The Next Wave of Blockchain: The Deep Integration of RWA and Decentralized Finance

The RWA sector is leading the transformation of Blockchain from technology to assets, facilitating an unprecedented convergence between on-chain ecosystems and traditional wealth. Currently, RWA has risen to become the seventh largest category in Decentralized Finance (DeFi), with a total locked value exceeding $12 billion.

U.S. Treasury bonds are the most liquid financial assets in the world, with a daily average trading volume reaching several trillion dollars year-round. They are backed by the credit of the U.S. government and are regarded as a model of zero default risk. Their yields represent the risk-free rate, providing a reliable anchor for the pricing of various assets and risk management.

The combination of RWA and U.S. Treasury bonds has become the best paradigm for off-chain assets to move towards on-chain innovation. Tokenized Treasury bonds not only inherit the core advantages of U.S. Treasuries but also incorporate the transparency, efficiency, and composability of DeFi. Boston Consulting Group predicts that by 2030, the global market size for the tokenization of non-liquid assets will exceed $16 trillion. As of May 2025, the market value of tokenized Treasury bonds has increased from $1.39 billion a year ago to $6.89 billion.

Ondo Finance occupies about 25% of the tokenized U.S. Treasury market through its two major products, USDY and OUSG. Its overall TVL has increased from $1 billion to nearly $1.2 billion within two months.

Against the backdrop of global inflation retreating and interest rate divergence, investors' demand for stable and highly liquid assets is rising, leading to the emergence of tokenized government bonds. Ondo Finance continues to lead with innovation; where does its core advantage come from? How will it bridge the last mile between the crypto world and Wall Street? Next, we will conduct an in-depth analysis.

Overview of Ondo Finance

Ondo Finance has launched three tokenized U.S. Treasury and bond products: OUSG, OSTB, and OHYG, through ETFs managed by institutions such as BlackRock and PIMCO. Its market share is approximately 20%, with a market value of over $120 million for the Treasury products, and a management fee of 0.15%.

The two core products currently are USDY and OUSG:

USDY

USDY is an interest-bearing stablecoin backed by short-term US Treasury bonds and bank deposits. Holders automatically earn interest without any additional operations. It is primarily aimed at institutions and accredited investors outside the United States and can be minted and redeemed daily at net asset value, with a transfer lock-up period of 40-50 days after the first minting. The current annualized yield is approximately 5.2%.

OUSG

OUSG is a transferable on-chain fund that primarily invests in short-term US Treasury bond funds. Managed by Ondo Capital Management, the on-chain price Oracle is updated daily. The management fee is an annualized 0.15%, with no performance fee. The APY is calculated based on the changes in net value over 30 days and is updated once every business day.

Key Mechanism

Flux Finance

Flux Finance has built a collaborative transmission path for the industrial chain:

• Technical Foundation: Utilizing Layer2 networks and Stellar cross-border settlement to bring traditional asset liquidity into a multi-chain environment.
• Upstream: Underlying yield support provided by institutions such as BlackRock, tokenized through USDY and OUSG.
• Midstream: Users can deposit stablecoins to obtain USDY or exchange for OUSG through Flux Fund. OUSG can be used as high-quality collateral in the Flux Lend phase.
• Downstream: The released RWA liquidity transmits value throughout the Web3 ecosystem.

Ondo Chain

Ondo Chain is a blockchain network designed specifically for RWA, situated between permissioned chains and public chains. Its core components include:

• Native support for real assets
• Permission verification mechanism
• Ondo Bridge Cross-Chain Tool
• Mandatory KYC process

Ondo Global Markets

Ondo GM is a tokenization platform that puts traditional financial assets on the Blockchain. Its key components include:

• Ondo Chain underlying infrastructure
• Ondo Bridge cross-chain feature
• Collaborate with traditional financial institutions

Ondo GM simplifies traditional financial processes, allowing small investors to participate in advanced financial strategies.

Comparison and Summary of Mechanisms

Ondo Finance links traditional finance and the crypto world through three major mechanisms:

1. Ondo Chain provides native support and compliance verification for high-grade assets.
2. Ondo GM aggregates retail funds into a unified collateral pool.
3. The fToken mechanism of Flux Finance realizes a closed loop of "deposit earns interest, borrowing incurs interest."

These mechanisms make Ondo Finance a hub for the on-chain representation of real assets, bridging the traditional financial entry point with the cryptocurrency market exit. It is initiating an unprecedented liquidity revolution, with the potential to unlock a $16 trillion blue ocean market.

Highlights Summary

1. RWA empowers the on-chain ecosystem: introducing the "risk-free interest rate" benchmark
2. The three major mechanisms work together to release liquidity
3. Retail users and institutions participate in parallel
4. Supports 24/7 instant trading and settlement
5. 1.6 trillion blue ocean market pioneer

Ondo Finance is paving the way for the digitalization of real assets through the deep integration of traditional financial assets and on-chain innovations, creating infinite incremental space.