The current investment landscape is fraught with challenges. Investors and the firms serving them face significant barriers, including high fees, limited access, transfer inefficiencies, platform fragmentation, and concealed risks. These issues have persisted for decades, preventing millions from participating in capital markets and hindering financial innovation.
Ondo aims to transform this paradigm by harnessing blockchain technology to bring institutional-grade financial markets onchain. This approach enhances accessibility, transparency, and operational efficiency. Last year, Ondo unveiled plans for Ondo Global Markets (Ondo GM), a pioneering tokenization platform dedicated to onchain public securities.
Initially, the design focused on tokens representing client instructions at traditional broker-dealers within a fully permissioned system. However, feedback from developers, traditional finance (TradFi) partners, and government officials highlighted a growing readiness for a more open and accessible framework, leveraging stablecoins as a key reference.
This insight led to a reimagined tokenization framework. Ondo GM now enables the creation of freely transferable tokens, akin to stablecoins, with built-in permissioning at the distribution layer to meet compliance, security, and commercial needs. This evolution empowers stakeholders with greater control, fosters fair competition, and addresses longstanding issues like high costs and transfer frictions.
In essence, what stablecoins achieved for digital dollars, Ondo GM aims to accomplish for securities.
Understanding Ondo Global Markets
Ondo Global Markets is a tokenization platform that provides non-US investors with onchain exposure to thousands of US publicly traded securities, including stocks, bonds, and ETFs. Each token is backed 1:1 by its underlying asset, such as a public stock, and is freely transferable outside the US, similar to stablecoins.
By tokenizing these assets, Ondo GM introduces the transparency, efficiency, and accessibility of blockchain technology to institutional finance. The platform also offers APIs and SDKs, enabling third-party developers to build innovative financial applications and services.
Benefits for Key Stakeholders
- Individual Investors Outside the US: Gain low-friction access to US securities, as easily as acquiring stablecoins. Participate in global markets and access onchain financial services—lending, trading, derivatives—often at institutional rates.
- Traditional Broker-Dealers Outside the US: Use Ondo GM as an alternative to provide clients exposure to US securities, reducing operational complexity and cost. Integrate third-party protocols to enhance user services.
- Asset Managers and Issuers: Reach a broader, global investor base through a new distribution channel. Bring new assets onchain and leverage transparent fund management via blockchain infrastructure.
- Crypto-Focused Platforms: Offer users exposure to high-quality traditional securities previously unavailable onchain. Enable cross-collateralization and other advanced financial strategies, subject to regulatory requirements.
Core Features of Ondo GM
The Ondo GM platform and web app offer a suite of powerful features designed to enhance the investment experience:
- Broad Access to Real-World Assets (RWAs): Gain exposure to over 1,000 securities listed on NYSE and NASDAQ, including ETFs (e.g., SPY, QQQ, TLT) and stocks like Apple, Tesla, and Uber. Each token is 1:1 backed by the underlying security.
- Global, 24/7/365 Availability: Mint, redeem, and transfer tokens from anywhere outside the US at any time, ensuring uninterrupted access to high-quality RWAs.
- Instant Minting and Redemption: Execute token creation and redemption instantly.
- Full Liquidity: Tokens are designed to mirror the liquidity of the underlying securities, enabling immediate, low-slippage transactions.
- Built-In Margin Access: Borrow against tokenized holdings at competitive rates typically reserved for institutional investors.
- Onchain Financial Services: Utilize decentralized finance (DeFi) protocols for trading, lending, and derivatives, applying DeFi’s transparency and composability to traditional assets.
- Additional Yield Opportunities: Earn yield by pledging tokens as collateral to secure onchain infrastructure like chains, oracles, and bridges.
- Freely Transferable Tokens: Transfer tokens seamlessly on secondary markets outside the US, using them across various protocols and wallets without platform restrictions.
- Institutional-Grade Protections: Benefit from robust legal structures ensuring bankruptcy remoteness and security interests in backing assets.
- Income from Securities Lending: Opt in to lend underlying securities in the institutional lending market, earning additional income with explicit investor consent.
- Comprehensive APIs: Integrate with Ondo GM’s APIs to reduce costs, modernize infrastructure, and enhance user experiences for brokers, issuers, and platforms.
Addressing Traditional Market Challenges
Ondo GM is designed to solve persistent problems in traditional capital markets:
Accessibility and Cost
- Problem: Global investors often face hurdles accessing US financial products, with high minimum balances and fees making investing impractical.
- Solution: Ondo GM enables anyone outside the US in eligible regions to gain exposure to thousands of US securities with minimal fees using stablecoins, eliminating geographic and cost barriers.
Platform Lock-In
- Problem: Investors are often locked into specific platforms, which control fees, product access, and margin rates. Transferring between brokers is cumbersome and slow.
- Solution: Ondo GM tokens are freely transferable outside the US, allowing instant, 24/7 transfers to any wallet or platform. This eliminates lock-in and enables a seamless, cross-platform investment experience. 👉 Explore seamless transfer solutions
Platform Fragmentation
- Problem: Securities held at different brokerages are not interoperable, hindering cross-collateralization and integrated management.
- Solution: Blockchain-recorded ownership allows investors to grant platforms permission to utilize assets across services, enabling true interoperability and cross-collateralization.
Limited and Costly Margin
- Problem: Margin options for non-US retail investors are expensive and limited, with no cross-asset borrowing capabilities.
- Solution: Ondo GM integrates institutional-grade borrowing options, allowing investors to borrow against tokenized holdings via third-party protocols or directly, including cross-collateralization with crypto assets.
Hidden Risks
- Problem: Platforms often lend client securities without clear disclosure, retaining yield and exposing investors to risk.
- Solution: Securities are only lent with explicit investor permission, and clients earn 100% of the generated yield.
US Markets with Global Reach
Ondo GM’s initial focus on US securities is intentional. US capital markets have outperformed most global markets over the past 25 years, with US equities serving as an effective inflation hedge, surpassing global inflation by about 4.5% on average over 50 years. While the US dollar is the world’s reserve currency, US capital markets and crypto have been primary drivers of long-term wealth creation.
By enhancing access to high-quality US financial assets, Ondo GM aims to make markets more open and inclusive globally.
Embracing a New Investment Era
Ondo plans to launch Global Markets this year, marking a significant step toward democratizing capital markets and fostering the open economy. This initiative requires robust infrastructure for security, reliability, compliance, and convenience, which is still evolving.
Recognizing the scale of this undertaking, Ondo has collaborated with key partners to build the necessary ecosystem. Soon, Ondo will announce a comprehensive vision integrating assets, infrastructure, and ecosystem to redefine the future of financial markets.
Frequently Asked Questions
What is Ondo Global Markets?
Ondo Global Markets is a tokenization platform that allows non-US investors to gain onchain exposure to US publicly traded securities. Each token is backed 1:1 by assets like stocks or ETFs, combining traditional finance with blockchain efficiency.
How does Ondo GM ensure token liquidity?
Tokens are designed to mirror the liquidity of the underlying securities, enabling instant, low-slippage transactions. The platform leverages stablecoin-like transferability and institutional-grade mechanisms to maintain liquidity.
Can investors in the US use Ondo GM?
No, the platform is currently available only to investors outside the US due to regulatory considerations. US investors should explore alternative compliant options.
What are the benefits for traditional financial institutions?
Broker-dealers and asset managers can reduce operational costs, access a global investor base, and integrate with DeFi protocols to enhance service offerings and modernize infrastructure.
How does securities lending work on Ondo GM?
Investors can opt in to lend their underlying securities, earning 100% of the generated yield. Lending occurs only with explicit permission, ensuring transparency and control.
What makes Ondo GM different from other tokenization platforms?
Ondo GM emphasizes free transferability, institutional-grade protections, and deep integration with DeFi services. Its focus on US securities and global accessibility sets it apart, leveraging blockchain for true interoperability and cost efficiency.