Ondo: RWA Leader's Product Line, Competitors, and Token Valuation Analysis

Original Article Title: "Ondo: RWA Leader's Product Line, Competitors, and Token Valuation Analysis"

Original Article Author: Alex Xu, Mint Ventures

Introduction: The Need to Focus on the RWA Track at This Moment

Amidst this round of innovation-starved cryptocurrency cycle, we have not seen new tracks like DeFi, NFTs, or even GameFi as we did in the last cycle. Meme speculation has become the main focal point of market trading. However, with the continuous acceleration of project mass production, liquidity extraction pace, and the exhaustion of themes, the Meme market has also entered an inevitable downturn. As many AI projects, which are part of this cycle's new themes, have not yet found the right product fit between Crypto and AI, the business logic of the track is fragile, making it difficult to attract long-term industry investment and long-haul funds.

The commercial exploration of the Web3 track has come to a standstill, with the lack of a solid industrial logic investment narrative being a major reason for most crypto assets beyond BTC entering an "early bear market" this round. The downturn in the application track has also directly led to a continuous decline in the valuation of Layer 1 public chain platforms that support application loads, resulting in a sustained decline in public chain assets led by ETH against BTC. Meanwhile, BTC has benefited from multidimensional improvements in fundamentals (opening of compliant investment channels, government reserves, inclusion in listed companies and sovereign wealth fund balance sheets, regulatory shift towards friendliness, etc.). After experiencing a mid-term correction for several months, it has now returned to near its new high, accumulating considerable unrealized profits. The need to realize part of these profits and look for more elastic altcoin assets for deployment still exists.

The question is, what to buy?

Comparing other crypto tracks horizontally, RWA may be one of the more worthy focal categories. In the article "U.S. Stocks on the Chain and STO: A Hidden Narrative," the author expounded on the underlying thinking: from a business logic perspective, the tokenization of U.S. stocks and more RWA assets has a clear value proposition, with demand from both sides relatively clear. In addition, the improved regulatory environment represented by the United States has provided an opportunity for the outbreak of this track, and influential traditional financial institutions are eager to try it.

Based on this, the author has recently conducted research on many RWA projects, and Ondo, as a representative project among them, is worth a detailed analysis. In this report, I will analyze Ondo from the aspects of its current business status, team background, competitive situation, challenges, and risks, and compare its current valuation level with other projects in the same track.

Note: This article represents the author's phased thinking as of the publication date, which may change in the future. The views are highly subjective and may contain errors in facts, data, or reasoning logic. All views in this article are not investment advice. Criticism and further discussion from peers and readers are welcome.

1. Business Status

1.1 Product Matrix

Ondo Finance is an institution-level platform dedicated to tokenizing traditional financial assets (Real-World Assets, RWA) and introducing them to the blockchain. It is currently the most well-known brand and has the most comprehensive product line among the RWA projects that have been issued. Ondo's product lineup includes tokenized funds, interest-bearing stablecoins, lending platforms, tokenization asset issuance protocols, tokenized asset trading platforms, and its own compliance blockchain, covering the full process of RWA from issuance and custody to trading circulation. We can also classify its products into asset, protocol, and infrastructure categories. Next, let's take a look at Ondo's main products.

1.1.1 Asset Class Products

OUSG (Ondo Short-Term US Government Bond Fund)

A token backed by U.S. Treasury bonds, issued for Qualified Purchasers, with strict KYC/Qualified Purchasers verification requirements. Investors purchasing OUSG hold shares of a professional fund manager's investment in a short-term U.S. bond asset portfolio. The intrinsic value of OUSG's token increases with the rise in the fund's net asset value, equivalent to daily automatic rollover interest income. In addition to BlackRock's BUIDL U.S. bond fund, OUSG's underlying assets include shares of U.S. bonds issued by Franklin Templeton (FOBXX), Wellington, WisdomTree, Fidelity, and other reserve assets.

OUSG's Revenue Model

OUSG charges institutional clients a 0.15% management fee (management fee, currently not levied, to be imposed starting July 1, 2025) and a fund expense fee (also 0.15%, currently being imposed), with actual earnings generated from the underlying U.S. bond interest minus these fees.

USDY (US Dollar Yield)

Income-generating USD-pegged stablecoin. USDY is issued to non-U.S. individual and institutional users, backed by interest from short-term U.S. Treasuries and bank deposits. USDY has a base price of 1 U.S. dollar, but interest is accrued daily to the token's value, allowing holders to automatically earn yield. Therefore, users do not need to stake or lock up funds; holding USDY enables them to accumulate yield automatically every day. The yield calculation of USDY typically references the risk-free rate (SOFR) minus a 0.5% fee.

USDY's Revenue Model

Ondo sets USDY's annualized yield rate monthly (e.g., 4.25% for a certain month) and distributes most of the base yield to holders, retaining around 0.5 percentage points as a management fee. In addition, OUSG and USDY can both be converted into rebase-enabled stable value tokens, namely rOUSG and rUSDY, whose value remains stable but the token quantity increases with added yield, similar to Lido's stETH mechanism.

OUSG and USDY Differentiation Positioning

Although on paper OUSG and USDY are very similar products, both investing funds in U.S. short-term treasuries and other high-quality cash equivalents, they still differ in several aspects and are positioned differently:

· Asset Composition Difference: OUSG indirectly invests in U.S. treasuries through holdings of multiple regulated government bond fund shares (such as Buidl Fund issued by BlackRock, WTGXX issued by WisdomTree), resulting in a diversified portfolio composed entirely of government-related securities. In contrast, USDY employs a direct holding strategy, with the majority of assets being a combination of bank deposits and short-term treasuries. USDY does not invest in any fund products, with a significantly higher proportion allocated to bank deposits.

· Yield and Risk: Both have similar yield levels closely tracking the risk-free rate (around 4-5% annually), with little difference. However, due to holding some bank deposits, USDY exhibits slightly higher yield stability, with the net asset value almost unaffected by interest rate fluctuations. Additionally, it includes a 3% overcollateralization to enhance risk mitigation. Consequently, USDY introduces certain bank credit risk (though mitigated as much as possible), whereas OUSG closely corresponds to U.S. government credit (purer credit quality). Thus, while USDY takes on minimal bank risk and achieves yield stability and risk insulation through asset structure design, OUSG more directly reflects the Treasury market interest rate, with risk entirely stemming from Treasury rate fluctuations.

· Liquidity and Redemption Mechanism: OUSG is aimed at qualified investors, providing instant subscription and redemption with on-chain settlement convenience. However, secondary market transfers are restricted, and it can only circulate in a restricted environment where only institutional addresses that have undergone KYC application can hold it. USDY, on the other hand, can become a freely tradable interest-bearing stablecoin after the initial lock-up period (40 days), allowing it to freely circulate on-chain, enhancing its liquidity and broad availability. However, due to the 40-day waiting period, USDY's initial liquidity is not as immediate as OUSG. Regarding redemption, OUSG supports direct redemption to USDC, while USDY's official redemption requires fiat withdrawal and has a minimum threshold, so USDY holders typically liquidate through secondary market trading.

· Face Value: The base face value of OUSG is 100 US dollars, and the base face value of USDY is 1 US dollar.

We can also understand it simply as follows: USDY focuses more on open circulation and leans towards retail demand, positioning itself as a stablecoin; while OUSG emphasizes immediate liquidity in a closed environment, leans towards institutional demand, positioning itself as fund shares.

1.1.2 Protocol-based Products

Flux Lending Platform

Flux Finance is a decentralized lending protocol developed based on the Compound V2 asset pool model. It supports users to collateralize high-quality RWA assets (currently only supporting OUSG) to borrow stablecoins, as well as lend idle stablecoins to earn interest. Flux currently supports deposits and borrowing of USDC, DAI, USDT, FRAX, and other stablecoins. Simultaneously, it implements permission controls for restricted assets like OUSG (only whitelist addresses can be used as collateral), ensuring compliance. Governed by Ondo DAO, whereby ONDO token holders govern parameters and asset listings. The emergence of Flux allows users holding OUSG to collateralize and obtain liquidity.

In the scenario where the only available collateral asset type is OUSG, Flux may not stand out, and its business volume of tens of millions of dollars in deposits and loans is not significant. However, as more RWA assets are introduced onto the chain in the future, Flux will become a key component of the Ondo ecosystem, providing lending liquidity for RWA assets within the ecosystem.

Ondo Global Markets (referred to as GM)

At the first Ondo Summit held in New York in February 2025, Ondo officially unveiled the design of the GM platform, which is the traditional asset tokenization platform planned by Ondo, aimed at bringing thousands of publicly traded securities (stocks, bonds, ETFs, etc.) onto the blockchain. Ondo also referred to the vision of this product as "Wall Street 2.0." It is expected that Ondo GM will be open to non-U.S. investors, and all issued GM tokens will be backed 1:1 by real securities, freely transferable like stablecoins and usable in Defi, but with built-in compliance controls at the issuance and redemption levels.

Ondo pointed out that the current traditional investment environment suffers from high costs, restricted channels, and fragmented liquidity. GM aims to achieve lower costs, 24/7/365 trading, and instant settlement through blockchain. For example, investors will be able to easily obtain tokenized versions of U.S. stocks/funds like Apple, Tesla, SP 500 ETFs, similar to purchasing stablecoins, and can freely trade in non-U.S. markets or participate in on-chain financial services. The GM platform will also support token holders choosing to participate in securities lending to earn additional income.

However, Ondo Global Markets is not yet officially launched. On its business website, it vaguely states that it is "expected to be released later this year." The business is likely still preparing in various aspects such as product development and compliance. Clear compliance guidelines from U.S. regulatory bodies on asset tokenization and definitive legislation will be crucial prerequisites for the successful operation of this product. Additionally, Ondo Global Markets will run on the Ondo Chain, as detailed in the following section.

Nexus Asset Issuance Protocol

Ondo Nexus is a new technical solution launched in February 2025, aimed at providing instant liquidity for third-party issued U.S. Treasury bond tokens. In simple terms, Nexus leverages OUSG's instant minting capability to act as a shared liquidity layer between different issuing parties. Ondo expands the eligible collateral range of OUSG to include U.S. Treasury bond tokens from entities like Franklin Templeton, WisdomTree, Wellington, among others. Income certificates issued by these collaborative institutions (such as Franklin's FOBXX fund token) can be accepted by Ondo and exchanged for OUSG, facilitating shared liquidity between various products and stablecoins.

Through Nexus, an investor holding a third-party institution's U.S. Treasury bond token can sell it to Ondo at any time, 24/7, in exchange for USDC or other stablecoins, with Ondo then incorporating the token into its asset pool as support and minting an equivalent amount of OUSG. This provides the market with an "instant redemption" mechanism, breaking the traditional mutual fund redemption restriction of limited time windows on business days. The launch of Nexus also strengthens Ondo's collaboration with asset management giants like BlackRock, Franklin Templeton, etc.

1.1.3 Infrastructure Products

Ondo Chain: Compliance-Focused Permissioned L1

In February 2025, Ondo announced the launch of its proprietary semi-permissioned blockchain, Ondo Chain, designed specifically for institutional-grade RWA issuance and trading. Ondo Chain utilizes a Proof of Stake (PoS) consensus, but validators can stake assets not limited to crypto assets; they can also be real-world assets with ample liquidity to mitigate the impact of crypto market volatility on network security. The validation nodes will be operated by recognized financial institutions under permission (intended advisors include Franklin Templeton, Wellington, WisdomTree, Google Cloud, ABN AMRO, Aon, McKinsey, and other large traditional institutions).

The key feature of this chain is to combine the transparency of a public chain with the compliance and security of a permissioned chain: open access and development on the chain, but a controlled validation layer to prevent MEV attacks and meet regulatory requirements. Additionally, Ondo Chain natively supports key financial functions (such as dividend distribution, stock splits, etc.), provides on-chain proof (Proof of Reserves), and undergoes regular audits by validators to ensure each token is fully backed by real-world assets. Ondo Chain will also include a cross-chain bridge built on a decentralized validation network. The so-called "open" refers to allowing anyone to issue tokens, develop applications, or access the network as users or investors. Meanwhile, user identification and permissions will be core features of Ondo Chain, allowing asset issuers and application developers to implement permission management and transfer restrictions at an appropriate contract level; this means that while users can freely access the network, developers can specify at the contract level which users on the network can access the protocols and assets they deploy.

The goal of this chain is to serve as the underlying architecture of the future "Wall Street 2.0," enabling institutions to conduct on-chain operations including prime brokerage businesses, cross-collateralized lending, and achieve seamless integration of traditional finance and DeFi. Ondo Chain is expected to undergo testing and launch within 2025 and is reportedly currently collaborating with institutions such as PayPal, Morgan Stanley, BlackRock, and others to design network details.

In summary, Ondo Finance has preliminarily built a comprehensive matrix covering asset issuance, liquidity management, and infrastructure. Its product line spans from underlying assets (US Treasuries, bank deposits, public securities) to on-chain protocols and infrastructure (lending, cross-chain bridges, dedicated chains), working together and facilitating business flows.

1.2 Business Data

Despite Ondo Finance having a wide range of products, currently, only a few products are truly live. The asset-based products are OUSG and USDY, while the protocol-based product is the lending product Flux.

OUSG Business Data

Data Source: Ondo Website

Currently, OUSG's total asset size is $545 million. Since its launch in '23, its size has experienced three rapid growth phases, with the fastest growth occurring from February of this year to the present, increasing from under $200 million to over $500 million. OUSG is supplied on three blockchains: Ethereum, Polygon, and Solana, but the vast majority of the issuance is on Ethereum, with a very small size on the other two chains. When observing the address data on Ethereum, the number of addresses holding OUSG is only 57, and the top 10 addresses hold over 90% of the total asset issuance, which is consistent with OUSG being open only to compliant institutions.

Data Source: etherscan

USDY Business Data

Data Source: Ondo Website

Currently, USDY's total asset size is $634 million, supported on 8 blockchains including Ethereum, Mantle, Solana, Sui, Aptos, Noble, Arbitrum, and Plume. Ethereum is also the main issuance platform for USDY, with over half of its issuance on Ethereum, valued at around $330 million, and with only 316 holding addresses. Solana follows closely, with an issuance value of around $177 million and a high number of holding addresses at 6329, demonstrating a higher retail user adoption rate.

Flux Business Data

Data Source: Flux Website

Due to Flux currently only supporting OUSG as the collateral asset, with a modest business scale, the total deposit size is 74 million US dollars, and the lending funds amount to 33.43 million US dollars. Flux's future growth still relies on the Ondo ecosystem to introduce more RWA assets.

1.3 Team Background

RWA, as a track where strong compliance, DeFi, and traditional finance converge, whether the project team has rich traditional financial institution business resources, has established smooth communication channels with government regulatory agencies, and has deep industry experience in financial compliance are important considerations for us to judge whether the project can develop smoothly in the future.

Professional Background of Key Team Members

Source: Ondo Website

The founding and executive team of Ondo Finance mainly come from Wall Street's large financial institutions and well-known consulting companies, with several members from Goldman Sachs' digital asset division, and all core team members are fully identified.

Among them, co-founder Nathan Allman has worked in Goldman Sachs' digital asset division. President and COO Justin Schmidt previously served as head of Goldman Sachs' digital asset market department and was also one of the founding members of the Goldman Sachs digital asset team. Chief Strategy Officer Ian De Bode was a partner at McKinsey Company before joining Ondo, responsible for digital asset consulting, with nearly ten years of experience providing strategic consulting to executives of financial institutions. Chief Legal Counsel Mark Janoff holds a Stanford Law School degree and has worked in legal affairs for technology companies. The core team members have impressive resumes, and their past experiences align well with the development needs of Ondo's industry.

Government Relations: Actively Engaged in Policy Making and Industry Associations/Public Initiatives

In April 2025, the Ondo team, together with their legal counsel, met with the U.S. SEC Crypto Asset Working Group, and submitted a proposal to the regulatory agency regarding a compliant framework for tokenized securities. According to the meeting minutes, Ondo proposed a plan to the SEC to issue and sell on-chain tokenized U.S. securities under current financial laws, with discussions covering the structural model of security tokenization, registration and Broker-Dealer regulatory requirements, market architecture regulations, anti-money laundering compliance, and state corporate law, among other key topics. Ondo even suggested that regulators consider adopting a "regulatory sandbox" or temporary exemption measures (facilitating space for enterprise innovation exploration before formal regulations are put in place), to promote innovation while safeguarding investor protection.

Ondo Finance's interaction with government officials and regulatory bodies is not limited to private discussions but also extends to public forums. In February of this year, Ondo hosted the inaugural Ondo Summit in New York, inviting key figures from both traditional finance and the blockchain space. Notably, the summit featured former and current U.S. congressional and regulatory officials: former Chairman of the U.S. House Financial Services Committee Patrick McHenry attended and delivered a speech on the future regulation of digital assets; Commodity Futures Trading Commission (CFTC) Commissioner and Acting Chair Caroline Pham engaged in a fireside chat, sharing insights on regulatory trends. During the conference discussions, McHenry urged the crypto industry to actively engage with Washington policymakers and emphasized the lengthy and intricate legislative process. Caroline Pham provided an overview of recent developments in regulatory agencies' enforcement of federal policies.

Furthermore, in early 2025, Ondo announced that Patrick McHenry would join the company as an advisor, serving as the Vice Chair of the Ondo Finance Advisory Board. McHenry, who had a long tenure as a congressman and was involved in shaping financial regulatory policies, joining was seen as a significant step by Ondo to strengthen its government relations.

Association with the Trump Family

In early February 2025, at the "Ondo Summit" held in New York, the eldest son of the U.S. President, Donald Trump Jr., made a surprise appearance and delivered a speech. Subsequently, Ondo Finance officially announced in February 2025 that it had established a strategic partnership with the crypto platform World Liberty Financial (WLFI), supported by the Trump family, aiming to jointly promote the adoption of RWAs by bringing traditional financial assets onto the blockchain. As per the announcement, WLFI plans to integrate the tokenized assets provided by Ondo (OUSG, USDY) into its network as reserve assets. Later on, an Ethereum address associated with WLFI exchanged about $470,000 worth of USDC for approximately 342,000 ONDO tokens. This address had previously purchased $245,000 worth of ONDO two months ago and stored the tokens in Coinbase Prime custody.

Of course, verbal agreements with WLFI and purchases made by crypto projects associated with WLFI are not uncommon, and this type of collaboration and acquisition has a strong promotional nature, more resembling a business partnership.

1.4 Business Summary

Summarizing the above information, the author believes Ondo's business situation can be summarized in a few sentences:

From asset issuance to trading, Ondo has a comprehensive product matrix centered around RWA. The ceiling of the business story is high, the core team has a high-quality background, with excellent positioning in traditional financial institutions and government relations. They can engage in meaningful conversations with regulatory authorities. The core products (Global Markets and Ondo Chain) are not yet live and are still awaiting regulatory approval. Currently, the business development is still quite "left-sided." Overall, facing the largely untapped encrypted blue ocean of RWA, Ondo is currently one of the most well-prepared encrypted enterprises. Various endowed resources are very good, and they are only waiting for the regulatory and legislative authorities to give the go-ahead.

2. Competitive Landscape

As the RWA concept gains popularity, Ondo faces competition from multiple projects across various business aspects, including Securitize (unlaunched), Centrifuge, Polymesh (listed on Binance), etc. Below is a comparative analysis of Ondo's competitive situation with several competitors in terms of market share, product differentiation, compliance progress, and ecosystem partnerships:

2.1 Market Position and Scale

Data Source: https://app.rwa.xyz/treasuries

According to the RWA data platform RWA.xyz's statistics, as of May 2025, Ondo ranks second in the U.S. Treasury RWA market by locked assets, with a market share of approximately 17.01% and locked assets of around $1.17 billion. The first place is held by Securitize, backed by BlackRock, with locked assets of around $2.912 billion and a market share of 42.11%. The third position is Franklin Templeton's Benji platform ($727 million, 10.52%).

In the sovereign bond yield token market, Securitize and Ondo lead the market, with Securitize having a larger asset size, while Ondo's growth rate is also relatively fast (20.3% growth in the past 30 days). Centrifuge focuses on private credit RWAs such as SME loans, with locked assets of around $409 million, representing 5.96%, and a staggering one-month growth rate of 222.66%.

Holder Distribution of Sovereign Bond Tokenized Assets by Country, Data Source: https://app.rwa.xyz/treasuries

It is worth noting that Ondo is far ahead in terms of the number of holders compared to other projects—its U.S. Treasury bond token holders account for over 90% of the total market (as USDY is open to non-U.S. retail investors, with a broad user base), while platforms like Securitize prefer institutional investors, with a majority of their holders being a few large clients.

2.2 Product Positioning and Mechanism Differences

Ondo focuses on high liquidity, stable yield U.S. dollar assets (short-term government bonds, money market funds) and aims to integrate them into DeFi applications. The introduced USDY is positioned as a "yield stablecoin" usable for payments and collateral. In contrast, Securitize, as a digital security issuance platform, has a broader service scope, including tokenization of private equity and fund shares. However, in U.S. bond yield products, Securitize partnered with BlackRock to issue the BUIDL Fund token (custodied through Coinbase), targeting institutions and affluent clients.

BUIDL and OUSG are similar in that they are both yield-bearing fund tokens, but their liquidity mechanisms differ: BUIDL usually only allows subscriptions and redemptions during specific U.S. business hours, while Ondo's OUSG provides round-the-clock instant minting services. In terms of DeFi integration, Ondo is clearly in the lead—its USDY and OUSG are available in over 80 multi-chain applications and support on-chain collateralized borrowing (Flux). On the other hand, Securitize focuses on facilitating trades through its own licensed trading system (ATS license) and has not deeply integrated into public DeFi protocols yet, although it is considered a critical underlying yield asset by numerous projects, including Ondo and Ethena.

Centrifuge's products are entirely different: its core is the Tinlake loan pool, packaging real-world assets like factoring receivables and real estate mortgages into tokenized equity sold as fixed-income assets. Investors take on higher risks for higher returns (often 5-10%+ annualized). These assets have longer terms and lower liquidity, relying on large institutions like MakerDAO to provide exit liquidity. Starting in 2021, MakerDAO included the Tinlake pool's senior bond tokens as RWA collateral, allowing asset originators to open a Maker Vault backed by the corresponding debt to borrow DAI at an agreed-upon interest rate. Accordingly, Centrifuge's governance token CFG is used more for on-chain staking and security rather than targeting daily retail and payment scenarios, positioning it as a more specialized track within RWA.

Polymesh is positioned as a specialized security token chain, facilitating institutions to issue various compliant tokens (such as stocks, bonds, fund shares, etc.) on it through built-in identity authentication and permission control. Polymesh has evolved from the original Polymath project, and its POLYX token is used for on-chain fees and governance. However, the actual asset issuance activities on the Polymesh network are currently limited, with a scale much smaller than the RWA activities on mainstream public chains like Ethereum. But now some heavyweight traditional institutions (such as WisdomTree) have chosen to cooperate with Ondo (issuing assets through Nexus and serving as a design advisor for the Ondo Chain) rather than building their own chains. In the long run, Ondo appears to have more promising prospects for business implementation.

2.3 Compliance and Regulatory Progress

In terms of compliance, each platform has adopted different strategies.

Ondo, through collaboration with regulated financial entities, follows the "registration exemption + overseas issuance" model. The so-called registration exemption means that the securities issued by institutions meet specific exemption clauses, such as not being open to the general U.S. public, thereby exempting them from conducting public sale registrations with the SEC to reduce compliance costs and improve issuance efficiency. OUSG in the U.S. is offered as a private placement only open to accredited investors, while USDY is issued through overseas entities for overseas issuance. Ondo's compliance team has a wealth of experience, with its Chief Compliance Officer and several executives coming from Wall Street institutions like Goldman Sachs, making them quite familiar with regulatory rules.

Securitize directly holds multiple U.S. financial licenses, including a Broker-Dealer and SEC-registered Transfer Agent, giving it more direct compliance authority when issuing digital securities. This enables it to legally provide services for large asset management schemes, such as tokenizing KKR fund shares, among other cases. Additionally, Securitize has partnered with several large banks to explore blockchain applications. In comparison, Ondo does not currently hold an SEC license directly but operates legally through a partner ecosystem (such as collaborations with the broker Clear Street and Coinbase custody). Globally, Ondo expands its market through regulatory arbitrage (not offering USDY to Americans), while Polymesh integrates compliance from the ground up (requiring each address to be tied to an identity). Centrifuge establishes offshore Special Purpose Vehicles (SPVs) to hold underlying assets and provides legal advice to tokenize receivables without violating securities laws.

Regulatory policy risk is a common challenge faced by all RWA platforms. If in the future the U.S. requires such tokens to be classified as public securities, both Ondo and Securitize would need to obtain more comprehensive licenses or alter their issuance methods.

However, at present, Ondo maintains good communication with regulatory agencies. For example, Ondo chose to establish a regulated subsidiary in the United States (such as Ondo I LP, etc.) and operate in compliance with existing rules. Its products, such as USDY, also emphasize daily transparency reports by independent third parties. This has to some extent reduced the risk of enforcement. In contrast, some attempts by decentralized RWA projects (such as selling RWA tokens to U.S. users without registration) are more likely to become the focus of regulatory crackdown.

2.4 Developmental Advantage of Ondo

Currently, Ondo's leading edge lies in the brand recognition brought by its extensive support from the traditional financial ecosystem. Through various product collaborations and public relations efforts, Ondo has "cleverly" gained an indirect endorsement from financial giants such as BlackRock, Morgan Stanley, and Fidelity. For example, Buidl issued by BlackRock is one of the underlying assets of OUSG. Although the two parties do not have direct cooperation, under extensive publicity, the market once regarded Ondo as the main "BlackRock concept coin"; top asset management companies such as Franklin Templeton and Wellington directly participate in the Ondo Nexus plan, contributing their U.S. Treasury products as part of the Ondo ecosystem. Even payment giants PayPal and card network Mastercard have cooperated with Ondo—PayPal's PYUSD stablecoin will be used for OUSG redemption, and Mastercard has invited Ondo to join its Multi-Token Network (MTN) pilot, integrating bank payment interfaces with on-chain settlement.

Although the depth of cooperation with these large institutions is not particularly deep, compared to other RWA projects, these collaboration cases have not only brought good advertising effects and brand accumulation to Ondo but also provided demonstration cases for more commercial cooperation in the future. Overall, Ondo, through "dual connections": connecting with traditional asset management giants upstream to obtain assets and brand reputation, and connecting with the crypto market downstream to acquire users and liquidity, aims to open the market faster than other projects.

3. Main Challenges and Risks

Although Ondo has made good progress, its business still faces various challenges and risks:

3.1 Intensifying Competition

Ondo's developmental advantage is more relative to other Web3 projects. Compared to projects truly backed by platform-type institutions (such as Securitize backed by BlackRock), Ondo's advantage is not significant. Currently, due to unclear regulatory rules, many large financial institutions have not fully entered the battlefield. The source assets of RWA are still the strengths of Tradfi giants. With such a large financial pie, they have sufficient motivation to build their own ecosystem to digest, rather than giving everything to emerging Web3 projects like Ondo.

3.2 Product Delivery and Implementation Capability

Ondo's core protocols such as Global Markets and Ondo Chain have not been officially delivered yet. Currently, its products are primarily asset-based, and its lending protocol is a fork from Compound V2, relatively simple. In the future, after the core product delivery, it remains doubtful whether Ondo can withstand scrutiny in multiple dimensions such as product, operations, and compliance.

3.3 Regulatory Compliance Uncertainty

Although the current U.S. administration is the most crypto-friendly, there has been no formal cryptocurrency regulation legislation passed to date (the recent stablecoin GENIUS Act was rejected, reflecting the current situation). Furthermore, the midterm elections in 2026 are approaching, and whether the Republican party can maintain its advantage in both houses post-election remains unknown. If regulatory bills regarding asset tokenization cannot be passed before the midterm elections, progress afterward will be even more challenging, significantly increasing uncertainty.

3.4 Token Risk

1. The current circulation rate of the Ondo token is only about 34%, facing a high inflation rate of up to 64% in the coming year, posing a significant selling pressure risk; 2. The token's value capture mechanism is unclear, as the current ONDO token mainly grants governance rights without a clear fee-sharing or buyback and burn mechanism.

4. Valuation Reference

ONDO's total token supply is 10 billion, with approximately 3.16 billion tokens currently in circulation, accounting for around 31.6% of the total supply. Based on today's price (25.5.11), Ondo's circulating market cap is approximately $32.7 billion, while its fully diluted valuation (FDV) is around $103 billion. Among similar asset token projects, ONDO's circulating market cap and FDV are both significantly higher than other projects.

From a relative valuation perspective, the market cap ratio of ONDO/CFG is about 40x, while the Ondo TVL/CFG TVL ratio is about 2.7x. This indicates that ONDO's price has already priced in optimistic expectations for future expansion to a large extent, potentially overspreading the future upward price movement and making the market cap very fragile against various risk factors. From a fundamental analysis perspective, the current valuation of the ONDO token still appears to be very high.

Starting from Ondo's current static state: with a $32.7 billion market cap, assuming Ondo's platform annual revenue mainly comes from management fees and spreads of USDY and OUSG (estimated based on an asset size of $1 billion, an average yield of 5%, and a fee rate of 0.3-0.5%), totaling about $3-5 million annually, plus miscellaneous income from Flux, the total estimated annual revenue is less than $10 million. The static price-to-earnings ratio (P/E) calculated based on the market cap would far exceed 300 times, with the FDV being over a thousand times, indicating it seems very expensive based on traditional valuation methods, even without a clear token value capture mechanism for the ONDO token.

The current high valuation of the ONDO token reflects the market's extremely optimistic growth premium on Ondo for the next few years: If Ondo can expand to a $10B+ TVL within 2-3 years (as the official "Next Stop: $10B" target suggests) and successfully extend its business to areas such as equities, either by increasing revenue scale or by an order of magnitude, the current valuation will be somewhat digested. The high valuation of Ondo also comes from its grand narrative of "Wall Street 2.0 on-chain"; if the Ondo Chain develops smoothly, Ondo will enjoy the valuation level of a public chain, and a market cap of several tens of billions of dollars, with a FDV of over 100 billion, would not seem so exaggerated.

Of course, considering the many challenges and risks mentioned in the "Challenges and Risks" section, reaching this stage of a project requires a great deal of effort and luck, as well as a favorable market environment, with significant uncertainty.

Key Events to Watch for in the Future

The following events and data will directly impact the project's prospects, have a relatively direct impact on token prices, and require focused attention:

1. Project Progress: Deployment and launch of the Ondo Chain mainnet and testnet Testing and launch of Ondo Global Markets Introducing and issuing more new categories of RWA assets Bringing in more institutional-level partners and deepening the current relatively shallow cooperation with large financial institutions Continued growth in asset size

2. External Environment Changes: Legislative progress of the U.S. Asset Tokenization Act SEC's regulatory stance on asset tokenization, whether it clearly defines "sandbox-style regulation," meaning proactive exploration of businesses before legislation Whether traditional TradFi giants personally enter the game to build their products and platforms, and whether the blue ocean rapidly turns red

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