What is ONDO?

ONDO Finance Describes Itself As

Ondo (Ondo) Finance is a decentralized finance (DeFi) protocol that aims to increase accessibility to institutional-grade financial products and services through the tokenization of realworld assets (RWAs). Operating as an open, decentralized bank, Ondo improves upon DeFi-TradFi connectivity, allowing institutional-grade products, such as US treasury-backed tokens, to be brought on-chain.

Ondo is split into two divisions, an asset management arm that specializes in the creation and management of tokenized financial products, and a technology arm that designs DeFi protocols for these products to be used within. Across these two divisions, Ondo is able to coordinate both required parties and compliance components, expanding on-chain access to RWAs and helping to foster financial inclusivity.    

ONDO RWA Products

Flux Finance (Flux) is decentralized lending protocol forked from Compound v2, and functions as an on-chain Treasury repo marketplace for users to borrow and lend stablecoins. Additional functionality has been implemented to support both permissionless (USDC) and permissioned (UOSG) assets. Flux allows for overcollateralized borrowing and lending in a peer-to-pool model, similar to Compound. Through Flux Finance, retail investors are able to gain exposure to institutional-grade Ondo products that they may not be able to access directly. Flux was developed by the Ondo team, and has since been acquired by the Neptune Foundation. 

US Dollar Yield Token (USDY), Ondo’s newest product, is a tokenized note secured by short-term US Treasuries and banks demand deposits. This asset works to provide non-US individuals and institutional investors direct access to a fully compliant, interest-bearing USD-denominated stablecoin.

Among Ondo’s core objectives is to bring US treasury yields on-chain, demonstrated by their Ondo US Short-Term Government Bond Fund (OUSG Fund). OUSG tokens represent various share classes of the OUSG Fund, which exclusively invests in short-term US Treasuries, and at the time of writing, has already attracted over $165 million in TVL.  

OMMF is a USD-pegged security token backed by US money market funds, that pays holders interest in additional OMMF tokens. OMMF tokens are only available to qualified purchasers and accredited investors, however, retail users can gain exposure through Flux Finance.  

What does the ONDO token do?

The ONDO token is used to govern the ONDO DAO, which oversees the Flux Finance protocol. Holders are able to vote on protocol aspects such as supported assets and market parameters.  

Who Created ONDO Finance?

Ondo Finance was co-founded in March 2021 by former Goldman Sachs employees Nathan Allman and PInku Surana, with an initial focus on improving DeFi yields. Their first product, Ondo Vaults, launched in August of the same year, allowing investors to choose between “enhanced returns” and “downside protection” when providing liquidity to decentralized exchanges like Uniswap. The seed round was led by Pantera Capital, raising $4 million USD, at a token price of 0.0057 USD per ONDO.

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