Mastercard onboards Ondo Finance as one of its tokenization partners

Mastercard will onboard Ondo Finance as its first partner for real-world asset (RWA) tokenization. Ondo will connect with Mastercard’s Multi-Token Network (MTN) and become available to businesses that use tokenized treasuries. 

Ondo Finance will become a part of Mastercard’s Multi-Token Network (MTN), giving access to vetted tokenized products for businesses. Ondo will first offer one of its tokenized products, the Short-Term US Government Treasuries Fund (OUSG). 

The fund’s assets are based on BlackRock’s tokenized BUIDL fund, as well as an additional basket of low-risk US treasuries. Ondo Finance has also partnered with Franklin Templeton, WisdomTree, Wellington Management, and Fundbridge Capital for the creation of its new product. 

Ondo Finance to offer yield-bearing funds with 24/7 flexibility

Ondo Finance can deliver the yield-bearing tokens based on treasuries with a direct onboarding process, no need to swap to crypto and acquire the assets through a partner. All MTN users and related businesses can access the yield from a conservative financial asset. 

The partnership also brings Ondo’s on-chain ecosystem and connects it to a business payment network. Ondo remains linked to the Ethereum ecosystem, but its RWA efforts are also directly targeting crypto outsiders. 

The partnership with MTN will connect Ondo to financial institutions, meaning businesses can simplify the acquisition and settlement of the tokenized fund. By carrying the OUSG product, Mastercard’s MTN will connect private payments with tokenized assets on a public blockchain. Mastercard’s MTN is a private chain, offering all the speed and uptime of public networks with higher reliability and the potential for offering regulated products. 

Unlike purchases of crypto tokens, businesses will be able to settle through traditional banking on-ramps, without requiring additional crypto or stablecoin purchases. They can also manage cashing out at any time, with flexible redemptions. The relatively low cost of on-chain transactions will add flexibility to investment and redemptions, as well as a predictable, institutional-grade investment in a yield-bearing asset.

Tokenized US treasuries are a growth sector

Tokenized US treasuries are one of the fast-growing sectors for general tokenization. As of February, various tokenizing startups are carrying over $3.9B in US treasuries with various maturities. 

A year ago, in early 2024, tokenized debt was under $800M, with tentative additions. BlackRock’s BUIDL token was one of the first tokenized assets, where Ondo Finance was the biggest owner. Through Ondo Finance OUSG Manager address, the platform owns over 34% of all BUIDL tokens, using them as the underlying collateral for its products. 

BlackRock continues to offer tokenized securities, with the BUIDL-1 fund already spreading. BUIDL has been used mostly for passive income, as well as a collateral for DeFi products and stablecoins. 

RWA narrative continues to draw attention

RWA tokens continue to draw attention despite weakening price performance. RWA tokens as a whole sank from a valuation of $37B down to $34B, mostly after the slide of Mantra (OM) from its recent peak. ONDO remained a staple in the RWA trading space, even after its latest dip to $0.97, losing over 19% in the past week.

ONDO was one of the few RWA tokens and tokenization projects to be added to the portfolio of Trump’s World Liberty Financial. Recently, Binance also increased its ONDO holdings, held in a cold wallet. Despite the hype, ONDO is still in an accumulation stage. The token trades with 60% drawdowns, though setting expectations for a higher price range.

In a market where until recently, traders looked for short-term memes, ONDO is drawing buyers looking for a buy-and-hold asset. ONDO offers slower potential growth, but also sustainability as the project has already set up high-profile partnerships.   

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