Ondo Finance unveils on-chain US treasuries

Decentralized investment platform, Ondo Finance, announced the launch of a tokenized fund, that will allow stablecoin holders to invest in US Treasuries and bonds.

Ondo Finance UST products

The DeFi marketplace revealed on its website that the tokenized fund would make traditional capital markets more accessible to investors, given there are more than $100 billion of non-yield-bearing stablecoins in the market.

The company disclosed it would offer short-term US treasuries and bonds via large, highly liquid ETFs managed by large firms like Blackrock and PIMCO. The three share classes will provide a range of institutional-grade yielding offerings.

They will include US Government Bond Fund (OUSG), Short-Term Investment Grade Bond Fund (OSTB), and High Yield Corporate Bond Fund (OHYG).

OUSG will use the Blackrock US Treasuries ETF (SHV) to invest exclusively in short-term US treasuries. Moreover, OSTB will utilize the PIMCO Enhanced Short Maturity Active ETF (MINT) to invest solely in short-term investment grade and corporate bonds. Lastly,

OHYG will use the Blackrock iBoxx $ High Yield Corporate Bond ETF (HYG) to invest in high-yield corporate bonds.

The firm will charge a 0.15% per annum management fee because Onto Capital Management will take charge as an investment adviser. It will facilitate the purchase and sale of these ETFs.

The company’s big step for DeFi

Nathan Allman tweeted on Jan 10 that one of Ondo Finance’s goals is to ease how investors convert between stablecoins and traditional assets, emphasizing “highly liquid, low-risk products like short-term US Treasuries.”

Allman believes that his company can start to link low and risky on-chain yields with more liquid, more liquid, and higher-yielding alternatives.

The step will likely benefit start-ups, DAOs, and stablecoin holders. The tokenized fund will grant investors ownership to allow the transfer of tokens with other allowed investors to effect authoritative changes in ownership.

Ondo Finance will work closely with the market’s most reputable and highly regulated service providers. They will include Clear Street as the prime broker, Coinbase Custody as the stablecoin custodian, Coinbase Prime as the stablecoin and fiat converter, Richey May as tax advisor and auditor, and NAV Consulting as the fund administrator. 

Allman said that he envisions the tokenized fund as a compliant on-chain financial ecosystem supporting both permissioned and permissionless assets, which might improve accessibility, transparency, and efficiency of the firm.

The company completed a funding round of $10 million in June 2022 by selling ONDO tokens via CoinList. Earlier last year, the firm also raised $20 million in another funding round to be a hub that matches those who have capital with those who need it via customized DeFi products.

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