Ondo is transforming finance through its decentralized protocol, utilizing blockchain to provide institutional-grade products.

Market Opportunity

BlackRock's CEO Larry Fink believes that tokenization is the future of finance and the next evolution of the market, and his stance may influence the attitudes of other major financial players. As emphasized in our previous research on Dusk Network, Real World Assets (RWA) are becoming an important asset class in the cryptocurrency industry. As of May 2024, the RWA market has exceeded 6.6 billion USD, reflecting increasing investor interest in this innovative financial product. Tokenizing RWAs and introducing them to the blockchain can provide yield opportunities in DeFi (decentralized finance). The asset tokenization market is expected to reach 10 trillion USD by 2030.

Source: Roland Berger

The primary appeal of this emerging market is not only to provide yield opportunities for DeFi. By digitizing assets into tokens, it achieves asset fractionalization—dividing assets such as government bonds, stocks, and real estate into smaller shares. This process enhances liquidity and opens the door to investment opportunities for investors with different capital levels.

Chainlink explains the operation of asset tokenization with the illustration below here. Its main advantages include increasing liquidity and accessibility through interoperable tokenized assets, allowing small investors to invest in high-yield assets with relatively low capital. Additionally, due to the public nature of many blockchains, it enhances transparency and strengthens composability by connecting the value of real-world assets to the DeFi ecosystem.

Source: Chainlink

The market value of tokenized US government bonds has also grown from 114 million USD in 2023 to 845 million USD, with Franklin Templeton being the largest issuer in this asset class, accounting for approximately 38% of the market.

The latest research from Ernst & Young (EY) indicates that 64% of high-net-worth investors and 33% of institutional investors plan to increase their investments in tokenized government bonds by the end of 2024.

While still in its early stages, asset tokenization represents one of the most promising and potential applications of blockchain technology. Ondo Finance is well-positioned to capitalize on this trend with its government bond tokenization service, as investor interest continues to grow.

Ondo's Technology

Ondo is transforming finance through its decentralized protocol, utilizing blockchain to provide institutional-grade products. By tokenizing stable assets in traditional finance, Ondo combines reliability with the efficiency of blockchain.

Ondo has two main divisions: asset management and technology. The asset management division creates and supervises tokenized financial products, while the technology division develops protocols that support these products.

Currently, Ondo Finance offers two different investment options:

1. USDY** (Ondo US Dollar Yield Token)**

• Tokenized notes backed by short-term US government bonds and bank deposits.
• Offers an annualized yield rate (APY) of 5.30%, with a total value locked (TVL) of 315.35 million USD.
• Safer and more transparent than traditional stablecoins such as USDT/USDC.
• Managed by Ankura Trust Company to ensure compliance and investor protection.

Source: Ondo Finance

2. OUSG** (Ondo Short-term US Government Bond)**

• Provides low-risk tokenized short-term US government bonds for passive investors.

• Offers an annualized yield rate (APY) of 4.81%, with a total value locked (TVL) of 221.32 million USD.

• In March 2024, the investment will be transferred from BlackRock's SHV to BUIDL.

• Ondo recently launched a new version of OUSG, called rOUSG, to provide additional income for investors through the additional rOUSG tokens.

Source: Ondo Finance

Ondo's Flux Finance

Flux Finance, created by the Ondo Finance team, is a significant advancement in decentralized lending. It is based on Compound V2 but with added features. It supports open tokens such as USDC and restricted tokens such as OUSG (Ondo Short-Term US Government Bond Fund). This means that you can freely lend USDC, but using OUSG as collateral for borrowing requires specific permission requirements to ensure compliance and security.

Flux uses a point-to-pool (p2pool) model similar to Compound, allowing users to borrow with over-collateralization. Lenders can earn interest on the stablecoins they provide, while borrowers can use their collateral to borrow stablecoins and adhere to the asset's permission requirements. Flux Finance is governed by Ondo DAO.

Competitors

With Ondo establishing relationships with giants like BlackRock, it seems to be making a mark in the traditional finance space in the crypto RWA category, complementing other TradFi companies.

Competition is intensifying in the decentralized finance space. Centrifuge focuses on tokenizing structured credit and issuing debt using NFTs. Ethena offers synthetic asset exposure, allowing users to trade without holding the assets. Maple Finance provides low-collateral loans to institutions, emphasizing credit assessment and lending. Pendle deals with tokenized yield trading, allowing users to separate and trade the yield portion of assets.

Ondo Finance stands out for several reasons. By integrating traditional finance with blockchain and targeting the vast US government bond market, it has broad market coverage. Its complementary approach involves partnerships with traditional financial giants like BlackRock, avoiding direct competition. Additionally, Ondo offers innovative products such as USDY and OUSG, providing safer and more transparent alternatives to traditional stablecoins.

Tokenomics

ONDO Tokenomics Summary

Current Price: $1.87

Market Cap Rank: #54

Fully Diluted Valuation (FDV): $13.15B, Rank #16

Circulating Supply: 1.44 billion ONDO (14.27% of total supply)

Total Supply: 10 billion ONDO

Max Supply: 10 billion ONDO

Next Unlock: 1.67 million ONDO (approximately $2.19 million), in 5 days

Token Distribution

Source: Dropstab

Upcoming Unlock Events

June 18, 2024: 1.67 million ONDO (approximately $2.19 million)

July 18, 2024: 1.67 million ONDO (approximately $2.19 million)

August 18, 2024: 1.67 million ONDO (approximately $2.19 million)

September 18, 2024: 1.67 million ONDO (approximately $2.19 million)

October 18, 2024: 1.67 million ONDO (approximately $2.19 million)

November 18, 2024: 1.67 million ONDO (approximately $2.19 million)

December 18, 2024: 1.67 million ONDO (approximately $2.19 million)

January 18, 2025: 1.94 billion ONDO (approximately $25.5 billion)

January 18, 2026: 1.94 billion ONDO (approximately $25.5 billion)

January 18, 2027: 1.94 billion ONDO (approximately $25.5 billion)

January 18, 2028: 1.94 billion ONDO (approximately $25.5 billion)

Token Utility

The ONDO token is the governance token for Ondo Finance and its Flux Finance protocol. Holders have the right to vote on various proposals within the Ondo DAO, ensuring all decisions are transparently made on-chain.

To initiate a proposal, individuals must hold or be delegated at least 100 million ONDO voting power.

It is not yet clear if there will be additional utilities introduced for ONDO holders in the future.

Team, Fundraising, and Ecosystem

The Ondo Finance team has a diverse mix of individuals from traditional finance and the Web3 space. Co-founder and CEO Nathan Allman and President and COO Justin Schmidt both come from Goldman Sachs. Another key member, Katie Wheeler, comes from BlackRock. Additionally, the team includes developers from OpenSea, MakerDAO, and Boson Protocol. This combination of expertise aligns well with Ondo Finance's unique vision and goals.

Source: Ondo Finance

Fundraising Summary

Seed Round: In December 2021, Ondo Finance raised $4 million at a price of $0.013 per token, achieving a 99.87x return on investment (ROI). A total of 300 million tokens were sold (3% of total supply), led by Pantera Capital, with a 1-year initial lock-up period followed by a 24-month release period.

Public Sale: On May 12, 2022, Ondo Finance raised $10 million at a price of $0.03 per token, achieving a 43.28x ROI. A total of 100 million tokens were sold (1% of total supply) on Coinlist, with a 1-year lock-up period followed by an 18-month release period.

Series A Funding: In April 2022, Ondo Finance raised $20 million at a price of $0.02 per token, achieving a 64.92x return on investment (ROI). A total of 1 billion tokens were sold (10% of total supply), led by Founders Fund, with a 1-year initial lock-up period followed by a 24-month release period.

Partnerships

Ondo Finance has formed several key partnerships to strengthen its blockchain and financial services:

● Aptos Foundation: This partnership demonstrates the integration of real-world assets with blockchain technology, starting with the tokenization of the USDY US government bond product.

● Thala Labs: The partnership launched USDY for use in Thala's AMM pool and as collateral for debt positions (CDPs), enhancing liquidity and DeFi solutions.

● Wintermute: The partnership aims to enhance the liquidity of the USDY stablecoin, providing all-weather liquidity across multiple blockchain platforms.

● BlackRock: By investing $95 million in BlackRock's BUIDL fund, they demonstrate a commitment to expanding tokenization efforts and integrating with Ondo products.

Adoption and Roadmap

Ondo Finance aims to connect traditional finance and decentralized finance through public blockchain technology. Their focus is on creating secure, transparent, and compliant financial products.

Key Products:

● OUSG: Tokenized BlackRock Short-Term US Government Bond ETF.

● OMMF: Tokenized BlackRock Money Market Fund.

● USDY: Alternative yield stablecoin.

● Flux Finance: Protocol supporting tokenized securities as collateral.

These products have driven significant growth, with Ondo's TVL increasing from $40 million to $534 million. Looking ahead, Ondo plans to expand the use and liquidity of USDY, OUSG, and OMMF, involving partnerships and developing cross-chain tools to facilitate these processes.

Source: DeFillama

In the next phase, they aim to tokenize publicly traded securities, addressing challenges related to liquidity and infrastructure. Ultimately, Ondo hopes to innovate in traditional finance by extending the advantages of blockchain to a broader range of financial services, using a combination of centralized and decentralized mechanisms. This approach will help bring the benefits of blockchain technology to a wider range of financial operations.

Bullish Fundamentals

● The tokenization industry is poised for significant growth, and Ondo Finance's collaboration with BlackRock strategically positions it to bring trillions of dollars into Web3.

● Ondo Finance's TVL has seen substantial growth since early 2024. Real-world assets represent a fresh and promising narrative in the crypto space, with strong early adoption potential.

● Ondo Finance is committed to developing its products to meet customer demand.

● The majority of investments in OUSG were initially in BlackRock's iShares Short Treasury Bond ETF (SHV). In March 2024, they transitioned to BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), aligning with Ondo's focus on asset tokenization.

● Ondo Finance is a leader in the crypto RWA space, becoming the preferred choice.

● Ondo Finance holds approximately 38% of the current supply of BUIDL.

Bearish Fundamentals

● The utility of the ONDO token shows significant centralization risk.

● While all holders can participate in governance, the largest holders have the most influence.

● Approximately 85% of the total ONDO supply is controlled by the Ondo Finance team.

● Operating at the intersection of TradFi and crypto presents a relatively undeveloped market, with regulatory challenges.

● Bad debt is a major risk for DeFi protocols, including Ondo Finance's Flux. Bad debt occurs when the value of a borrower's collateral is lower than their debt. If a borrower's equity becomes negative, Flux uses its reserve fund to mitigate losses. To minimize volatility and reduce bad debt risk, Flux only accepts stable assets as collateral.

Disclaimer

This document is prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (hereinafter referred to as "Greythorn"). The information contained in this document is for general reference only and is not intended to provide investment or financial advice. This document does not constitute advertising, marketing, an offer or invitation, or is intended to buy or sell any financial instruments or participate in any specific trading strategy. When preparing this document, Greythorn did not consider the investment objectives, financial situation, or specific needs of any recipient. Therefore, individuals or institutions receiving this document should assess their personal circumstances and consult their accountants, lawyers, or other professional advisors for professional advice before making any investment decisions.

This document contains statements, opinions, forecasts, and forward-looking statements based on several assumptions. Greythorn does not assume any obligation to update such information. These assumptions may be correct or incorrect. Greythorn and its directors, employees, agents, and advisors do not make any guarantees or representations regarding the accuracy or likelihood of any forward-looking statements or their underlying assumptions. Greythorn and its directors, employees, agents, and advisors do not make any warranties or commitments regarding the accuracy, completeness, or reliability of the information contained in this document. To the maximum extent permitted by law, Greythorn and its directors, employees, agents, and advisors are not liable for any losses, claims, damages, costs, or expenses arising from the information contained in this document or related to it.

This document is the property of Greythorn. Individuals or entities receiving this document agree to keep its contents confidential and agree not to copy, provide, disseminate, or disclose any information contained in this document in any form without the written consent of Greythorn.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。