Today, with the continuous development of digital currency and blockchain technology, investors' demand for new assets is increasing day by day. In January 2023, Ondo launched the OUSG token for the first time, becoming a pioneer for investors to invest in U.S. Treasury bonds on the chain. While we are excited about this innovative product, we know that the future goal is to enable instant, 24/7 minting and redemption to deliver on the improved customer experience promised by blockchain technology.
OUSG’s liquidity challenges
While OUSG and its subsequent tokenized U.S. Treasury funds provide some liquidity through the secondary market, the opportunity cost of maintaining large reserves of idle stablecoins has become a serious challenge. This makes creating deep liquidity prohibitively expensive, limiting investor flexibility and choice.
However, this is starting to change as BlackRock and Securitize launch the BUIDL token and work with Circle to ensure deep, round-the-clock liquidity between BUIDL and USDC. Although redemption requests from the BUIDL fund may take up to a business day to complete, Circle agreed to allocate an initial allocation of $100 million in USDC to purchase BUIDL at any time from investors wishing to sell. This arrangement provides investors with instant liquidity and lowers the threshold for market participation.
Ondo Innovations and Improvements
Inspired by BlackRock, Ondo decided to improve the OUSG product. We moved the vast majority of our reserves to BUIDL, allowing us to provide instant, 24/7 stablecoin exchange. At the same time, we have also launched a series of innovative features to attract a wider investor base:
Instant redemption and subscription: OUSG tokens not only support instant redemption through the Circle secondary market, but also support instant subscription through USDC. When an investor makes a USDC subscription, OUGS tokens are immediately minted into their wallet. USDC sent by investors is automatically routed to the fund's Coinbase account, where this USDC is periodically converted to U.S. dollars and transferred to BUIDL. Automation of this process greatly improves the convenience of investing.
Lower minimum investment amount
BUIDL is primarily aimed at large institutional investors and requires a minimum initial investment of $5 million, while OUSG has an initial investment requirement of just $100,000, with a minimum issuance/redemption size of $5,000 thereafter. This lower investment threshold is achieved through the subscription of stablecoins, allowing for fully automated, incremental investments without manual intervention.
Daily Interest Distribution: Ondo offers two forms of interest distribution: the redemption value of OUSG increases continuously, while the issuance/redemption price of rOUSG remains at $1. This means that the rOUSG balance in investors’ wallets will automatically increase, providing a more flexible way to distribute interest. In contrast, BUIDL distributes interest to investors through airdrops of new tokens every month, which may cause confusion for investors who wish to completely exit their positions during the month.
Reduce costs
Ondo is committed to providing investors with a more competitive fee structure. We reduce fees to a maximum of 35 basis points and include fees paid to third parties, saving investors at least 15 basis points compared to other products.
Multi-chain support: OUSG tokens are not limited to use on a single chain, but can be traded on multiple chains such as Ethereum, Solana, and Polygon. This provides more entry points for global and cryptocurrency-related users, further expanding investors’ options.
Conclusion
As mentioned at the beginning, we are pleased with BlackRock's efforts to tokenize Treasury bonds through the launch of BUIDL, particularly its extensive collaboration with ecosystem players such as Securitize and Circle. This innovation not only drives the latest developments in RWA tokenization, but also inspires us to continue to push boundaries and enhance the investor experience.
In the future, Ondo will continue to be committed to promoting the development of tokenized assets and using blockchain technology to provide investors with more efficient and flexible investment solutions. We look forward to working with more partners to jointly create a new era of digital asset investment.