Ondo Finance, a decentralized finance platform, has established a new initiative that introduces some products to its platform.
These products provide stablecoin holders with the ability to invest in bonds and the United States Treasury on a global scale.
Ondo Finance’s Initiative
The DeFi firm projects that this regulated product has the potential to generate returns exceeding $90 billion worth of stablecoins for holders.
On the company’s website, it is noted that the OUSG short-term investment earns a 4% annual return and OSTB short-term bond investment earns a 5.5% annual return.
The DeFi platform plans to utilize funds deposited by investors, by investing in BlackRock’s exchange-traded fund (ETF).
DeFi protocols, such as Compound Finance, also offer a yield of 1-2% annually through investments in liquidity pools on top crypto networks like Ethereum and Solana.
However, emerging lending firms are offering yields from 7% APR, but these loans have been criticized as being risky when compared to traditional bonds.
Investors will have the option to make subscriptions and renewals in both stablecoins and fiat currencies. They will also receive cryptocurrencies on the Ethereum network to signify ownership.
Benefits Of This Initiative
The tokens in question will have the capability to be transferred among pre-approved investor addresses and any smart contract that meets the compliance standards.
Ondo finance’s project envisions the possibility for investors to utilize smart contracts to conduct on-chain trading and lending activities, utilising the fund tokens in addition to other types of cryptocurrencies.
While some DeFi protocols have advertised yield and returns of over 20% in the past, these products have ultimately failed as the model behind them was unsustainable and relied on issuing tokens without adequate utility.
Firms holding large amounts of stablecoins are also facing the issue of inflation affecting their purchasing power.
The goal of Ondo finance is to offer investment options and services that are comparable to those provided by institutions, utilizing blockchain technology.
This is achieved through technology division, which specializes in the creation of decentralized finance solutions, as well as their asset management division, which designs and oversees tokenized investment funds.
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