ONDO rises 30% in three weeks, what are funds betting on?

Original Author: Ku Li, TechFlow

When the market is down, seeing what is still rising can be an indicator of which projects are still actively building.

Bitcoin has been grinding around $63,000 for nearly a month, and most altcoins are lying flat, ignored by the market. The crypto market in the first half of the year has essentially been in a state where, after the meme craze receded, both capital and attention are searching for the next destination.

Meme coins on Robinhood form one part, but they also seem to be losing steam; RWA is another high-conviction battleground.

For instance, the ONDO token was around $0.31 in early July and is now near $0.40, up nearly 30% in three weeks. This could, of course, be market maker activity or market cap management. But more interestingly, ONDO's price increase occurs within a larger context.

On Hyperliquid, the trading volume for tokenized stocks and commodities in the third week of July reached $25.1 billion, according to Startup Fortune, surpassing the platform's crypto asset trading volume for the first time.

Trade[XYZ] has listed on-chain contracts for SpaceX and the latest ChangXin Memory Technologies (CXMT). Tokenized stocks now account for 23 of the top 30 assets on Hyperliquid. Binance is also following suit, capturing 56% of the CEX market share for RWA perpetual contracts. Even the SEC is reportedly discussing opening an "innovation exemption" for tokenized stock trading.

In other words, trading US stocks on-chain is clearly the narrative of this cycle. And Ondo happens to be the most active player on this track recently.

Many of those US stock contracts on Hyperliquid are backed by Ondo's supply

If you only see ONDO's 30% rise as "another RWA concept coin pumping," you're missing the point. Ondo's position at this table is different from Hyperliquid and Binance.

Hyperliquid and Binance are competing for trading volume.

Trade[XYZ] commands 79% of the open interest in the RWA perpetual track. Binance's cumulative RWA perpetual trading volume in Q1 reached $450 billion.

To use an imperfect analogy, they are running restaurants, while Ondo is supplying the ingredients.

A significant portion of the underlying assets for the tokenized stock contracts listed by trade[XYZ] comes from Ondo Global Markets. According to AInvest, the on-chain tokenized stocks accessed by Hyperliquid via the Felix Protocol in May also use tokens issued by Ondo.

According to RWA.xyz data, Ondo Global Markets holds over a 70% market share in tokenized stock issuance, with a TVL exceeding $5 billion and cumulative trading volume surpassing $18 billion.

The platform lists over 260 tokenized US stocks and ETFs across Ethereum, Solana, and BNB Chain, distributed through channels like Binance, Bitget, MetaMask, and Blockchain.com.

When the DTCC news hit on July 15th, ONDO surged 18% in a single day. For a relatively established token to have such a strong market reaction, this is the reason why.

The DTCC is the settlement and clearing backbone of US stock trading; almost all US stock transactions eventually pass through it. Ondo's on-chain US stock certificates, issued via DTCC's tokenization service, appear on the same participant list as BlackRock, J.P. Morgan, Goldman Sachs, and Nasdaq.

This is not a "partnership announcement" level news; it's a distribution channel upgrade level news.

When Ondo Goes from Supplier to Operator: Perps Data Analysis

After securing 70% of the upstream market, Ondo is now moving downstream.

Launched on July 7th, Ondo Perps is essentially Ondo opening its own trading platform. It offers perpetual contracts for US stocks, ETFs, and commodities with up to 20x leverage.

This platform has a unique feature not available elsewhere:directly use Ondo-issued tokenized stocks as margin. If you hold on-chain tokens representing Apple or Nvidia, you can use them directly to open positions.

On Hyperliquid or other perps platforms, you first need to convert your assets into USDC or USDT to use as margin, because the trading platform and the asset issuer are separate entities. Ondo integrates issuance and trading, eliminating that layer of friction.

According to the DefiLlama RWA Perps ranking, as of July 28th, Ondo Perps recorded a 24-hour trading volume of $221 million, ranking fourth.

Its growth rate is indeed fast, but its open interest is only $49.92 million, representing 1.15% of the total market. The ratio of trading volume to open interest is 4.4x, suggesting that capital comes in, turns over, and leaves the same day, resulting in very thin overnight positions.

For comparison, trade[XYZ]'s same metric is 1.6x, indicating significantly deeper capital retention.

The $221 million daily volume is a fraction compared to Hyperliquid's $25.1 billion weekly volume. But Ondo Perps is catering to a different user base.

Its strategy is to convert holders within its $5+ billion asset pool into traders, shifting revenue from issuance fees to trading fees. The viability of this logic may not hinge on whether daily volume catches up to Hyperliquid; whether open interest can climb from $50 million is more critical. Volume can be incentivized through market making and campaigns, but overnight positions cannot be forced.

It's worth noting that the DefiLlama RWA Perps aggregate chart and the Ondo Perps protocol page show two different sets of numbers, with a difference of nearly three times (the protocol page shows 24h volume of $77.53 million and open interest of $10.3 million). Those tracking this should stick to one data source for longitudinal comparison; cross-referencing different sources can easily lead to errors.

What Happened to the Ondo Chain?

On July 27th, Ondo released the Ondo Network, replacing the previously planned Ondo Chain public chain project that had been in development for over a year.

Simply put, Ondo has now split its trading into two layers. Execution (matching, margin, settlement) runs within hardware secure enclaves (TEEs) – isolated spaces inside the chip that even server administrators cannot see, achieving speeds close to centralized exchanges. Settlement (who owns what) still utilizes Ethereum. Ondo Perps runs on this architecture.

Choosing not to build its own chain seems, in my view, more pragmatic than forcing another L1.

The L1 track has taught us enough lessons over the past two years. Building your own chain means bootstrapping liquidity and an ecosystem from scratch, while Ondo's assets are already deployed across several chains like Ethereum and Solana.Decoupling the execution layer allows for a lighter approach with significantly less risk.

However, the current architecture has two compromises that Ondo itself acknowledges.

First, execution runs within a single secure enclave, not a distributed network. Transaction validation is delegated to a group of independent operators called "witnesses," but their number, list, and identities are undisclosed, making it somewhat centralized.

Second, the security of the TEE solution is anchored to the chip manufacturer. Ondo has not disclosed which manufacturer's chip or generation it uses, leaving questions about the chip's security guarantees.

These technical details don't constitute a buy or sell signal, but they imply that the Ondo Network is currently closer to a "verifiable centralized execution layer," with a gap remaining before the decentralized end-state described in the whitepaper.

However, for those focused on the ONDO token, what matters more is that the CEO stated the ONDO token will assume incentive and governance roles in the network's future decentralization. Yet, the witness economic model and staking reward structure are all listed under "possible directions," with none having a timeline.

What is ONDO's current price increase pricing in?

Breaking it down, approximately 18% of the recent rise came from the DTCC news, essentially pricing in the upgrade of Ondo's distribution channels – specifically, valuing the "being on the same list as BlackRock and Goldman Sachs" status.

Another ~10% likely came from the SBI Group partnership (providing access to the Japanese market) and the overall beta of the RWA sector rallying.

The announcement on July 27th regarding the architecture upgrade (choosing a trading layer over an L1) had a very limited impact on the token price.

So, the speculative signal is quite clear: the catalysts are more strongly tied to the 70% market share in the RWA issuance end and institutional distribution channels, rather than the technical architecture.

From an investment perspective, ONDO is currently trading at $0.38, with a market cap around $2 billion, down approximately 65% from its 52-week high of $1.13.

If you believe that on-chain trading of US stocks will become a sustained, multi-year structural trend (Hyperliquid's weekly data at least suggests the trend exists), then Ondo, sitting on a 70% market share of the issuance end, does have a fundamental logical support.

Ondo is indeed making big moves, and tokenized stocks are indeed the narrative of this cycle. However, constrained by the overall weakness of the crypto market, short-term catalysts are unlikely to constitute a long-term structural uptrend; it's more about short-term reactions to events and capital games.