Ondo Brings Treasury-backed Tokens To Solana

The Solana blockchain continues to attract interest from major players in the Ethereum DeFi ecosystem.

The latest example is Ondo Finance, a leading Real World Assets (RWA) protocol which offers tokenized versions of traditional financial products. It’s now offering two products, OUSG and USDY, which are both backed by U.S. treasuries, on Solana. Both launched on Ethereum earlier this year.

OUSG is a tokenized version of the Blackrock short-term treasuries ETF (SHV) with a $146.7M market capitalization. Over 90% of that value lives on Ethereum, with the rest on Polygon. USDY is a stablecoin which derives yield from U.S. treasuries.

“Solana has recently become an undeniable hotbed of activity and a black hole for incoming liquidity,” Ondo said in a release.

The Solana move represents a departure from the Ethereum-centric strategy the company has followed so far. Solana has a different execution environment than Ethereum and Polygon, which share the Ethereum Virtual Machine (EVM) as the smart contract engine which processes transactions.

Trading volumes on decentralized exchanges on Solana surpassed Ethereum on Dec. 15, according to Artemis, an analytics provider. Ondo cited this change in its press release, emphasizing its importance, considering that ETH’s market capitalization is still eight times larger than SOL’s.

Ondo is entering an untapped market in terms of tokenized treasury offerings on Solana. RWA.xyz shows that only $12.8M of tokenized treasuries are on Solana — that contrasts with over $400M on Ethereum, presenting a growth opportunity for Ondo’s OUSG.

To be sure, Ondo’s success on Ethereum and its adjacent chains may not translate into success on Solana. The blockchain has its own community with demands for different products. As the older blockchain, Ethereum has established projects and users looking to minimize risk through treasuries, while Solana may have newer entrants looking for more lucrative but higher-risk plays.

Ondo’s release acknowledged that its offerings might contrast with the memecoin-driven romps on Solana that have captured headlines. “It is no secret that, as of late, Solana has become the house of speculation, and Ondo seeks to introduce a counter-balance facilitating a broader push to maturity,” the release said.