Ondo's Onchain Stocks
Buy stocks with crypto!
TLDR:
Ondo are one of the biggest players in RWAs, bringing traditional financial assets like stocks, bonds, and ETFs onchain, and have $3.2bn already in TVL.
Their “Global Markets” product lets you buy and sell tokenised stocks like NVIDIA and Amazon directly in DeFi.
Below you can see how to onboard and trade, it sits somewhere between DeFi and CeFi, with KYC required and some eligibility criteria.
The real promise of crypto has always been to bring all of finance onchain, and Ondo is a glimpse into that future.
This week I decided to look at ondo.finance. Ondo represent an important shift in the crypto industry as we start to get more traditional financial instruments like company stocks brought onchain! This is a pretty important move for the next wave of DeFi.
Unfortunately I couldn’t complete their onboarding because I didn’t qualify based on their criteria, but I do believe they have an interesting product that’s worth showcasing all the same and that points in the general direction crypto is moving.
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Ondo
Ondo have been building an important foundation for the next big wave in crypto. A wave that brings traditional financial instruments onchain, like stocks and ETFs. This all gets classed under the term “RWAs”, which stands for Real World Assets.
Beyond stocks and ETFs, RWAs cover a wide range of traditional financial instruments including government bonds, treasuries, real estate, private credit, and commodities like gold. Essentially, anything from the traditional financial world that can be represented as a token on a blockchain!
Ondo are by no means the only player doing this. Robinhood are bringing stocks onchain too, for example, and there are plenty of others entering the space. However, Ondo are one of the biggest names and biggest players in the RWA world.
They are already across 10 chains, integrate 150+ projects, and have over $3.2bn worth of RWAs onchain!
Ondo also have several products. They have: their own USD stablecoin called USDY; their own tokenised treasuries and bonds; tokenised stocks and ETFs under their “Global Markets” product; borrowing and lending in tokenised assets with “Flux”; liquidity through “Nexus”; and their own chain and bridge!
This is a big company already doing big things. They have too many products to cover in a single post, so today we’re going to focus just on their tokenised stocks.
RWAs represent a key next step in DeFi and onchain finance. They move us into a place where traditional financial assets are traded onchain, and people can buy productive financial assets like stocks and bonds using crypto.
Ondo Global Markets
Ondo’s onchain stocks product can be accessed at ondo.finance/global-markets.
In their own words, “Ondo Global Markets is a platform that brings traditional public securities onchain, with tokens that are freely transferable and usable in DeFi.”
By hitting “Launch App” you’ll be taken to their product page where you can browse all the available tokenised stocks and ETFs and see how they’ve been performing.
If you look closely you’ll notice that Ondo has its own ticker format for stocks. NVIDIA becomes NVDAon, Amazon becomes AMZNon, with the suffix “on” representing Ondo.
This is because these tokenised stocks are still not quite the real deal. They are essentially Ondo’s own wrapped version of these stocks.
In practice you get the upside or downside of the price movements, but the underlying stocks are still owned under the hood by Ondo. So you can’t get voting rights, for example.
Think of this as the first step of onchain finance as the space figures itself out. In the future you can imagine these working in ways that give you full ownership rights with anonimity.
Speaking of anonymity, to use Ondo you do need to share information about yourself as you go through their onboarding process.
Unforunately I couldn’t complete Ondo’s onboarding myself because I didn’t qualify based on their criteria. But I’ll still showcase their product all the same so you can use it if you’re interested and do qualify.
Onboarding
Unlike most of DeFi where you just connect a wallet and get started, onboarding into Ondo requires answering some questions.
It’s a bit of a process, but you can understand why they’re doing it as they are trying to protect themselves legally, which is fair enough.
You’ll first be asked some basic information like your name and location.
Then you’ll be asked about your investor profile.
Now at this point I didn’t qualify and ended up with this screen.
Assuming you do qualify, the final onboarding screen will ask you to provide some identity information to then get started on the platform.
Buy & Sell onchain stocks
Their trading interface is straightforward enough once you’re in.
You pick a stock, let’s say NVIDIA, and you get a very familiar option to buy or sell.
There’s a small network cost but you get a quote that’s pretty close to the market price.
Below you can then see plenty of statistics about the company and the asset price, plus the chains it can be traded on.
Next they show some trading limits per session and reference some legal documents, invariably to protect themselves.
There’s a lot of familiarity here if you’ve used other crypto platforms, but you can also see how they mix DeFi with TradFi in an interesting way!
Tokenised stocks are cool
Ondo’s tokenised stocks are an impressive product already.
There are some clear limitations and it sits somewhere between a full DeFi product and something more akin to CeFi. But it does allow people to buy stocks onchain, and it points clearly in the direction that crypto is heading.
For the past 15+ years crypto has mostly dabbled in assets that naturally trend towards zero. Zeneca put this really well in a recent post about the “Token Graveyard”, where he noted that over 99% of tokens released have already gone to zero.
There are plenty standout exceptions of course. Great DeFi projects like Aave (AAVE) and Spark.fi (SPK), tokens for important L1 networks like ETH, SOL, and BTC, and others cryptos that hold genuine long-term promise.
But the opportunity of bringing traditional finance onchain is one of the biggest of them all!
The market cap of NVIDIA alone is larger than the entire market cap of crypto today. Think about how much money could come onchain through RWAs.
The whole point of DeFi has been to build new decentralised financial rails that empower people financially. Ondo gives a real glimpse into that exciting future!
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