Tokenized US Treasuries
Ondo Finance, an institutional-class on-chain fund that invests in US Treasuries, launched on the Ethereum (ETH) blockchain on the 10th.
Investors who have cleared conditions such as identity verification (KYC) and anti-social checks (AML/CFT) at Ondo Finance can purchase bonds using stablecoins such as USDCoin (USDC), Tether (USDT), and Dai (DAI). Earn up to 8% yield on your investment.
We are excited to announce that we are making US Treasuries easily accessible to stablecoin holders in tokenized format! Check out our new site at https://t.co/z0GWsjKn21 for more info, and read more below 👇 https://t. co/4YoNVpUbOX
— Ondo Finance (@OndoFinance) January 10, 2023
Ondo collects non-yielding stablecoins in the DeFi (decentralized finance) market through three types of funds that invest in bonds with different risk levels, ultimately reaching a fund size of 13 trillion yen ($100 billion). We aim to expand to
The minimum usage amount is about 650 million yen ($5 million). Users will need to complete Ondo’s KYC (know your customer), but they are also looking to partner with startups operating DeFi protocols and DAOs (decentralized autonomous organizations). Ondo Finance CEO Nathan Allman said:
One of our goals is to allow investors to quickly and easily exchange between stablecoins and traditional assets. Focus on highly liquid, low-risk products such as U.S. short-term Treasuries.
Ondo Finance’s three products invest in exchange-traded funds (ETFs) provided by major US asset managers BlackRock and Pimco, respectively. There does not appear to be any partnership between BlackRock and Pimco. Details of investment destinations and yields are as follows.
- US Treasury Bond Fund (OUSG): Invest in BlackRock US Treasury Bond ETF (SHV), Annualized Yield (APR) 4.2%
- Short-Term Investment Grade Bond Fund (OSTB): invested in PIMCO Enhanced Short Maturity Active ETF (MINT), 5.45% APR
- High Yield Corporate Bond Fund (OHYG): iBoxx USD High Yield Corporate Bond ETF (HYG), 8% APR
Overall, the custody and exchange of stablecoins will be managed by an affiliate of US cryptocurrency exchange Coinbase. The ETF will be bought and sold by prime broker Clear Street under the control of investment advisor Ondo Capital Management. Ondo Finance earns a 0.15% commission throughout the process.
Relation:MakerDAO to manage 230 billion yen with Coinbase Custody
DeFi use cases for security tokens
By investing in a fund on Ondo, users receive a security token representing ownership of the fund. Transfers of tokenized bonds are only between qualified investors, and ownership changes upon transfer.
In the future, the project plans to link Ondo’s tokenized bonds with external DeFi products and explore uses such as trading and lending, but other smart contracts will only be available after passing Ondo’s compliance review. .
Ondo Finance was founded in the United States in 2021 by Goldman Sachs ex-Nathan Allman and Pinku Surana. The company raised about 2.6 billion yen in April 2022 in a Series A investment round led by Peter Thiel’s Founders Fund and Pantera Capital. In the second half of the same year, it raised 1.3 billion yen in a token sale.
What is a security token
A token that digitizes securities such as stocks using blockchain technology.
Relation:Major French Bank Issues Security Tokens on Tezos (XTZ)