The Bridge between Blockchain and TradFi: The Innovative Path of Ondo Finance

1. Market Background

The next wave in the Blockchain world is shifting from technology to the deep integration of assets. The RWA track is leading this transformation, achieving an unprecedented convergence between on-chain ecosystems and traditional wealth. Currently, RWA has risen to become the seventh largest category in DeFi, with a total locked value exceeding $12 billion.

U.S. Treasury bonds, as the deepest liquidity financial asset globally, offer advantages such as high liquidity and zero default risk, providing a reliable anchor for asset pricing and risk management. The combination of the RWA track and U.S. Treasury bonds creates a new investment tool that inherits the advantages of U.S. Treasury bonds while incorporating DeFi characteristics. It is expected that by 2030, the global market size for tokenized non-liquid assets will reach $16 trillion.

Currently, the market value of tokenized government bonds has increased from $1.39 billion a year ago to $6.89 billion, showing enormous growth potential. Ondo Finance holds about 25% of the tokenized U.S. Treasury market through its two major products, USDY and OUSG, leading the sector. Its TVL has also risen from $1 billion to nearly $1.2 billion in just two months.

2. Project Overview

2.1 Project Introduction

Ondo Finance has launched three tokenized US Treasury and bond products by partnering with large asset management institutions:

• US Government Bond Fund ( OUSG )
• Short-term investment-grade bond fund ( OSTB )
• High Yield Corporate Bond Fund ( OHYG )

Market share is about 20%, the market value of government bond products exceeds 122 million USD, and management fees are 0.15%.

2.2 Core Products

2.2.1 USDY

USDY is an interest-bearing stablecoin, backed by short-term U.S. Treasury bonds and bank deposits, allowing holders to automatically earn interest.

• Targeting institutions and qualified investors outside the United States
• Daily minting and redemption based on net value, with an initial lock-up period of 40-50 days.
• Target annual yield of approximately 5.2%(2025 April )

2.2.2 OUSG

OUSG is a transferable on-chain fund that primarily invests in short-term U.S. Treasury bonds, providing holders with exposure to U.S. Treasuries.

• Underlying assets: Mainly invest in government bond funds from institutions like BlackRock.
• Daily update of on-chain NAV price
• Management fee 0.15%, no performance fee
• APY is calculated based on the 30-day net value change and is updated every business day.

3. Key Mechanisms

3.1 Flux Finance

Flux Finance has built a collaborative transmission path for the industrial chain:

• Technical foundation: Introducing liquidity of traditional assets into a multi-chain environment with the help of Layer 2 and cross-border settlement networks.
• Upstream: Custody of traditional assets through large financial institutions, minting on-chain certificates such as USDY and OUSG.
• Midstream: Release liquidity through the Fund and Lend stages to achieve refinancing of yield certificates.
• Downstream: Conveying value to the entire Web3 ecosystem, supplying low-cost capital to emerging sectors.

3.2 Ondo Chain

Ondo Chain is a blockchain network designed for real-world assets:

• Native support for RWA asset blockchain mapping
• Adopt a permissioned verification model
• Integrated cross-chain bridge tool
• Mandatory KYC process ensures compliance

3.3 Ondo Global Markets

Ondo GM is a tokenization platform that puts TradFi assets on the Blockchain:

• Based on Ondo Chain and Bridge to achieve cross-chain asset transfer
• Pool retail funds into a unified collateral pool
• Simplify TradFi processes, improve efficiency

4. Mechanism Comparison

Ondo Finance links TradFi and the crypto world through three major mechanisms:

• Ondo Chain provides native support for RWA and compliance verification.
• Ondo GM achieves cross-institutional fund aggregation
• Flux Finance builds the fToken lending ecosystem

These mechanisms work together to make Ondo Finance a hub for the on-chainization of real assets.

5. Summary

Ondo Finance is initiating a liquidity revolution at the intersection of TradFi and the on-chain world. It integrates compliant RWA underlyings, cross-institutional capital aggregation, and instant yield fToken ecosystems, unlocking market potential and attracting a new wave of capital influx.

In the future, Ondo Finance is expected to open up significant incremental space in the $16 trillion RWA market, promoting the digitalization process of real assets.

6. Highlights Summary

1. Introduce a "risk-free interest rate" benchmark for DeFi through the tokenization of government bonds.

2. The three major mechanisms work together to bridge the "last mile" between TradFi and the crypto world.

3. Lower the threshold, allowing small funds to participate in advanced financial strategies.

4. Build an all-weather, highly efficient and transparent on-chain financial infrastructure

5. Expand the $16 trillion tokenized market, paving the way for the digitization of real assets.