Explain in detail the new OMMF launched by Ondo Finance: a stable calculation supported by U.S. debt
Original Author: Leo, BlockBeats
Asset tokenization (or RWA) is a trillion-dollar field, and Ondo Finance is currently a leader in this field. Ondo is a structured product DeFi protocol, which stands out in the DeFi 2.0 trend with its Liquidity-as-a-Service feature. LaaS is a service that helps projects obtain deep liquidity at low cost. Even without yield mining, Ondo still attracted over $200 million in TVL.
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Previous products of Ondo Finance
Before that, let’s briefly talk about Ondo’s funding strategy. When users can invest USDC (or other stablecoins) in their funds through Ondo, they need to perform five basic steps:
-Ondo converts this USDC into US dollars, which is then kept in a bank account;
- Ondo then uses these dollars to buy assets, which can be ETFs or funds (holding single name securities and other assets);
- New fund tokens are minted and deposited into user wallets;
- When these underlying assets earn income, the income will be reinvested to buy more assets, thereby automatically compounding user income;
-Users can withdraw their tokens at any time, the fund token will be destroyed, and users can withdraw USDC.
Ondo has launched three types of fund tokens: OHYG, OSTB, and OUSG. OHYG provides exposure to high-yield bonds; OSTG provides short-term corporate bonds with a weighted average investment grade rating; OUSG provides exposure to short-term U.S. bonds. In addition, to experience Ondo products, you first need to join its whitelist.
Among the three products, OUSG is the most commonly used product by users. Users deposit USDC and receive OUSG for investment income. The income will be accumulated in OUSG and drive its price up. Recently, Ondo officially announced that its product OUSG will be 10 years after the opening of investment. Weekly AUM (total assets under management) reached 100 million US dollars, currently 1 OUSG = 100.81 USD.
In addition, Ondo also launched Flux Finance to increase the use cases of OUSG token. Flux Finance is a decentralized lending project. It was announced in early February that it would launch the Ethereum mainnet. Flux connects on-chain and off-chain by supporting license-free assets such as stablecoins and licensed assets such as tokenized securities. Lenders can provide stablecoins (USDC and DAI) to earn income, while borrowers can mortgage OUSG as collateral. Currently, Flux Fiannce AUM is about 300 million US dollars. Most of these assets come from FRAX and OUSG.
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Ondo Finance's new OMMF
OMMF is a USD stablecoin based on money market funds (MMF) recently officially announced by Ondo. OMMF was introduced for two reasons:
- MMFs have long been a popular investment choice for individuals and institutions seeking to generate income while protecting capital, and today with over $5 trillion in capital under management in the U.S., MMFs offer high liquidity and low risk, with their value stabilizing At $1 per share. Unlike bank deposits, which are subject to fractional reserve lending and significant asset-liability mismatches, MMFs are required to invest entirely in low-risk, short-term debt securities.
-Many investors have thought about using OUSG as an alternative to USD and stablecoins for over-the-counter (OTC) settlements and collateral, but Ondo found that assets held at USD levels would be a better fit for these use cases than OUSG.
After some consideration, Ondo confirmed the U.S. money market fund and launched its tokenized OMMF. The MMF invested by OMMF is a type of asset with a particularly low risk. linked assets. In this way, OMMF perfectly combines cash with stablecoins, unlocking the potential of MMF not only as a store of wealth, but also as a globally accessible on-chain collateral and settlement alternative.
Collateral: OTC desks and other institutional parties often use stablecoins to collateralize loans (eg, BTC loans overcollateralized with USDC), OMMF is a high-yield, low-risk form of collateral that allows 24/7 settlement/clearing.
Settlement: OTC desks, trading platforms, traders, and other institutional parties can use OMMF to settle transactions denominated in USD (or stablecoins), which allows both parties to earn interest on either side of the settlement and better manage risk.
OMMF use cases also include that investors will be able to mint and redeem OMMF on weekdays, and receive daily interest in the form of OMMF tokens. OMMF is also a type of rebase token, derived from the rebase mechanism, which means that the number of tokens locked by users is within one It will increase by a certain ratio within a fixed period of time. For example, OlympusDAO voted for OHM. This mechanism will also bring super high yields to OMMF holders. OMMF will also hold stablecoin reserves on the chain, and use these reserves for 24/7 instant subscription and redemption (as long as there are remaining stablecoin reserves, otherwise the redemption settlement is at most T+ 3, that is, the redeemed funds will arrive in the account after 3 days) .
Compared with OUSG, the advantage of OMMF is also in its use cases. Because of its pegged characteristics to the U.S. dollar, its use cases will be more than the previous OUSG, such as the settlement or collateral mentioned above; Facilities (DeFi protocols) compatible.
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As the world develops in a more digital and decentralized direction, OMMF also represents a future trend of encryption and the real economy, which can provide depositors (even outside the encryption economy) with a better way to store and transfer wealth In this way, Ondo also has an admirable team, constantly developing products suitable for the encrypted market and the real market, quickly realizing the bridging and growth of the two economies, and contributing to the RWA field.
