risk-free, stable, and scalable asset, are currently the biggest beneficiary of the RWA track, and there is unlimited room for imagination in the future. This is much smoother than MakerDAO and Centriduge's earliest credit asset RWA transitions to the current US Treasury RWA.
ONDO also faces homogeneous competition from peers. For example, the interest-bearing stablecoin project Mountain Protocol launched on September 11, 2023 has surpassed Ondo in just four months. Centrifuge has also reached cooperation agreements with Aave and Frax Finance through the US bond tokenization fund Anemoy Liquid Treasury Fund. On the other hand, due to the single product, the threshold for the only US bond RWA product and interest-bearing stablecoin product is not high. It is worth looking forward to how to expand more channels or launch more attractive products.
On May 8th at 16:00 (UTC + 8), ONDO will land in The First spot area. Let's witness its future performance together.