In this paper we outline tokenization, which is a new and rapidly growing financial innovation in crypto asset markets, and we discuss potential benefits and financial stability implications. Tokenization refers to the process of constructing digital representations (crypto tokens) for non-crypto assets (reference assets). As we discuss below, tokenizations create interconnections between the digital asset ecosystem and the traditional financial system. At sufficient scale, tokenized assets could transmit volatility from crypto asset markets to the markets for the crypto token's reference assets.

Tokenization: Overview and Financial Stability Implications

Crypto and traditional finance (TradFi) are converging. This theme is examined from the perspective of price action and market structure in the insights paper “Navigating the Convergence of Crypto and Traditional Financial Markets”, which has been co-authored by Bullish and Flow Traders.

Navigating the Convergence of Crypto and Traditional Financial Markets

The tokenization of real-world assets (“RWAs”) has continued to gain traction  with increasing user adoption and the entrance of large institutional players. Coupled with relatively low decentralized finance (“DeFi”) yields, rising interest  rates have contributed to an uptake in RWAs, specifically in tokenized  treasuries. Investors are effectively lending over US$600M to the U.S. government today via  the tokenized treasury market and receiving around a 4.2% annualized yield in return. 

Real World Assets: State of The Market 2023

We are on the verge of an infrastructure evolution that may reshape how value is transferred, settled and stored across every industry. Tokenization is just one DLT/BCT application, but this one application may transform financial and non-financial infrastructure and public and private financial markets over the next 5-15 years.* Disruptive innovations like the radio, television and email took 30 years to reach mainstream adoption. We expect a far shorter road for digital assets. 

Global Digital Assets Beyond Crypto: Tokenization

Mantle, an Ethereum Layer 2 network, is the latest web3 team to embrace real-world assets in the form of U.S Treasury Bonds.

On Dec. 4, Mantle deployed its mUSD stablecoin, comprising a rebasing version of USDY from Ondo Finance. USDY is a yield-bearing stablecoin described as a “tokenized note secured by short-term U.S. Treasuries and bank demand deposits.”

Mantle Jumps On T-Bill Bandwagon With mUSD Stablecoin


Injective, the lightning-fast blockchain for Web3 finance applications, today introduced US Treasuries-backed yield. This achievement is realized through the bridging of Ondo’s US Dollar Yield (USDY) token, offering users across Injective and the broader cosmos ecosystem the ability to store dollar-denominated value while generating an attractive yield.

Bridged USDY is Now Available on Injective

Ondo Finance, the issuer of tokenized secure notes and on-chain treasuries, collaborated with Axelar to introduce Ondo bridge, a cross-chain solution inspired by Circle’s cross-chain transfer protocol. The bridge will support the issuance of native tokens, including Ondo’s USDY, across blockchain networks supported by Axelar

Ondo unveils bridge to move treasuries-backed USDY stablecoin across chains

Today, we're excited to unveil Ondo Bridge, a mechanism for seamlessly transferring Ondo tokens across blockchains. Ondo is partnering with Axelar, incorporating its state-of-the-art, multi-chain communication primitives together with a novel Ondo risk management layer to help investors in Ondo products bridge assets in a safe and efficient manner.

Ondo Bridge: Enabling Native, Cross-Chain RWA Transfers

Mantle, a leading DAO-led web3 ecosystem centered around Ethereum layer 2 (L2) Mantle Network, and Ondo Finance, a pioneer in institutional-grade blockchain-enabled investment products, have unveiled the USD Yield ($USDY) token within the Mantle Ecosystem. This milestone follows the introduction of the Ethereum L1 to Mantle Network L2 bridge for $USDY, marking a significant stride in the convergence of decentralized finance (DeFi) and real-world assets (RWA).

Mantle and Ondo Finance Collaborate to Launch USDY Token in Mantle Ecosystem

Mantle, operator of layer 2 Ethereum ecosystem Mantle Network, and Ondo Finance, provider of on-chain financial products for institutional investors, are launching USDY, the companies announced Tuesday. The yield-generating token backed by real-world assets (RWA) aims to provide easier access and more liquidity within the Mantle ecosystem, according to a press release provided to Unchained Crypto.

Mantle, Ondo Finance Launch Real-World Asset-Backed Token

Decentralized autonomous organization-led web3 ecosystem Mantle partnered with tokenized financial products platform Ondo Finance to launch USDY, a yield-generating token backed by real-world assets.  The yield-bearing token is being introduced to the Mantle Network following the launch of the Ethereum Layer 1 to Mantle Layer 2 bridge for USDY, according to a statement. USDY is an upgradeable Ethereum ERC-20 token — available at Mantle decentralized exchanges, such as Agni Finance and FusionX Finance.

Mantle and Ondo Finance launch RWA-backed USDY yield token, rebasing version to follow

L.F.G. Today we bring you a look at Real World Assets (RWAs) - what they are, discuss some of the use cases of tokenized RWA we’re seeing today, the pros and cons of bringing RWA on-chain, and where this emerging market is headed. All this and much more on today's Blockchain Insider!

199. Insights: Real world assets on-chain: changing the future of ownership

Andrew Ross Sorkin:  “Treasury yields coming down from fresh 16-year highs yesterday.  Our next guest says the yield on the 10-year could hit 5.00%. Joining us right now to talk about that and, of course, cryptocurrency is Dan Morehead, the Founder and Managing Partner of crypto hedge fund, Pantera Capital.  Dan was formerly the CFO and Head of Macro Trading at Tiger Management. Good morning.

Pantera Monthly Newsletter

The original hype around tokenization back in 2017 was around creating digital assets that represented ownership of illiquid, physical assets such as real estate, commodities, art or other collectibles on a blockchain. But the current high yield environment has given tokenization a somewhat different significance as an opportunity for digitizing financial assets such as sovereign bonds, money market funds and repurchase agreements.

Tokenization and the New Market Cycle

Real World Assets (RWA) in crypto refers to the tokenization of tangible assets that exist in the physical world, that are brought on chain. They also include the growing issuance of capital market products on-chain, where digital securities are tokenized and offered to retail customers.



What are Real World Assets (RWA) in Crypto?

Almost every major financial institution is looking to tokenize. This is not an exaggeration. A Citi report projects $4+ trillion of tokenized securities by 2030. Boston Consulting Group put the possible figure of illiquid assets tokenized even higher, at $16 trillion. With so much interest flooding the space, the Federal Reserve has released a working paper exploring the pros and cons of tokenization, and many countries, especially across Asia, are looking to create regulatory clarity for institutions.

From Digital Bonds to Pokemon Cards, Tokenization Hype is Real and It’s Happening on Polygon

Ondo Finance brings institutional-grade products on-chain, pushing for a new era of financial inclusivity and access. Conceptually best construed as fleshy connective tissue, Ondo does the heavy lifting, integrating all the required parties and compliance components to deliver on-chain access to real-world assets. At the highest level, Ondo Finance bridges the decentralized and traditional finance landscapes, offering yields from the latter with the convenience and accessibility of the former. 

What Is Ondo Finance: Narratives, Products, and Potential Future

The tokenization theme has only strengthened since the start of 2023 with Q2
arguably applying more pressure than ever. Whether you’re a fan of ‘tokenized
assets,’ ‘real-world assets (RWA),’ or maybe prefer the ‘on-chain finance’
nomenclature that’s emerging, the bottom line is that this category within digital
assets is now becoming a catch-all - which is something we’ve been expecting.

State of Security Tokens 2023 - Q2

Over the past few years, a number of notable players in both the crypto and traditional banking worlds have either gone bankrupt or have come close to doing so. Investors have thus started asking more questions about what would happen to their assets if the company holding such assets were to file for bankruptcy. In this post, we’ll talk more about what we do to protect investors in this scenario and how our efforts compare to others in the space.

Protecting Investors: What Happens if Ondo goes Bankrupt?

Traditionally the real world asset class does not even include financial assets. It originally encompasses anything physical that has a practical utility such as real estate, commodities (natural and agricultural resources), infrastructure, machinery, and equipment. Financial instruments have a more abstract representation. However, when RWA are discussed in crypto, they are various tokenizable assets from real estate and precious metals to stocks, bonds, and financial derivatives. In traditional finance, real world assets function as a valuable collateral source for loans. Similarly, crypto protocols want to bring the same advantages and functionality to DeFi.

RWA Report: Deep-Dive into 2023 Market

We’re thrilled to announce USDY, a tokenized note secured by short-term US Treasuries and bank demand deposits that will revolutionize the way investors all around the world store and transact value. USDY brings the institutional-grade structuring and investor protections of our latest product, OUSG (Ondo US Government Bond Fund), but now in a format accessible to global, non-US individual (and institutional) investors. Building on the early success of stablecoins, USDY provides investors a way both to store dollar-denominated value and to generate yield from their investments.

Introducing Ondo USD Yield (USDY)

In this report we offer an overview on the dynamic space of tokenizing ‘real-world’ valuables (or off-chain assets, ‘OCAs’), exploring advantages and obstacles, while delving into innovative projects and protocols in this field. Among other findings, we report the significant benefits that tokenizing OCAs may offer across key economic sectors. The most important of these benefits are improvements in asset management and administration, market efficiency and liquidity, as well as risk diversification. Despite these potential advantages, there are hurdles to overcome for OCA tokenization to reach its full potential. The most important of these include legal and regulatory uncertainties.

Research: Tokenization of Off-chain Assets

This report provides you with everything you need to know from the last month of DeFi events.

U.S. Treasuries Fuel Real World Asset Growth

Ondo Finance, which already offers tokenized U.S. Treasuries on the Ethereum blockchain, expanded the product to the Polygon network. The company has issued its OUSG token, a tokenized version of BlackRock’s short-term U.S. government bond exchange-traded fund (ETF), natively on Polygon as part of a “strategic alliance,” according to a press release Thursday.

More Tokenized Treasuries Arrive on Polygon as Digital Bond Market Expands

Ondo Finance, an Ethereum-based asset manager, is broadening its market with the help of Polygon Labs in a bid to drive greater adoption of tokenized financial products within DeFi. By expanding to Polygon, Ondo is looking to make its first move beyond the Ethereum mainnet since it became the first company to tokenize U.S. Treasuries in February. When the Ethereum base layer reaches capacity, it drives up the cost of transactions, and Ondo says this latest move will bring those costs down.

DeFi Startup Ondo Expands Yield-Earning Stablecoin Alternative to Polygon

Ondo, an Ethereum-based asset manager coalescing DeFi and traditional finance, and Polygon Labs, a development team for the Ethereum scaling Polygon protocols, today announce a strategic alliance to help drive the adoption of institutional-grade products within the DeFi ecosystem. This collaboration brings together the expertise and cutting-edge technologies of Ondo with the scalability and low cost of the Polygon PoS protocol in a movement toward reshaping traditional financial markets.

Ondo and Polygon Labs Announce Strategic Alliance to Help Drive Adoption of Institutional-Grade DeFi Products and Services

Flux Finance submitted a proposal to add the fUSDC-fDAI pool to the Curve Gauge Controller, allowing users to assign gauge weight and mint CRV. This proposal aims to enhance liquidity and usage of the pool, which allows Flux Finance users to swap between interest-earning stablecoin deposits on its lending platform (fUSDC and fDAI). The proposal successfully passed an on-chain vote on April 22nd, 2023.

Asset Risk Assessment: Ondo and Flux Finance (OUSG)

Flux Finance’s introduction of DeFi loans collateralized by US Treasuries represents a groundbreaking development for the crypto industry.  Why is this, and how does lending against US Treasuries collateral compare to lending against other types of crypto collateral, such as Bitcoin or stablecoins?  Before delving deeper, let's revisit what Flux Finance does and the ideal characteristics of loan collateral.

Ideal Collateral for Decentralized Lending

Even as the regulatory environment in the United States looks increasingly hostile for crypto projects, investors are piling into tokenized versions of the nation’s debt. Tokenized versions of publicly traded securities crossed a market capitalization of $200M this week, according to a Dune Analytics dashboard. All of that growth came this year, as numerous projects launched tokenized securities. OUSG, a tokenized version of Blackrock’s short-term U.S. treasury bond ETF (SHV), leads the market with a market share of over 60%. Ondo Finance launched OUSG in January.

Tokenized Bonds Surpass $200M In Market Capitalization

Demand for tokenized versions of U.S. Treasury bonds is soaring as rising yields in traditional financial markets attract fresh capital from crypto investors. The combined market capitalization of tokenized money market funds nears $500 million, and has quadrupled in size this year, according to data compiled by CoinDesk.

Demand for Tokenized Treasury Bonds Soars as Crypto Investors Chase TradFi Yield

Just a year or so ago, the decentralized-finance corner of crypto was offering an (at least on the face of it) extremely compelling proposition: Yields as high as 20%, vastly more than what most of traditional finance could muster — not to mention your average zero-interest bank account. That gap has all but vanished, and with it, much of DeFi’s raison d’etre. So perhaps not surprisingly, the industry is searching for a new path. And one path has led straight to traditional finance, the very sector DeFi diehards want to render obsolete.

DeFi Revives the ‘Mullet’ to Save Itself

Cryptocurrency firms are leaning on traditional financial products to attract customers to the flagging market. 

More decentralized finance companies have bought up Treasurys to sweeten yields on their blockchain-based financial services.

Crypto’s Cure for a Shrinking Customer Base: Buy Government Bonds

The new stablecoin-like token, OMMF, will be backed by conventional money market funds and is available only to qualified purchasers and accredited investors. But retail investors can lend against the tokens via Ondo’s DeFi protocol Flux to indirectly access the yield.

Ondo Finance Plans Yield-Generating Stablecoin Alternative for Institutional Investors

Ondo Finance Inc., a decentralized platform set up by a pair of former Goldman Sachs Group Inc. associates, is launching a new product that uses money-market funds investing in US government securities to create a yield-generating stablecoin alternative. Investors in the tokenized money-market fund will receive a digital coin called OMMF, the company said in a blog post Thursday. The details of the fund structure weren’t disclosed, but Ondo said that it will invest only in low-risk money market funds, including those holding US government securities.

Crypto Startup Ondo Unveils Stablecoin Alternative Backed by Money-Market Funds

Just over two months ago, we launched the world’s first tokenized US Treasuries exposure in OUSG, bringing the risk-free rate on-chain. Our initial focus has been to use OUSG to help large stablecoin holders more easily tap into Treasuries. We also fostered early on-chain utility for OUSG by developing a decentralized lending platform, Flux Finance, that today facilitates 24/7 lending and borrowing of stablecoins against Ondo’s tokenized Treasuries. Both initiatives have been well-received and are showing signs of strong early organic growth, with OUSG above $70M in Assets Under Management (AUM) and Flux Finance above $40M in Total Value Locked (TVL), including $27M in OUSG collateral. We have also been overwhelmed with demand to use our tokenization platform for new use cases and assets, and we are delighted to reveal today the first product we are releasing in response to that demand.

Bringing Money Market Funds On-Chain

The Ondo Short-Term Investment Grade Bond Fund (OUSG) invests its assets into the Blackrock’s iShares Short Treasury Bond ETF (SHV), a more than $23 billion ETF that trades several hundred million dollars a day, in order to deliver tokenized U.S. Treasuries exposure with direct stablecoin onramp and offramp support. Some of you may ask: why not just invest in U.S. Treasuries directly? In this post, we’ll answer that question, explaining why we opted to start with an ETF to scale OUSG to create a global, 24/7, real-time, and smart contract-compatible settlement layer on top of U.S. Treasuries.

Bond ETFs vs Direct Bond Exposure in Tokenized Products

Justin Schmidt, the former head of digital asset markets at Goldman Sachs Group Inc., has become president and chief operating officer of Ondo Finance Inc., a decentralized investment platform founded by a pair of other Goldman associates.

Schmidt spent two years at Goldman, leading its efforts in digital assets, before moving on to crypto technology provider Talos, which he left almost a year ago.

Goldman’s Former Head of Digital Assets Joins DeFi Startup Ondo Finance

I am thrilled to announce that Justin Schmidt is joining Ondo as our President and COO. Justin joins us with an over 19-year track record in financial services including as Head of Digital Assets at Goldman Sachs, where he spearheaded the firm’s overall digital asset strategy, and as Head of Strategy at Talos. Justin's impressive background also includes serving as a quantitative equities portfolio manager for hedge funds in New York and London and graduating from MIT with degrees in computer science, focusing on artificial intelligence and decentralized applications.

Welcome Justin Schmidt, Ondo's new President and COO

There are trillions of dollars worth of real world assets (RWAs) in the existing financial ecosystem ready to be tokenized and brought on-chain. In this episode, ChainLinkGod talks to Nathan Allman, founder and CEO of Ondo Finance—a project focused on tokenizing bonds and US treasuries on Ethereum blockchain, enabling stablecoin holders to put their assets to work with sustainable higher-than-DeFi rate yield. We discuss the value proposition of tokenizing RWAs, the challenges involved, how Ondo is approaching this market, and what the future of the DeFi ecosystem looks like.

How Ondo Finance Aims To Bring Trillions On-Chain

Ondo Finance, a decentralized investment platform set up by a pair of former Goldman Sachs Group Inc. associates, has launched a new fund through which holders of stablecoins can invest in bonds and US Treasuries.

The fund will be split between three tokenized share classes, each of which invests in a single exchange-traded fund from either BlackRock Inc. or Pacific Investment Management Co., according to a news release. Neither asset manager is directly involved in the new fund’s management.

Ex-Goldman Duo Debut Crypto Fund for Treasuries, Bonds

I am delighted to announce that Ondo is bringing the risk-free rate on-chain. We have launched a tokenized fund that allows stablecoin holders to invest in bonds and US Treasuries, making traditional capital markets more accessible to investors who collectively hold more than $100 billion of non-yield-bearing stablecoins. Investors will receive tokenized fund interests, which are transferable on-chain, including through approved smart contracts. We envision these security tokens and protocols that support them as creating a compliant on-chain financial ecosystem supporting both permissioned and permissionless assets, ultimately improving the accessibility, transparency, and efficiency of our markets.