Ondo Finance, a tokenization protocol, has announced plans to launch its tokenised US Treasury fund, the Ondo Short-Term US Government Treasuries (OUSG), on the XRP Ledger. This move aims to provide investors with seamless access to institutional-grade government bonds via Ripple’s RLUSD stablecoin.
According to a statement on 28 January, the OUSG fund will become available on the XRP Ledger within the next six months. Ondo and Ripple, the developers of XRP Ledger, intend to “seed OUSG liquidity” immediately upon the fund’s launch.
What is OUSG?
The OUSG fund offers exposure to short-term US Treasury securities and is backed by the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). The fund provides investors with intraday settlement and redemption capabilities, allowing for enhanced liquidity.
Currently, OUSG boasts an annual percentage yield (APY) of 4.16% and has a total value locked (TVL) of $184 million. The tokens, valued at $109.76 each, will be redeemable via Ripple Labs’ RLUSD stablecoin.
The total value of tokenized US Treasury securities, bonds and cash equivalents. Source: RWA.xyz
Ripple launched RLUSD, a dollar-pegged stablecoin, on 17 December. As of now, RLUSD has a market capitalisation of approximately $72.4 million, according to data from CoinGecko.
The Growth of Tokenised Treasury Assets
Tokenised debt instruments, such as Ondo’s OUSG, represent digitised versions of traditional financial assets like bonds and loans. The market for tokenised Treasury assets is estimated to be worth $3.43 billion, according to RWA.xyz.
This sector forms part of the broader tokenised real-world asset (RWA) market, which has a total valuation exceeding $16.8 billion. Analysts predict exponential growth in this space, with Lamine Brahimi, co-founder of enterprise digital asset company Taurus SA, forecasting the bond tokenisation market to reach $300 billion by 2030.
Brahimi’s predictions are backed by research from consulting giant McKinsey, which projects $300 billion as a base-case scenario within the next five years.
Tokenisation: The Future of Financial Markets
The concept of tokenisation has gained strong advocacy from financial leaders. BlackRock CEO Larry Fink has called for the US Securities and Exchange Commission (SEC) to approve the tokenisation of traditional assets, including stocks and bonds.
BlackRock CEO Larry Fink advocates for the tokenization of stocks and bonds. Source: CNBC
Fink, a vocal supporter of tokenisation, described it as the “next generation for markets” as early as 2023. He believes tokenisation could revolutionise financial markets by providing enhanced transparency and efficiency.
With Ondo Finance’s integration of its OUSG fund into the XRP Ledger, the burgeoning tokenised asset market is poised for significant expansion. This development reflects growing interest in digitising traditional financial instruments to create a more accessible and efficient ecosystem.
