The Rise of the RWA Market: An In-Depth Look at Ondo Finance, a pioneer in real-world asset tokenization in the United States

Recently, the tokenization of real-world assets ( RWA ) has become a focal topic in the Web3 field. From the Hong Kong Web3 Carnival to discussions in professional legal circles, RWA has garnered attention for its relatively safe and reliable method of asset tokenization.

! [Analysis of Ondo Finance: How is the US RWA played?] ](https://img.gateio.im/social/moments-4091c9dffc8cb4465245d56568be6418)

Although there are already a number of unique RWA projects emerging in the Chinese market, when it comes to true industry pioneers, Ondo Finance in the US market is undoubtedly the clear leader. Of particular note is the recent meeting (SEC) the SEC with Ondo to discuss options for a compliant issuance of tokenized securities, which further solidifies Ondo's leadership position in the space.

Detailed Explanation of Ondo's RWA Model

The core reason why Ondo is known as a leading project in the field of RWA is its forward-looking vision. While most projects are still in the stage of "how to choose the right real assets to put on the chain", Ondo has successfully put high-quality assets such as U.S. Treasury bonds and money market funds on the blockchain and integrated them into the decentralized finance (DeFi) ecosystem.

Take the USDY(Ondo US Dollar Yield Token) issued by Ondo as an example, this token is anchored to short-term US Treasury bonds and bank deposits, and has two core advantages:

1. Substantial Yield Support: USDY is essentially a yield-bearing stablecoin, allowing holders to enjoy daily returns generated from U.S. Treasury bonds or bank deposits.
2. High transparency and security: The custody, auditing, and profit distribution of assets adhere to the compliance standards of traditional finance.

In addition, USDY adopts a bankruptcy isolation framework, ensuring that reserve assets are completely separated from the issuing entity. In the event of extreme situations, investors have priority claims on the reserve assets. Besides USDY, Ondo also issued OUSG, which is anchored to US short-term treasury bond funds, and its operational logic is similar to that of USDY.

In essence, Ondo is actually moving the wealth management products and clearing mechanism of traditional finance to the blockchain, giving on-chain liquidity to these assets while ensuring income and risk control.

From static assets to dynamic ecosystems

Asset tokenization is only the first step in RWA, and how to fully flow these tokens on-chain and create incremental value is the key. To this end, Ondo created Flux Finance, a lending protocol designed specifically for RWA.

Unlike traditional lending protocols ( such as Compound and Aave), Flux allows users to lend tokenized treasury bonds ( such as OUSG) as collateral to lend stablecoins such as USDC. However, considering the security nature of treasury bonds, in order to avoid regulatory problems, Flux has adopted a licensing system: users must pass a compliance review and prove that they meet the investment qualifications before they can participate in lending activities. This centralized review mechanism effectively avoids the regulatory hidden danger of "any asset can be pledged" in DeFi, and provides a template for the compliance combination of RWA and DeFi.

Build RWA Infrastructure

With the popularity of the RWA concept, more and more projects want to join the track. Acutely aware of the need for infrastructure, Ondo began to build a blockchain tailored to RWA, Ondo Chain, with core features including:

• Licensed Verifiers: Traditional financial institutions such as Franklin Templeton and WisdomTree act as network nodes to ensure network security and compliance.
• Open Application Layer: Allows any developer to issue RWA Tokens or build decentralized applications on the chain. Built-in oracles and cross-chain bridges: On-chain asset prices, interest rates, and other data are directly provided by validators

This architecture not only satisfies the needs of institutions for security and regulation, but also maintains the openness of the Web3 ecosystem.

In terms of token standards, Ondo announced the Ondo Global Markets (Ondo GM) program in 2024. Although the initial design was biased towards the traditional "brokerage order model", according to a February 2025 blog post, Ondo GM is redesigning the tokenization framework to make the RWA token more like a stablecoin – the token itself can be freely transferred, and the distribution layer is embedded with compliant permissioning logic, allowing any token issuer to issue both compliant and flexible RWA tokens through Ondo GM.

In summary, while most players in the industry are still studying how to issue RWA assets, Ondo has already built a complete system that achieves a seamless connection between traditional financial assets and the blockchain world.

Ondo's Contribution to the U.S. RWA Market

Breakthrough at the market level

At present, many RWA narratives are still stuck in the stage of "helping traditional enterprises issue coins and raise funds". However, the real value of RWA lies in improving the liquidity and efficiency of high-quality assets, while lowering the entry threshold of traditional ABS, REITs and other instruments, and creating more possibilities for asset activation through the programmability of the token.

Ondo's design sets a new standard in the industry. Whether it is the RWA token that has been issued, or the Ondo GM that is being built, we are committed to creating a new financial market that circulates around the clock and can be minted and redeemed at any time, breaking the limitations of traditional financial "business hours trading".

What's more, Ondo allows tokenized traditional financial assets to break down the original "walls". Although traditional financial products can be circulated, they are often limited to a specific time and platform, and cross-market and cross-asset applications are almost impossible. Ondo's design incorporates these assets that could only be "earned by lying down" into the on-chain ecology, allowing them to restructure and increase their value in the DeFi environment, which is the direction of mining the true value of RWA.

Exploration of compliance aspects

In the US market, the biggest challenge for tokenizing securities assets is compliance, especially in the context of the SEC's tightening regulations in recent years. Ondo's ability to grow in such an environment, along with its compliance strategy, is worthy of attention.

First of all, Ondo imposes geographical restrictions on US users, and many token products cannot be accessed under US IPs, which is an effective means to circumvent high-pressure regulation.

Secondly, for products anchored to assets in the U.S. market, Ondo strictly follows U.S. compliance standards in custody, auditing, bankruptcy isolation and other links, such as custody of assets in regulated trust institutions ( such as Ankura Trust), the implementation of a strict lending licensing system, and the design of bankruptcy isolation mechanisms.

It is worth noting that in 2025, Ondo, together with the law firm Davis Polk, will negotiate with the SEC regarding the compliance of tokenized securities, proposing a "wrapped security token" scheme. By embedding access control at the distribution layer, they explore paths such as registration exemptions and market structure exemptions to find legal space for tokenized securities in the U.S. market.

This two-pronged approach – one that steadily serves non-US markets while engaging in active dialogue with US regulators – provides an example for RWA to develop in a highly regulated environment.

Practical Suggestions

Based on Ondo's experience, the following strategies are worth considering for projects looking to enter the U.S. RWA market:

1. Step by step, avoid first and then explore: Although the U.S. securities market is large and has high asset quality, it also has high regulatory barriers. From securities laws to anti-money laundering, every step is challenging. It is recommended to land in the non-US market first to ensure that the asset side meets the regulatory requirements.

2. Conservative Innovation, Clear Boundaries: While DeFi plays are diverse, in the U.S. market, the more aggressive the innovation, the greater the regulatory risk. Especially in high-risk scenarios such as lending and derivatives, moderate centralized control helps enhance security and transparency.

3. Proactive dialogue, layout in advance: Instead of trying to circumvent regulation, it is better to take the initiative to talk to regulators. Cooperate with law firms or set up a legal team in advance, and actively communicate with the SEC to explore compliance paths.

! [Analysis of Ondo Finance: How is the US RWA played?] ](https://img.gateio.im/social/moments-114e83c0c8c73329b31a582be5a7e365)

In summary, in the US RWA market, a steady and cautious approach is the long-term strategy. First, establish the two foundational aspects of the market and compliance, then gradually look for breakthroughs, avoiding hasty attempts that could lead to regulatory issues.