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.   

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.  

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. 

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.  

Risks of ONDO

Like an investment in other crypto assets, there are some general risks to investing in ONDO. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in ONDO is subject to the following specific risks:

• Ondo Finance operates using smart contracts, which have an association with vulnerabilities and security breaches. Despite undergoing successful audits by well-regarded third-party entities, it is essential to acknowledge the existence of inherent risks.  
• ONDO token holders play a role in influencing parameters of Flux Finance, including supported assets and market parameters. 

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with ONDO. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

The ONDO community and Ondo Finance founding team are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of ONDO have no recourse to the ONDO community, Ondo Finance founding team, or Uphold if ONDO declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing ONDO on the Uphold Platform, Uphold performed due diligence on ONDO and determined that ONDO is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following: 

• The creation, governance, usage, and design of ONDO, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community. 
• The supply, demand, maturity, utility, and liquidity of ONDO.
• Any marketing materials put forward by the ONDO social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with ONDO, including any code defects, security breaches and other threats concerning ONDO and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with ONDO, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of ONDO.