Ondo Finance Plans Layer-1 Blockchain for Tokenized Real-World Assets

Ondo Chain was crafted to meet institutional compliance standards while maintaining the transparency and accessibility of public blockchains like Ethereum

Ondo Finance, the second-largest tokenized Treasuries issuer, announced Thursday the launch of its layer-1 blockchain designed for tokenized real-world assets (RWAs) in a bid to connect traditional capital markets with decentralized finance (DeFi).

Ondo Chain was built to meet institutional compliance standards while maintaining the transparency and accessibility of public blockchains, the company said in a statement at its inaugural Ondo Summit.

The network will rely on permissioned validators to verify transactions and ensure accurate financial data, such as asset prices and token backing. It will also support staking of tokenized RWAs and native bridging between blockchains for interoperability.

“Financial markets are overdue for an upgrade,” CEO Nathan Allman said in the statement. “We’re creating an ecosystem that bridges the best of traditional finance with blockchain technology.”

The native token of the ecosystem, ONDO, saw volatile swings following the announcement. The token dipped 1.5%, then rallied 3.5% higher and later erased the gains.

“We really set out to build something that could combine the best of both traditional finance with its incredible deep liquidity and investor protections with all the benefits of DeFi (decentralized finance) with its open access and innovation and new primitives,” Ian De Bode, chief strategy officer at Ondo, said during a presentation at the summit in New York City.

“However, as we set out on this mission, we realized that the necessary conditions to really bring together really did not exist. The infrastructure to bring these two together really was not present.”

The announcement comes a day after Ondo unveiled a tokenization platform that helps place stocks, bonds and funds on blockchain rails.

Allman said that he believes that with a new administration in place, it could take two to three years to achieve meaningful adoption for tokenized RWAs.

Tokenization, or the creation of digital tokens that represent ownership of traditional assets on a blockchain, is gaining traction globally. Institutions and even governments are increasingly exploring the process in pursuit of operational efficiency gains like speedier settlements and broader investor accessibility.

The tokenized RWA market could grow to trillions of dollars through this decade, according to projections from McKinsey, BCG, 21Shares and Bernstein.

Several influential leaders in the financial world have recently touted tokenized RWAs as the next frontier of financial innovation.

BlackRock CEO Larry Fink said bonds and stocks will be traded on blockchain rails in the future and urged U.S. regulators and policymakers to create rules for security tokens. Digital brokerage Robinhood co-founder and CEO Vlad Tenev said tokenization could democratize access to private equity investment, which is currently limited to accredited investors and wealthy individuals, and proposed rule changes to unlock tokenized asset investments for retail investors.

Ondo Finance is the second largest issuer of tokenized U.S. Treasuries offerings, according to data from rwa.xyz. The protocol’s U.S. Dollar Yield (USDY) and Short-Term US Government Bond (OUSG) tokens stand at $385 million and $268 million market capitalization, respectively.