Behind the explosive growth of Ondo Finance, BlackRock and Morgan Stanley enter the RWA track

Author: Mia, ChainCatcher

Editor: Marco, ChainCatcher

Recently, the proposal for unlocking ONDO tokens by the RWA protocol Ondo Finance's related organization, the Ondo Foundation, was voted through. The ONDO token officially entered the circulation era on January 18, and at the same time, Coinbase added Ondo Finance (ONDO) to its asset roadmap, with Binance quickly following suit by launching ONDO 1-50x USDT perpetual contracts.
According to data from CoinGecko, the ONDO token has surged over 300% since its launch on the 18th. In less than a week, ONDO has swept the entire crypto community with its impressive gains, becoming a hot topic of discussion in the X platform crypto community.

However, following the unlocking and surge, allegations of the project team actively dumping tokens have begun to spark controversy. On-chain analyst @ai_9684xtpa revealed that since the listing of ONDO, its team has allegedly sold a total of 60 million ONDO tokens. Currently, two addresses still hold 106 million tokens, accounting for 7.79% of the total circulating supply. Despite the massive sell-off, the price of ONDO has remained relatively stable, hovering around $0.25. The stability in price can be attributed to the appeal of the RWA wave behind ONDO to capital.

Ondo Finance and Its Traditional Financial Giants

Even before the announcement of the token unlocking proposal, Ondo Finance had already announced a community loyalty points program and plans to collaborate with Mantle and Solana to bring USDY to its blockchain. Following the announcement of the token unlocking, Ondo Finance once again announced on the 23rd that it would expand its business to the Asia-Pacific region, opening its first office in Hong Kong. Subsequently, it published an ecosystem directory on its official website, disclosing partnerships in liquidity, custody, and other key areas, including traditional financial giants such as Morgan Stanley, BlackRock, Ankura Trust, Clear Street, and NAV Consulting in the asset management trust sector.

From its inception, Ondo Finance has received support from institutions like BlackRock and Morgan Stanley, as well as investments from top venture capital firms including Founders Fund, Pantera Capital, and Coinbase Ventures.

Crypto analyst McKenna publicly stated on social media that he is optimistic about Ondo Finance as a "future blue-chip RWA asset," noting that "Ondo Finance has tokenized BlackRock's iShares ETFs as a short-term U.S. Treasury fund and has innovated in cash equivalents supported by stablecoins."

In March of last year, BlackRock CEO Larry Fink stated in his annual letter to BlackRock shareholders, "BlackRock will continue to explore the digital asset ecosystem, particularly in areas most relevant to our clients, such as permissioned blockchains and the tokenization of stocks and bonds." BlackRock's bet on Ondo undoubtedly provides an opportunity for its entry into the RWA space.

Currently, Ondo Finance has tokenized BlackRock's short-term U.S. Treasury ETF: iShares Short Treasury Bond ETF (NASDAQ: SHV), creating the OUSG (U.S. Treasury) product, which is also a major contributor to Ondo Finance's TVL. The current price of OUSG is $104.66, with an annualized yield of 4.69%, supporting purchases on Ethereum, Polygon, and Solana. As the issuer of the ETF, BlackRock will charge a 0.15% ETF management fee, while OUSG will be responsible for a 0.15% fund management fee. This undoubtedly becomes a successful case of traditional finance entering the RWA space, as BlackRock CEO Larry Fink stated, "The next generation of markets, the next generation of securities, will be the tokenization of securities." Currently, with OUSG as a breakthrough, BlackRock has taken the first step toward asset tokenization.

Financial Giants Compete to Enter RWA, Potentially Opening a Golden Era for Blockchain and Traditional Finance

Perhaps in the future, Ondo will become a "blue-chip stock" in RWA. This is not the first time traditional finance has ventured into the realm of tokenization of real-world assets (RWA). "Tokenizing all real assets to create liquidity for today's illiquid things" has always been the highest vision of developers in the crypto space for the future.

An argument increasingly shared between the cryptocurrency and traditional finance sectors is that the tokenization of real-world assets (RWA) will become the pillar of the next bull market, releasing trillions of dollars of real assets into the cryptocurrency space.

Boston Consulting Group has predicted that "the tokenized asset market could surge to $16 trillion by 2030"; while Citigroup has stated that "by 2030, there will be $4 trillion to $5 trillion in tokenized digital securities, and the trade finance transaction volume based on distributed ledger technology will reach $1 trillion."

The tokenization of real-world assets (RWA) is also developing in areas such as bonds, cars, gold, and real estate, successfully attracting the interest and attention of traditional financial giants.

As early as 2021, investment fund giant Franklin Templeton took the lead in RWA experimentation by launching the Franklin OnChain U.S. Treasury tokenized fund on Stellar, and expanded to Polygon in 2023. This fund is the first U.S. registered mutual fund to use a public blockchain to process transactions and record share ownership, with Stellar providing fast, low-cost transactions and handling asset issuance and exchange in a decentralized manner.

RWA tokenization is ushering in a new golden era for blockchain and traditional finance. To date, RWA has formed a landscape where multiple institutions are advancing simultaneously, with traditional financial giants including JPMorgan, Goldman Sachs, BlackRock, and Fidelity all embarking on the exploration of RWA.

In November 2020, JPMorgan launched its blockchain-based enterprise platform Onyx Digital Assets, aiming to tokenize ownership rights of money market fund (MMF) shares through a tokenized collateral network (TCN), allowing asset management companies and institutional investors to pledge or transfer MMF shares as collateral. Subsequently, in October 2022, JPMorgan achieved tokenized U.S. dollar deposits on the Quorum blockchain through JPM Coin.

Goldman Sachs launched its digital asset platform GS DAP last January. It is reported that this platform is developed based on Digital Asset's Daml smart contract language and privacy blockchain Canton, ensuring that data is shared only with qualified stakeholders through its privacy protocol while supporting the scalability needed for globally connected assets.

Fidelity faced obstacles in opening Bitcoin accounts in its 401(k) plans last year and is currently still in a wait-and-see mode in the RWA space.

Currently, Ondo's short-term U.S. Treasury fund (OUSG) has a market value of $111.5 million, second only to Franklin Templeton's Franklin OnChain U.S. Treasury fund and Mountain Protocol's Mountain Protocol USD (USDM), which have market values of $325.5 million and $151.1 million, respectively.