Ondo Finance’s tokenized US Treasury to join XRP Ledger

Tokenization protocol Ondo Finance plans to deploy its tokenized US Treasury fund on the XRP Ledger, giving investors access to institutional-grade government bonds that can be redeemed with stablecoins.

According to a Jan. 28 announcement, the Ondo Short-Term US Government Treasuries (OUSG) fund will go live on the XRP Ledger within the next six months. The announcement said Ondo and XRP Ledger developer Ripple plan to “seed OUSG liquidity” immediately upon launch.

OUSG provides exposure to short-term US Treasurys and is backed by the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). According to Ondo, OUSG offers intraday settlement and redemptions. 

OUSG offers an APY of 4.16% and has $184 million in total value locked, according to Ondo. The OUSG token is currently valued at $109.76. 

By joining the XRP Ledger, OUSG tokens will be redeemable via Ripple Labs’ RLUSD stablecoin.

Ripple launched RLUSD as a dollar-pegged stablecoin on Dec. 17. It has a total market capitalization of roughly $72.4 million, according to CoinGecko.

Related: Ripple’s RLUSD stablecoin to list ‘imminently’ on more exchanges — Exec

Investors eye bond tokenization boom

Tokenized debt instruments like Ondo’s OUSG are digitized versions of traditional assets like bonds and loans. The market for tokenized Treasury assets is currently worth $3.43 billion, according to RWA.xyz data. 

These instruments reside in the much broader tokenized real-world asset (RWA) market, which is currently valued at more than $16.8 billion.

Lamine Brahimi, co-founder of enterprise digital asset company Taurus SA, told Cointelegraph earlier in January that bond tokenization could become a $300 billion industry by 2030. 

Brahimi’s forecast is based on research from consulting firm McKinsey, which said $300 billion was a base-case scenario over the next five years. 

BlackRock CEO Larry Fink has advocated for broader tokenization of financial assets, calling on the US Securities and Exchange Commission to green-light the tokenization of traditional assets like stocks and bonds. 

As far back as 2023, Fink described tokenization as the “next generation for markets.”