Ondo Launches Tokenized US Treasuries and Bonds, Targeting $100 Billion Stablecoin Market

BY PR Newswire | TREASURY | 01/10/23 11:00 AM EST

GREENWICH, Conn., Jan. 10, 2023 /PRNewswire/ --?Ondo Finance (https://ondo.finance) today announced the launch of a tokenized fund allowing stablecoin holders globally to invest in bonds and US Treasuries. The fund seeks to close the widening gap between on-chain and off-chain yields, a potentially attractive opportunity for investors holding more than $100 billion in stablecoins, which they currently receive no yield on.?

Today, crypto investors have a relatively unattractive set of yield opportunities available to them. The most proven protocols like Compound and Aave yield about 1-2% per year. While newer uncollateralized lending protocols offer yields in the 7-10% APR range, these loans have been experiencing higher-than-expected default rates and are proving to be less transparent and more risky than many traditional bonds with comparable yields. Meanwhile, an inverted yield curve and the potential for the federal funds rate to exceed 5% make short-term Treasuries a particularly compelling asset.

"The crypto market is in desperate need of low-friction access to traditional capital markets. Large stablecoin holders, including start-ups and DAOs, are faced with a choice between having their purchasing power eroded away by inflation or taking too much risk with the current set of on-chain yield offerings," says Nathan Allman, founder and CEO of Ondo Finance. "We're delighted to bring to market high-quality, institutional-grade offerings like our tokenized US Treasuries."

The fund will process daily subscriptions and redemptions in stablecoins as well as traditional fiat, and investors will receive tokens on the Ethereum blockchain representing their ownership. These tokens will be transferable between whitelisted investor addresses, as well as any smart contract that passes a compliance review. Ondo envisions investors using smart contracts to engage in on-chain trading and lending with the fund tokens alongside traditional cryptoassets.

The fund will have three tokenized classes, each investing in a single ETF from either Blackrock or PIMCO. Ondo will manage the fund, with Clear Street serving as the prime broker and qualified custodian of the securities, Coinbase as the qualified custodian of the stablecoins, NAV Consulting as the fund admin, and Richey May as the fund auditor.

About Ondo Finance
Ondo's mission is to provide institutional-grade, blockchain-enabled investment products and services. Ondo has a technology arm that develops decentralized finance technology as well as an asset management arm that creates and manages tokenized funds.

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SOURCE Ondo Finance

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.