Ondo Finance – Ondo Protocol and ONDO Token Review

Ondo Finance Breakdown 

Ondo Finance brings institutional financial products and services onchain. It represents real-world assets, such as securities and government Treasury Bonds, as digital assets on the blockchain through tokenization. Beyond this, the project builds financial products to put these tokenized funds into use, for example, investing, lending, and other solutions. 

Founded in 2021, Ondo Finance is one of the leading Real World Asset Tokenization protocols. According to data from DefiLlama, the total value locked in the protocol is close to $300M, as of April 2024. Ondo is one of the top 5 largest RWA protocols by TVL together with Ethena, Maker RWA, and others. 

Each RWA protocol implements its mechanism of asset tokenization, has its goals, and can focus on different groups of assets. In the case of Ondo Finance, the main focus areas are tokenized cash equivalents and their use in DeFi. Ondo's partners include the world's largest asset manager, BlackRock, and PIMCO, a global leader in active fixed income, among others.

Ondo Finance TVL. Source: defillama.com

Ondo Finance Team 

The founder of Ondo Finance is Nathan Allman, who previously worked at Goldman Sachs’ digital assets team. The team members have experience in traditional finance as well as Web3. The president and Chief Operating Officer of the project, Justin Schmidt, was the head of digital asset markets at Goldman Sachs, and the Chief Strategy Officer, Ian De Bode, was the head of digital assets at McKinsey. Other members have backgrounds in BlackRock, OpenSea, SpaceX, and other companies. 

Ondo Finance raised around $24M in equity financing from Peter Thiel’s Founders Fund, Pantera, and Coinbase. 

ONDO Token 

In 2022, the Ondo Foundation was founded as an independently governed nonprofit entity. In May of that year, it launched the native governance token of Ondo Finance, named ONDO. The token sale was held on CoinList, during which the project raised over $10M from more than 18,000 purchases. At the time of token distribution, the project implemented token lockup and a global transfer restriction to support long-term project commitment and token price stability. 

During the lockup period, token holders cannot sell or transfer their assets. ONDO token holders can take part in decision-making in the protocol through the ONDO DAO (decentralized autonomous organization). Token lockup periods range from 18 to 30 months, with release dates decided by community voting. On January 18, 2024, ONDO Finance announced the unlocking of the tokens.

ONDO token has a max supply of 10,000,000,000. The tokens are distributed as follows: 

• Community Access Sale: 198,884,411 (~2.0%)
• Ecosystem Growth: 5,210,869,545 (~52.1%)
• Protocol Development: 3,300,000 (33.0%)
• Private Sales: 1,290,246,044 (~12.9%)

As of April 2024, the circulating supply of the ONDO tokens is 1,389,759,838. The token is among the top largest cryptocurrencies with a market cap of over $1 billion. 

Ondo Finance Products 

Ondo Finance consists of two arms: the asset management arm, which creates and manages tokenized financial products, and the technology arm, which develops DeFi protocols. Overall, the protocol has introduced 4 products: 3 funds and a decentralized lending protocol, Flux Finance. 

The Ondo Ecosystem. Source: ondo.foundation

ONDO's tokenized products require KYC (Know Your Customer) verification from users to ensure compliance and security. Meanwhile, Flux Finance facilitates financial activities, including lending and borrowing, for both permissionless tokens, such as USDT, and KYC-compliant tokens, including tokenized funds. Below is the list of products offered by the Ondo Foundation. 

• OUSG (Ondo US Government Bond Fund): investment option backed by US treasury bills. The OUSG is managed by Ondo Capital Management, a subsidiary of Ondo Finance. The main part of the OUSG consists of the BlackRock USD Institutional Digital Liquidity Fund, bank deposits, and USDC stablecoin. The fund allows investors to earn yield while holding the OUSG token. 

• USDY (US Dollar Yield): investment option issued by Ondo USDY LLC. USDY is backed by bank deposits and short-term US Treasuries. It is accessible to non-US individuals and institutional investors. 

• OMMF (Ondo Money Market Fund): investment option that will allow stablecoin holders to invest in tokenized US government money market funds. The Ondo Finance website says the token “is coming soon.”

• Flux Finance: DeFI protocol, a clone of Compound v2 protocol. Flux creates use cases for tokenized funds, where users can lend and borrow stablecoins providing OUSG as collateral. Like Compound offers cTokens to represent user balance on the protocol and earn interest, Flux offers users fTokens. 

Conclusion 

Ondo is one of the largest RWA tokenization protocols in 2024. Representing tokenized funds by large companies like BlackRock created a lot of hype around the project. The protocol’s native token ONDO is among the top 100 cryptocurrencies by market cap. At the time of writing its market cap stands above $1.2 M. Whether Ondo will preserve its position as one of the top tokenization projects is a question, as tokenization is a hot topic in crypto with growing solutions and large perspectives.

Please note that this article is for informational purposes only and should not be considered investment advice. It’s important to do your own research and take into account the risks before investing in crypto projects.