How do new products enhance their long-term defense capabilities?

Last week, the U.S. Securities and Exchange Commission (SEC) concluded its investigation into Ondo Finance. The main purpose of this investigation was to determine whether Ondo’s tokenized real-world asset products, such as OUSG (Ondo Short-Term U.S. Government Bonds Fund), complied with relevant regulations.

The SEC decided not to take any action and thus concluded the investigation, which brought significant clarity regarding Ondo’s regulatory status. Ondo is already a major player in the field of tokenized real-world assets. Its tokenized assets total approximately $1.8 billion, of which $1.5 billion consists of tokenized government bonds. This makes Ondo the second-largest issuer after Securitize, which has $1.9 billion in assets.

The dismissal of these charges effectively legitimizes Ondo and its assets in the eyes of institutional investors.

Ondo was one of the first companies to launch blockchain-based tokenized money market funds in January 2023. Their flagship product, OUSG, allows U.S. institutional investors to obtain similar returns as those achieved through money market funds on the blockchain. Like any tokenized asset, Ondo eliminates the complexities associated with settlement and ownership issues.

However, it’s well-known that the field of tokenized money market funds is dominated by traditional financial giants like Franklin Templeton and BlackRock’s BUIDL. In a market dominated by established companies like these, Ondo needs to have strong defenses.

The question is: How can this be achieved? We will discuss this issue in today’s report.

在推出OUSG近两个季度后，Ondo于2023年8月推出了USDY(Ondo美元收益代币)。此次推出旨在通过监管多元化来构筑护城河。

OUSG面向全球机构客户(包括美国客户)，而USDY则是一种面向非美国个人和机构投资者的收益型代币。这种国际通用的收益型代币拥有超过1.6万名持有者，相比之下，富兰克林邓普顿的USYC和Circle的USYC(另外两种国际通用的收益型代币)分别只有1000名和100名持有者。

然而，这仍然是一个竞争激烈的市场。富兰克林邓普顿的资产规模为8.2亿美元，USYC的资产规模为13.5亿美元，而USDY的资产规模仅为7亿美元。尽管USDY是一款具有竞争力的产品，但其护城河似乎尚未形成。

近期推出的产品表明，该公司急于构建自身竞争壁垒，并加倍发挥自身优势。与其参与竞争，该团队似乎更倾向于开拓新的增长途径，以确保在尚未开发的市场中占据更大的份额，而不是从竞争对手手中分一杯羹。

Ondo的两项新举措包括Nexus和Global Markets。

Nexus于2025年2月推出，旨在为代币化国库券的第三方发行方提供即时流动性。通过Nexus，Ondo进一步强化了其OUSG基础设施的创新部分。

Currently, if users hold tokens issued by Company A, the redemption process may be slow or restricted, and conversion is generally not available around the clock. With Nexus, tokens issued by all partners can be redeemed and exchanged instantly, thereby enhancing the versatility of this asset class (i.e., its ability to be used in other DeFi protocols). According to predictions from Boston Consulting Group (BCG), by 2030, the market size is expected to grow to a staggering $600 billion. Ondo thus opens up opportunities for partnerships with customers and institutions that prefer to invest in yield tokens supported by money market funds.

The second product designed to enhance defense capabilities is called Global Markets. This project, along with Nexus, will be launched in February 2025. Its goal is to tokenize stock markets and integrate these tokens onto the blockchain, making them accessible to investors worldwide, beyond the United States. Global Markets provides Ondo with a way to enter an emerging and growing market segment, where there are only two competitors currently.

Over the past three months, Ondo has launched approximately 103 stocks, ETFs, and indices on the blockchain. The total locked value of these tokens amounts to $355 million, which represents about 30% of the total value of the tokenized stock market.

If tokenized stocks account for 1% of the global stock market by 2030, their market value could reach $1.3 trillion. It seems like Ondo is actively working to seize this opportunity. With its first-mover advantage and the RWA ecosystem that supports distribution, it might have a chance of success.

We have already discussed two types of defense mechanisms. Ondo has another secret weapon at its disposal. The company has established a $250 million fund called Catalyst, supported by Pantera Capital. This fund is designed to support RWA projects built within the Ondo ecosystem. In turn, these investments can help promote the use of Ondo’s infrastructure engine, which primarily includes the Ondo RWA chain and the Nexus project.

Ondo offers a wide range of products, but they all share one common goal: to bring traditional financial services onto the blockchain and make them accessible worldwide. Currently, the total value of tokenized assets on the Ondo chain exceeds $1.8 billion, and its applications have been tested within the ecosystem. However, if Ondo wants to compete with traditional financial giants like BlackRock, Franklin Templeton, or Robinhood, it must develop strong advantages in terms of products and distribution channels.

Although Nexus occupies a favorable strategic position in this growing market, its success depends on which customers and partners the company can attract. So far, we haven’t seen any significant customers or partners yet. I believe this situation will change once approval from the U.S. Securities and Exchange Commission is obtained.

As for global markets and tokenized stocks, the current early momentum seems strong. If the team can maintain this momentum, it could become their most profitable project.

However, tokenized stocks are still in the early stages of development. How these tokens are linked to the actual value of stocks, and how the settlement mechanisms work, are questions that I have been pondering recently. If I learn more about this, I will report back in time.

Until then, please keep an eye on the trends in the US financial sector on the blockchain. It’s a huge trend, and its momentum is expected to increase as it progresses.

You’d better get on board quickly, otherwise it might fall down.