Asset Tokenization: The Bridge Connecting TradFi and Web3

Asset tokenization is becoming an important development trend in the financial sector. As the market size of physical assets continues to expand, investors' interest in this innovative financial product is increasing. Tokenizing physical assets and introducing them to the blockchain not only provides new revenue opportunities for decentralized finance but also achieves asset fragmentation, enhances liquidity, and creates more investment options for investors with different capital levels.

The advantages of asset tokenization are mainly reflected in the following aspects:

1. Increase liquidity and accessibility
2. Lower the investment threshold
3. Enhance Transparency
4. Strengthen the connection with the DeFi ecosystem

The market size of tokenized government bonds in the United States is rapidly growing, increasing from $114 million in 2023 to $845 million. Research data shows that 64% of high-net-worth investors and 33% of institutional investors plan to increase their investments in tokenized government bonds before the end of 2024. This reflects that asset tokenization is gradually gaining recognition among traditional investors.

Despite still being in its early stages, asset tokenization has shown great potential for development and is expected to become one of the most promising application areas of blockchain technology. Some innovative fintech companies are leveraging this trend to develop new financial products and services.

Ondo Finance: Connecting TradFi and Web3 with RWA Protocol

Ondo Finance is transforming financial services through its decentralized protocol, combining the stability of TradFi assets with the efficiency of blockchain technology. The company is primarily composed of two departments: the asset management department is responsible for creating and managing tokenized financial products, while the technology department develops the underlying protocols that support these products.

Currently, Ondo Finance offers two main investment options:

1. USDY(Ondo US Dollar Yield Token)

   • Tokenized notes backed by short-term U.S. Treasury bonds and bank deposits
   • Annualized return ( APY ) is 5.30%, total locked amount ( TVL ) reaches 315.35 million US dollars.
   • Safer and more transparent than traditional stablecoins
   • Managed by a third-party trust company, ensuring compliance and investor protection

2. OUSG( Ondo Short-term US Treasury )

   • Provide passive investors with low-risk tokenized short-term U.S. Treasury bonds
   • Annualized yield ( APY ) is 4.81%, total locked amount ( TVL ) reaches 221.32 million USD
   • The new version of rOUSG has recently been launched, providing returns through additional tokens.

Ondo Finance has also launched Flux Finance, which is a decentralized lending platform. Flux Finance supports open Tokens and restricted Tokens, using a peer-to-pool model for over-collateralized lending. The platform is governed by Ondo DAO.

In terms of competitive landscape, Ondo Finance avoids direct competition by collaborating with traditional financial giants like BlackRock, while offering innovative products to occupy a unique position in the RWA space. Its products such as USDY and OUSG provide investors with a safer and more transparent choice compared to traditional stablecoins.

Token Economics and Use Cases

ONDO is the governance Token of Ondo Finance and its Flux Finance protocol. Holders can vote on various proposals within the Ondo DAO, ensuring that decisions are made transparently on-chain. To initiate a proposal, a minimum voting power of 100 million ONDO must be held or delegated.

Key data of ONDO Token:

• Current Price:$1.87
• Market Cap Rank: #54
• Fully Diluted Valuation ( FDV ): $131.5B, Rank #16
• Circulating Supply: 1.44 billion ONDO, 14.27% of the total supply (.
• Total Supply: 10 billion ONDO
• Maximum supply: 10 billion ONDO

In the next 6 months, approximately 1.67 million ONDO) will be unlocked each month, amounting to about $2.19 million (. There will be a large-scale unlock on January 18, 2025, with approximately 1.94 billion ONDO), worth about $25.5B (.

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Team and Collaboration

The Ondo Finance team brings together professionals from the TradFi and Web3 sectors. Founder and CEO Nathan Allman and President and COO Justin Schmidt both hail from Goldman Sachs, along with other key members from institutions such as BlackRock, OpenSea, and MakerDAO.

The project has completed multiple rounds of financing, with investors including well-known institutions such as Pantera Capital and Founders Fund.

Ondo Finance has established strategic partnerships with several institutions, including:

• Aptos Foundation: Integrating physical assets with blockchain technology
• Thala Labs: Promoting the application of USDY in the DeFi field
• Wintermute: Enhance the liquidity of USDY
• BlackRock: Demonstrating commitment to asset tokenization through investment in the BUIDL fund.

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Development Prospects

Ondo Finance is committed to connecting TradFi and decentralized finance through public blockchain technology. Its TVL has grown from $40 million to $534 million, demonstrating strong growth momentum.

Future development plans include:

1. Expand the application scope and liquidity of USDY, OUSG, and OMMF.
2. Establish more strategic partnerships
3. Develop cross-chain tools
4. Tokenization of more publicly traded securities
5. Expand the advantages of blockchain technology to a broader range of financial services.

Ondo Finance is at the forefront of asset tokenization and the RWA field, poised to play a significant role in bridging traditional finance and Web3. However, the project still faces challenges such as regulatory uncertainty and high token concentration, and investors should cautiously assess the risks and opportunities.

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