Real-World Assets (RWA) are currently one of the most discussed topics in the blockchain space. From events like the Hong Kong Web3 Festival to conversations among legal professionals, RWA continues to attract significant attention—and for good reason. It offers a structured and secure method for tokenizing tangible assets.
While discussions often focus on emerging RWA projects in Asia, it's essential to look toward pioneering models in the United States for deeper insights. One standout example is Ondo Finance, especially after recent reports of engagement with the U.S. Securities and Exchange Commission (SEC) to explore compliant tokenized securities offerings.
This article breaks down Ondo's RWA model and examines what makes it a reference point for合规 asset tokenization.
How Ondo Finance's RWA Model Works
Ondo Finance has earned its reputation as an RWA leader by moving beyond theoretical discussions to practical implementation. While many projects are still exploring which real-world assets to tokenize, Ondo has already tokenized U.S. Treasury bonds and money market funds, integrating them with decentralized finance (DeFi) mechanisms.
A prime example is USDY (Ondo US Dollar Yield Token), which is backed by short-term U.S. Treasuries and bank deposits. This design offers two major advantages:
- Yield Generation: USDY functions as a yield-bearing stablecoin, allowing holders to earn daily returns based on underlying asset performance.
- Transparency and Safety: The asset custody, auditing, and distribution mechanisms adhere to traditional financial compliance standards.
Moreover, USDY uses a bankruptcy-remote structure, meaning the reserve assets are held separately from the issuer. In extreme scenarios, investors retain priority claim over these reserves. Ondo has also launched OUSG, a token tied to short-term U.S. Treasury ETFs, applying a similar logic.
In essence, Ondo brings traditional financial products like yield-bearing instruments onto the blockchain while preserving their safety and收益 attributes—and adding on-chain liquidity.
But tokenization is only the first step. To enhance utility, Ondo introduced Flux Finance, a lending protocol designed specifically for RWAs.
Unlike permissionless lending platforms like Compound or Aave, Flux requires users to undergo compliance checks before using tokens like OUSG as collateral to borrow stablecoins. This permissioned approach ensures that all activity remains within regulatory boundaries—a necessary adaptation for dealing with security-like assets.
Ondo didn’t stop there. It also launched Ondo Chain, a dedicated blockchain for RWA applications, with the following features:
- Permissioned validators, including established institutions like Franklin Templeton;
- An open application layer for developers to build dApps and issue tokens;
- Native oracle and cross-chain bridge support for real-time data.
This infrastructure balances institutional-grade security with the flexibility of decentralized ecosystems.
Most recently, Ondo announced Ondo Global Markets (Ondo GM), an initiative aimed at standardizing the issuance of compliant RWA tokens. The project initially followed a traditional broker-directed model but has evolved into a more flexible framework where tokens can circulate freely while embedding compliance at the distribution level.
👉 Explore compliant tokenization frameworks
In summary, Ondo has built an integrated system covering asset tokenization, liquidity, lending, and blockchain infrastructure—setting a benchmark for the entire industry.
Ondo’s Impact on the U.S. RWA Market
Ondo’s approach offers valuable lessons on both market innovation and regulatory compliance.
Market Innovation
Many still see RWA simply as a way to raise capital through tokenization. However, the real value lies in enhancing liquidity and utility for existing high-quality assets. Unlike traditional avenues such as ABS or REITs, tokenization allows for programmable functionality and broader use cases.
Ondo enables a 24/7 financial market where assets can be minted, traded, and redeemed at any time—breaking free from traditional trading hours and limited platforms.
More importantly, by integrating with DeFi applications, these tokenized assets can be used in lending, yield farming, derivatives, and other advanced strategies. This transforms passive assets into active instruments with compounded utility.
Regulatory Compliance
Surviving and growing in a strict regulatory environment like the U.S. requires careful strategy. Ondo adopted a two-tier approach:
- Restricted U.S. Access: Many of Ondo’s products are not available to U.S.-based users, avoiding direct confrontation with regulators.
- High Compliance Standards: Despite focusing on non-U.S. markets, Ondo maintains strict adherence to U.S. regulations in areas like asset custody (using licensed trusts like Ankura Trust), auditing, and investor protection.
At the same time, Ondo is actively collaborating U.S. legal experts and engaging in dialogue with the SEC. Recent proposals include wrapped security tokens with embedded compliance features—aiming to align with exemptions under existing securities laws.
This balanced tactic allows Ondo to grow safely in global markets while gradually navigating the complexities of U.S. regulations.
Frequently Asked Questions
What does RWA mean?
RWA stands for Real-World Asset tokenization. It refers to the process of representing physical or traditional financial assets—like real estate, bonds, or commodities—as digital tokens on a blockchain.
How does Ondo Finance ensure the safety of tokenized assets?
Ondo uses regulated third-party custodians, conducts regular audits, and structures tokens with bankruptcy remoteness. This ensures that underlying assets are protected and legally segregated.
Can U.S. investors participate in Ondo’s products?
Most of Ondo’s tokenized securities are not available to U.S. persons due to regulatory considerations. The platform employs geo-blocking and compliance checks to restrict access.
What is the role of DeFi in RWA models?
DeFi protocols enable tokenized assets to be used in lending, borrowing, and trading without traditional intermediaries. This enhances liquidity and creates new financial opportunities.
Is Ondo planning to launch more asset types?
While initially focused on Treasuries and money market funds, Ondo is expanding its asset offerings through its chain and Ondo GM framework, which will support third-party tokenization efforts.
What are the biggest regulatory challenges for RWA in the U.S.?
Key challenges include securities law compliance, broker-dealer licensing, anti-money laundering rules, and navigating the constantly evolving stance of regulators like the SEC.
Key Takeaways and Future Directions
Ondo Finance exemplifies how to merge traditional finance with blockchain innovation in a compliant manner. Its multi-layered strategy—covering asset selection, liquidity solutions, infrastructure, and regulatory dialogue—provides a template for others in the space.
For projects looking to enter the RWA market, especially in regulated jurisdictions, a phased and cautious approach is recommended:
- Start with non-U.S. markets to reduce regulatory risk.
- Ensure asset custody and legal structures meet high compliance standards.
- Incorporate permissioned mechanisms where necessary, particularly for DeFi integrations.
- Proactively engage legal experts and regulators to align with existing frameworks.
The RWA landscape is still evolving, but with pioneers like Ondo leading the way, the integration of traditional and decentralized finance looks increasingly promising.