TI Research: In-depth analysis of Ondo Finance

Author: TI Research Source: tokeninsight Translation: Shan Ouba, Jinse Finance

Ondo Finance has rapidly risen to become a leading force in the RWA ecosystem, pioneering a multi-layered strategy to connect traditional finance with on-chain capital markets. In the following sections, we will delve into Ondo's business model, product architecture, and strategic positioning to understand how this project is shaping the future of on-chain financial infrastructure.

Key Takeaways

1. Ecosystem Expansion Prioritizes Profitability Ondo's primary goal is ecosystem growth, not immediate profitability.

2. Assets Under Management and Coverage are Strategic Priorities The project's core strategy emphasizes the expansion of assets under management (AUM) and ecosystem penetration, rather than short-term profitability.

2. Assets Under Management and Coverage are Strategic Focuses The project's core strategy emphasizes the expansion of assets under management (AUM) and ecosystem penetration, rather than short-term profitability. Ondo's goal is to establish dominance in the on-chain risk-weighted asset (RWA) market by expanding product coverage and increasing liquidity depth, rather than optimizing current yields. 3. A Clear Long-Term RWA Roadmap Ondo follows a structured, phased roadmap for RWA product evolution, gradually transitioning from highly liquid assets (stablecoins) to highly utility assets (sovereign bonds, stocks, ETFs). This reflects its full-stack infrastructure vision, evolving from stablecoins to tokenized government bonds, and ultimately to tokenized securities. It's worth noting that Ondo's model focuses on primary market issuance rather than secondary market trading. 4. Distribution Channels Remain a Structural Weakness Despite product maturity, USDY's liquidity and trading volume remain limited, indicating low retail participation and an unclear target customer base. This highlights that distribution and channel development are Ondo's most pressing bottlenecks. 5. Token Unlocking Risk: A large-scale token unlocking event expected in early 2026 could bring selling pressure. Lacking sustainable cash flow, Ondo may become increasingly reliant on token sales to sustain operations. 6. Macroeconomic Yields: The ongoing global interest rate cut cycle is compressing risk-weighted asset yields, putting pressure on government-backed stablecoins. In the short to medium term, Ondo must leverage its Global Markets (GM) products to maintain growth momentum and offset declining fixed-income returns. Ondo's Business Lines, Model, and Revenue: Ondo operates multiple product lines, each targeting different tiers of the RWA value chain, evolving from highly liquid, low-risk assets to complex tokenized securities and financial infrastructure products. The roadmap follows a clear logic of expansion from "liquidity to utility," proceeding sequentially from stablecoins → tokenized government bonds → tokenized stocks/ETFs → multi-chain settlement infrastructure. The company views stablecoins as a proof-of-concept for the availability of on-chain assets, demonstrating that blockchain-based settlements can operate at scale. However, more complex financial instruments, such as government bonds, ETFs, and stocks, are expected to deliver more significant efficiency gains and improved user experience. Within this framework, stablecoins serve as an entry point for liquidity bootstrapping and user registration, while tokenized government bonds act as a bridge to fully on-chain securities. The next phase of development focuses on the tokenization of highly liquid stocks, directly connecting traditional market makers and brokers to the blockchain network. By enabling 24/7 issuance/redemption operations and 24/7 secondary market trading, Ondo aims to make stocks and ETFs composable components of the DeFi ecosystem, thereby significantly expanding the asset range and extending the trading hours of on-chain finance. To truly realize the usability of these securities, complementary financial protocols, such as lending, repurchase agreements, derivatives, and collateral frameworks, must be developed in parallel. Ondo's lending platform, Flux Finance, has demonstrated that tokenized securities can serve as collateral in DeFi, enabling recyclable liquidity. As one of the pioneers in the RWA field, Ondo's multi-tiered product evolution model provides a representative blueprint for how real-world asset projects can expand across product verticals. Through this framework, investors can better understand Ondo's operating model, growth trajectory, and strategic differentiation advantages, thus gaining a replicable perspective to analyze the broader RWA market landscape. USDY – A Yield Stablecoin USDY is a yield stablecoin backed by bank deposits and short-term U.S. Treasury bonds. While its primary issuance is limited to KYC-verified investors, secondary market trading is permissionless, ensuring its widespread adoption in the DeFi space. Ondo generates revenue through the yield of its underlying assets, distributing the majority of the yield to holders while retaining a small interest rate spread and charging a 20 basis point redemption fee as its primary source of income.

DeFi integration: Flux Finance

Roadmap and Strategic Milestones

Ondo's development trajectory reflects a methodical expansion strategy supported by continuous institutional investment and technological advancements.

Short- and medium-term outlook