The Next Wave in the Blockchain World: The Integration of RWA and DeFi

With the development of Blockchain technology, the industry's focus has shifted from pure performance and throughput to how to deeply integrate real-world assets with Decentralized Finance. The RWA track is leading this transformation from technology to assets, enabling an unprecedented convergence between on-chain ecology and traditional finance. Currently, RWA has become the seventh category of DeFi, with a total locked value exceeding 12 billion USD.

U.S. Treasury bonds, as the most liquid financial assets globally, their zero default risk and benchmark yield characteristics make them the most ideal entry point into the RWA sector. Tokenized Treasury bonds not only inherit the core advantages of U.S. bonds but also incorporate the transparency, efficiency, and composability of DeFi, creating a revolutionary investment tool. It is expected that by 2030, the global tokenized market size for non-liquid assets will exceed $16 trillion. As of May 2025, the market value of tokenized Treasury bonds has surged from about $1.39 billion a year ago to $6.89 billion.

Against this backdrop, Ondo Finance has captured about 25% of the tokenized U.S. Treasury market with its flagship products USDY and OUSG. Its TVL has also grown from $1 billion to nearly $1.2 billion in just two months. So, how has Ondo Finance continued to lead through innovation? Where does its core advantage come from? How will it bridge the last mile between the crypto world and traditional finance in the future?

Ondo Finance Project Overview

Ondo Finance has launched three tokenized U.S. Treasury and bond products in collaboration with asset management giants like BlackRock and PIMCO.

• US Government Bond Fund ( OUSG )
• Short-term investment-grade bond fund ( OSTB )
• High Yield Corporate Bond Fund ( OHYG )

Currently, Ondo Finance holds about 20% of the tokenized treasury bond market, with a market value of treasury bond products reaching $122 million and a management fee of 0.15%.

Core Products

USDY(US Dollar Yield Token)

USDY is an interest-bearing stablecoin supported by short-term US Treasury bonds and bank demand deposits. Holders automatically earn interest on the underlying assets without any additional actions.

Main Features:

• Targeting institutions and qualified investors outside the United States
• Can be minted and redeemed daily at a net value of ($1 USDY≈$1 USD)
• There is a transfer lock-up period of 40-50 days after the first minting.
• The current annualized yield is approximately 5.2%

OUSG(Ondo Short-Term US Government Treasuries Fund)

OUSG is a transferable on-chain fund that provides exposure to its holders by investing in short-term US Treasury bonds.

Main features:

• The underlying assets primarily invest in short-term U.S. Treasury bond funds from institutions like BlackRock.
• Managed by Ondo Capital Management
• Daily updates on on-chain price Oracle, supporting 24/7 instant investment and redemption.
• Management fee 0.15%, no subscription fee and redemption fee

The key mechanism to connect the "last mile"

Flux Finance

Flux Finance has built a collaborative transmission path for the industrial chain, bringing the liquidity of traditional assets into a multi-chain environment.

Technical Foundation

• Leveraging Layer 2 networks like Arbitrum and Mantle along with Stellar's cross-border settlement capabilities
• Promote the trading and liquidity provision of stablecoins and RWA tokens in DEX or AMM pools.
• Ondo Chain provides a native compliance verification network supporting RWA.
• Ondo Global Markets builds an on-chain custody and cross-chain trading platform

Upstream: Issuer and Management End

• Traditional Finance: Supported by underlying returns provided by institutions such as BlackRock through ETFs.
• On-chain Finance: Funds flow in the form of USDC, bringing risk-free interest rates on-chain through the minting of USDY and OUSG.

Inbound: Value-Added Mechanism

• Fund: Users can deposit stablecoins to obtain USDY or exchange for OUSG through Flux Fund.
• Lend: OUSG becomes the only quality collateral that can be pledged, achieving refinancing and leverage utilization of yield certificates.

Downstream: Value Transmission Mechanism

• Convey value to the entire Web3 ecosystem, providing stable low-cost capital for emerging sectors such as DeFi protocols.
• Continuously optimize governance and compliance frameworks, introducing mechanisms such as multi-signature custody and off-chain auditing.

Ondo Chain

Ondo Chain is a blockchain network designed specifically for RWA, positioned to serve as the underlying infrastructure for institutional-level financial markets.

Core Components

• Native support for real assets
• The "permissioned model" in the verification mechanism
• Ondo Bridge Cross-Chain Tool
• Mandatory KYC process

Potential Defects

• The permission verification mechanism may lead to an increase in centralization.
• Further verification is needed in terms of security.

Ondo Global Markets

Ondo Global Markets is a tokenization platform aimed at putting traditional financial assets on the Blockchain, providing around-the-clock on-chain trading channels.

Key Part

• Ondo Chain as the underlying infrastructure
• Ondo Bridge enables cross-chain asset transfers
• Collaborate with the ecosystem of traditional financial institutions

Advantages

• Provide ordinary investors with the opportunity to participate in advanced financial strategies
• Simplify traditional financial processes and improve efficiency

potential defects

• Not yet fully integrated with traditional finance
• Weigh the risks and rewards to ensure system stability.

Comparison and Summary of Mechanisms

Ondo Finance connects traditional finance and the crypto world through three key mechanisms:

1. Ondo Chain provides native support and compliance verification.
2. Ondo Global Markets aggregates a unified collateral pool across institutions
3. The fToken mechanism of Flux Finance realizes a closed loop of "deposit earns interest, borrow pays interest".

These mechanisms work together to make Ondo Finance the central hub for the on-chain representation of real assets, bridging the gap between traditional financial entry points and the crypto market exit. In the future, Ondo Finance is expected to continue leading the RWA market explosion in the $16 trillion blue ocean.

Highlights Summary

1. RWA empowers the on-chain ecosystem: introducing a "risk-free interest rate" benchmark to promote RWA as an important sector of Decentralized Finance.

2. Three major mechanisms work together to release liquidity: bridging the "last mile" between traditional finance and the crypto world.

3. Small users and institutions in parallel: breaking down high threshold barriers to meet different levels of demand.

4. Instant, round-the-clock trading and clearing: Build an efficient and transparent on-chain financial infrastructure

5. A pioneer in the 16 trillion blue ocean: deeply integrating traditional assets and on-chain innovations to attract a new wave of capital influx.