The true method of transferring the liquidity of traditional finance onto the blockchain is to ensure that anyone who wants to purchase on-chain can immediately access the liquidity of traditional finance, which is the core goal of Ondo.

Organized & Compiled by: Deep Tide TechFlow

Guests: Nathan Allman, CEO of Ondo Finance; Ian De Bode, Chief Strategy Officer of Ondo Finance

Hosts: Ryan & David

Podcast Source: Bankless

Original Title: Tokenized Stocks: The $100 Trillion Onchain Shift

Broadcast Date: September 11, 2025

Key Points Summary

Ryan and David had an in-depth discussion with Nathan Allman and Ian De Bode from Ondo Finance about the evolution from stablecoins to tokenized government bonds and then to tokenized stocks. They analyzed why Ondo Finance's unique packaging model is expected to become an industry leader, and how blockchain technology enables around-the-clock market trading, including a 24/5 primary market and a 24/7 secondary market. They also explored how the composability of DeFi promotes liquidity and ensures fair pricing for asset trades.

Ethereum and Ondo Finance are driving a migration of real-world assets (RWAs) worth up to $100 trillion onto the blockchain, which will become an undeniable trend in the financial sector.

Highlights

• Stablecoins are essentially tokenized cash. The efficiency gains and improved user experience brought by tokenizing stocks, ETFs, government bonds, and other assets far exceed those of cash.

• Tokenized government bonds as an asset class are being adopted much faster than stablecoins. Next, Ondo hopes to apply this model to stocks and ETFs, anticipating another accelerated growth.

• The true method of transferring the liquidity of traditional finance onto the blockchain is to ensure that anyone who wants to purchase on-chain can immediately access the liquidity of traditional finance, which is the core goal of Ondo.

• Some large traditional financial market makers view the tokenization of stocks and ETFs as an important step towards a 24/7 market. Stocks have now become "financial Lego modules" that DeFi developers can use. This is the goal we have always pursued.

• If I want to invest in a defense ETF and hope to include Palantir stock, asking a fund manager to create such a product is nearly impossible. But if all of this is on-chain, I believe someone will develop a ChatGPT-like interface that can automatically generate and dynamically adjust portfolios based on demand. This kind of personalized investment approach will become possible.

• Our system supports minting and burning 24 hours a day, 5 days a week. This means the U.S. market has developed the capability to offer 24/7 trading. Many Robinhood users are already accustomed to this 24-hour trading experience. Our platform also connects to the same liquidity sources as Robinhood.

• One advantage of our model is that putting additional assets on-chain is very simple; there is no need to recreate liquidity, and it can directly connect to traditional financial markets.

• Ondo's goal has never been to replace banks or the traditional financial system, but to enhance the existing system through technological innovation, enabling it to go on-chain and become a more efficient and open version, thus achieving global access and previously unattainable innovation scale.

• The goal of Ondo Chain is to help issuers easily achieve multi-chain support while connecting their assets to a broader public blockchain ecosystem such as Ethereum, Solana, and BNB Chain.

• By 2030, many first-time investors will choose to trade on the blockchain, holding stocks or other asset classes through on-chain technology.

Is the Business Thriving?

Ryan:

The current scale of real-world assets on-chain has reached about $300 billion, which seems like a good achievement. But from your perspective, is the business really thriving? Are we achieving our goals? Are real-world assets gradually migrating onto the chain?

Ian:

I believe so. While $300 billion is a significant scale, it still seems small compared to the overall size of traditional financial markets. However, the growth rate is very remarkable. I joined Ondo about 18 months ago, and at that time, the scale of tokenized government bonds was only about $1 billion, but now it has exceeded $7 billion and is still growing rapidly. This growth trend is indeed very encouraging.

Nathan:

That's right, I also believe our business is growing rapidly. From the perspective of product adoption, stablecoins have achieved tremendous success; they have broken through early barriers and entered the mainstream market. Many large traditional tech companies have begun to deeply integrate stablecoin-related technologies, which account for a large portion of the $300 billion in on-chain assets.

Of course, our work has just begun. I believe that tokenized government bonds and some private credit products are the next key areas for on-chain assets, and we are already starting to see significant growth in these areas. Recently, we also launched tokenized stock products, and the market feedback has been very positive. From the perspective of market interest, asset management companies, large institutions, and regulators are beginning to recognize the long-term potential of tokenized securities. Therefore, while much work is still being done behind the scenes, I believe these efforts will drive the expansion of on-chain assets from stablecoins to more types of products, and the future development is worth looking forward to.

Are RWAs (Real-World Assets) Inevitable?

David:

Nathan, you mentioned that the on-chain migration of real-world assets (RWAs) is an "inevitable trend." Can you elaborate on why? As practitioners in the crypto space, we generally agree that blockchain technology is the direction of the future, and this view is deeply rooted. Why do we believe that real-world assets will ultimately migrate onto the chain?

Nathan:

Stablecoins have well demonstrated the potential of on-chain assets; they provide a global solution that allows assets to be transferred and traded peer-to-peer without permission anytime and anywhere, and the world outside the traditional financial system is beginning to recognize the advantages of this technology. In the securities field, existing settlement processes have many pain points, such as geographic dispersion, cumbersome operations, and slow speeds. There are central securities depositories (CSDs) around the world, such as the DTC in the U.S., Euroclear in Europe, and similar institutions in Asia. Transferring securities from one CSD to another typically takes days or even weeks. Additionally, the flow of funds faces similar frictions, but we are very much looking forward to extending the advantages of stablecoins to the securities field to solve these problems.

Ian:

In fact, stablecoins are essentially tokenized cash. Cash in the traditional sense is stored in bank accounts, and while it can be transferred, it is still subject to time and geographic limitations. The emergence of stablecoins has changed this situation, allowing for 24/7 use globally and enabling interaction with assets like stocks, ETFs, and government bonds through smart contracts. This flexibility is something traditional finance cannot provide; although traditional financial institutions can transfer funds, the entire process is much more complex.

As Nathan mentioned, I believe that the efficiency gains and improved user experience brought by tokenizing stocks, ETFs, government bonds, and other assets far exceed those of cash. While the current applications of stablecoins are exciting, I believe the on-chain migration of other asset types will bring even greater breakthroughs.

Ryan:

Many people do not truly realize the inefficiencies of the traditional financial system until they experience it firsthand. Many practitioners in the crypto space began to understand finance through crypto technology. Therefore, when we see advancements in crypto technology, people may complain about the user experience in crypto, but once they return to the traditional financial system, they find the problems are even more severe.

These traditional financial operations feel like stepping back in time. You cannot directly exchange one security for another; first, you must convert the security into cash and then wait for the cash settlement.

Tokenization Roadmap

David:

The crypto industry is rapidly replicating the historical development trajectory of currency and finance. I believe we are also following a similar path in building the financial technology stack. Starting with the most basic dollar, like federal deposits, which is equivalent to the bottom layer of the tech stack. Then moving to the repo market, followed by short-term and long-term government bonds. Next, we will enter asset classes like stocks and corporate debt, ultimately gradually moving towards higher-level equity markets. This is my vision for the entire process.

Does this layered logic align with the structure of traditional finance and also explain how the crypto industry builds its parallel version? Am I correct in my understanding?

Ian:

I think your point is very valid. Nathan, would you like to discuss why the process from cash to government bonds to stocks is a logical path? And why we choose these asset classes first? Because many people might think of tokenization in terms of private credit, real estate, or private equity, among other asset classes. But the reason I joined Ondo is that Nathan presented a clear vision: the development path of tokenization is from stablecoins to government bonds to stocks, and there are good reasons for this. I think clarifying this is very important for understanding the logic of tokenization.

Nathan:

I completely agree with this observation. We are reshaping financial infrastructure and have some significant advantages that traditional finance did not have in its early days. If you look back at the history of commercial banks, they were actually a product of their time. These institutions needed to handle payment, savings, and lending functions simultaneously. Money was created in the process of lending and then paid through the check system. That was the earliest payment system. Now, with technological advancements, especially the emergence of Bitcoin, we can store value in a digitally scarce way, allowing us to separate the functions of savings, payments, and lending. This trend is not only happening in the crypto space; it has also existed in traditional finance for some time. For example, the rise of the shadow banking system has allowed many specialized non-bank institutions to gradually take over the commercial lending business of banks. The emergence of crypto technology has further accelerated this process.

We have already seen the impact of this trend in the stablecoin space, and this influence is gradually expanding to other securities areas. As Ian mentioned, we chose to start with government bonds because there was a significant demand in the market at the beginning of 2023, when over $150 billion in stablecoins were not providing any yield. Therefore, the value proposition of tokenized government bonds as an asset class is very clear: it not only meets the needs of global investors but also provides yield. In contrast, the value proposition of tokenized securities in the U.S. is more complex, as U.S. investors already have direct access to these assets. This requires a complete ecosystem to support it, such as a financial application ecosystem that includes lending, repos, trading, derivatives, and arrangements to accept these assets as collateral. Therefore, we are working to build such an ecosystem. As Ian mentioned, we developed the Flux Finance protocol as a proof of concept to demonstrate how to use tokenized securities as collateral within a DeFi-like framework.

Nathan:

As we build this ecosystem, I believe the value proposition in the U.S. will become clearer. But for now, we are very excited about making highly liquid U.S. public securities more accessible to global investors. Especially in Turkey, Latin America, and Southeast Asia, for those investors who do not have U.S. brokerage accounts today, these are small investment scales, which is true in most parts of the world, especially for early stablecoin investors. Therefore, we have always viewed tokenized government bonds as an entry point into a broader capability for tokenized securities. This space has become very competitive and almost commoditized. We do believe that tokenized government bonds are synergistic with our broader business. We can further explore these synergies when we discuss the global market later.

Tokenized Government Bonds

Ryan:

When we talk about RWAs, I want to provide a simple definition for those listeners who may not be familiar with the concept. First, we must mention stablecoins. Stablecoins are currently the most mature real-world assets on-chain, and there is even legislative support for them. The U.S. government has clearly expressed support for the development of stablecoins; for example, the Treasury Secretary mentioned, "We want to see $3 trillion in stablecoins on-chain." This indicates that stablecoins have been fully recognized by the U.S. government. The recently passed legislation is very important.

Therefore, stablecoins naturally become the most mature category of on-chain assets. The current market size of stablecoins is about $270 billion. But beyond that, we can also discuss other types of assets. I know you recently launched some exciting products in the tokenized stock space, but starting from stablecoins, the next major asset class seems to be* U.S. government bonds*.

I understand that Ondo has some products related to tokenized U.S. government bonds. In fact, I saw someone from your team notify me that Fidelity recently launched a money market account on Ethereum. This happened last week, and while I don't know the specific details, it's an important development.

For those who are not familiar, Fidelity's money market account has a scale of about $1.3 trillion, making it one of the largest money market accounts in the world. A money market account essentially refers to government bonds, which can be seen as a yield-bearing stablecoin, allowing investors to earn about 4% returns. This is also the essence of the money market. Compared to holding cash directly, investors prefer to hold money market assets in their investment accounts to avoid banks withholding returns. This is the core logic of the money market.

Now that Fidelity has tokenized money market assets and deployed them on-chain, this is a significant milestone. The total scale of money markets in traditional finance is about $7 trillion, which is why you previously laughed and said that the scale of on-chain assets at only $300 billion seems trivial, while in reality, just the money market alone is $7 trillion.

Currently, the scale of tokenized government bonds on-chain is about $7.4 billion. How big do you think the market opportunity for government bonds is? What work have you done in this area?

Ian:

The launch of Fidelity's money market account on Ethereum is indeed an important event. Money market funds or tokenized government bonds have always been very popular products in traditional finance. As you mentioned, rather than leaving cash in a bank account, it is better to invest it in a money market fund to earn returns. The initial motivation for Ondo to start tokenizing government bonds was based on this logic. We believe stablecoins are an excellent product with clear market demand, but they are not perfect. While new legislation has addressed some issues, not all stablecoins meet these standards. Additionally, another significant drawback of stablecoins is that they do not provide yield. Therefore, tokenized government bonds become the best way to address this issue. Users holding this asset can not only enjoy better investment protection but also earn daily returns.

Ondo launched its tokenized government bond product in 2023. The OUSG launched at that time was a very important innovation because it was the first time that participants could transfer tokenized government bond funds among themselves. This model was later replicated by Blackrock's BUIDL fund, which has the advantage of being able to integrate with smart contracts, further enhancing flexibility. Therefore, Ondo also launched the Flux Finance protocol, which allows users to use OUSG as collateral to enter the repo market application scenarios. In traditional finance, liquidity often relies on government bonds and overnight financing in the repo market. This is our starting point for trying to migrate these applications of traditional finance onto the chain and provide users with better products while ensuring good investment protection and yield payments.

Recently, we have expanded this mission and begun to focus on the tokenization of stocks and ETFs. Currently, the market size of tokenized government bonds is about $7.5 billion. Notably, it took tokenized government bonds two years to reach this scale, while stablecoins took longer to reach $7 billion. This indicates that the market has gradually formed a huge liquidity and capital pool starting from stablecoins. As people realize that stablecoins are just a form of tokenized cash, more and more investors are turning to government bonds to earn yields. The acceptance speed of tokenized government bonds as an asset class is much faster than that of stablecoins. Next, we hope to apply this model to stocks and ETFs and look forward to seeing another accelerated growth.

Ryan:

You mentioned the repo market. I'm not very familiar with how this concept operates in traditional finance. You mentioned it's an important area. How are government bonds used in the repo market? Can you explain it simply?

Ian:

The repo market is a complex but important area. Simply put, banks typically hold assets in government bonds and keep these bonds in custodial institutions. When banks need liquidity financing or want to earn returns on excess cash, they can exchange this cash for government bonds and vice versa. Government bonds are the most liquid collateral assets that can be pledged overnight and can even be traded directly at the Federal Reserve. This makes government bonds and cash a key liquidity tool in the traditional financial system, supporting the operation of the entire financial ecosystem.

Types of Tokenized Government Bonds

Ryan:

The use of stablecoins is very straightforward; you can trade them on exchanges or store them in your own crypto wallet. However, U.S. government bonds, on-chain government bonds, and what you discuss at Ondo or BUIDL belong to securities assets. Therefore, their operation is not as simple as directly using a crypto wallet or exchange. You cannot exchange these assets directly like trading stablecoins. I have used Ondo's platform before, and it felt very good. For crypto-native users, the basic process is to connect a wallet and operate using stablecoins.

Suppose you have USDC in your wallet; you need to complete some paperwork steps first, which are to meet compliance requirements because government bonds are classified as securities and require some additional checks. However, I can complete these operations directly in my crypto wallet to mint government bonds using USDC.

All these processes are completed on-chain, and after minting, I hold the government bond asset. Compared to stablecoins, why would I choose government bond assets? The main reason is that government bonds can provide yield. Therefore, I just minted government bond assets. If I want to exchange back to USDC, I can do that later, but it needs to go through the platform's review.

The entire process needs to comply with certain regulatory requirements. This is actually an early example of putting securities assets on-chain, which is very interesting. However, it is not as freely operable as stablecoins or DeFi . Is my description accurate?

Ian:

It depends on the specific situation. In simple terms, there are mainly two types of tokenized government bond products. The first type is the OUSG we launched, which operates similarly to BUIDL and some other newly issued products, basically functioning as you just described. Users need to connect with us first, and only after completing the connection can they hold these assets, as they operate on a restricted list. If you want to transfer assets to another address on the list, you can do so; but if the transfer target is not on the list, the transaction will be canceled.

The second type is USDY, which operates more like a stablecoin. If you want to mint or burn USDY directly from us, you still need to complete the connection process to meet compliance requirements. This is similar to the process Circle uses to mint USDC, where users need to have a Circle Mint account. However, USDY is a permissionless asset in the secondary market. Once you hold USDY and after the compliance period, you can use it freely. You can transfer it to crypto exchanges that support USDY through different wallets while also earning daily returns; these assets are only issued to non-U.S. investors in the primary market.

David:

Compared to Black Rock's BUIDL fund, users need to complete KYC and be whitelisted in the fund contract. Therefore, the assets of the BUIDL fund cannot be freely transferred like permissionless assets, which is also its uniqueness.

Ian:

Both the BUIDL fund and our OUSG fund are subject to strict restrictions on the issuance network. In contrast, USDY is a permissionless asset but can only be issued to non-U.S. investors in the primary market.

David:

But I heard that the contract address for USDY is permissionless, right?

Ian:

After the compliance period ends, users can transfer assets freely.

David:

So, if I find someone holding USDY, even if I am not whitelisted, they can still transfer the asset to me, right?

Ian:

What you describe is a peer-to-peer transfer, and such transfers are allowed. The biggest advantage of permissionless assets is that they can be integrated into the DeFi ecosystem. Frankly speaking, it is very difficult to build a DeFi ecosystem when assets are restricted. I completely agree with that. By making these assets permissionless, they can embed and root themselves in the DeFi ecosystem like stablecoins, while restricted assets cannot achieve this.

David:

So, when you mention the "primary market," I understand that when Ondo hands over the tokens to the first holder, that holder must be a non-U.S. citizen. Any subsequent transfers are not under your regulatory purview, correct?

Nathan:

That's correct. U.S. citizens are not allowed to hold USDY. There are many legal and regulatory details behind this. These products are not issued in a registered form, so investors do not need to connect directly with the issuer or be known by the issuer. In the secondary market, the ability to regulate and supervise is limited. This is somewhat similar to old-style bearer securities, where the issuer would send paper documents as proof of ownership to non-U.S. investors. If investors want to redeem interest or principal, they need to return that paper.

Cryptographic technology allows us to convert paper documents into digital form. This not only improves efficiency but also brings many compliance advantages, such as freezing assets, blacklisting, and other functions similar to those used by stablecoin issuers. Of course, we will do our best to monitor the flow of assets into the U.S. and will not sell or market these products in the U.S. However, since these products are not registered, they have advantages in accessibility and operational processes compared to registered products. As Ryan mentioned, the processes for registered products are often very cumbersome.

What are the obstacles facing the U.S.?

Ryan:

We all hope to be able to use tokenized securities more freely, and of course, this also involves the issue of tokenized stocks that we may discuss later. But since we are currently talking about tokenized government bonds and securities, I want to share my experience. When I tried to access these tokenized securities, I encountered geographical restrictions because I am a U.S. citizen. The system prompted me: "Sorry, Ryan, as a U.S. citizen, you cannot access your own country's capital markets on-chain."

This restriction also applies to tokenized government bonds. So why does this happen? I understand some reasons, such as the regulatory environment in the U.S. being unfriendly to cryptographic technology in 2023 and 2024. Figures like Gary Gensler are representative of this, as he is very resistant to the crypto industry.

However, the U.S. Securities and Exchange Commission (SEC) has established a dedicated crypto task force to study "crypto projects." We also know Hester Peirce, who seems very interested in transitioning and modernizing the U.S. capital markets towards crypto, hoping to promote the development of financial technology in the 21st century. This is a very good signal and an opportunity we have never had before. Why can't U.S. citizens own tokenized government bonds and tokenized stocks on-chain? Why are these opportunities always available to other regions like Europe, while we cannot participate?

Nathan:

I don't think this situation will last long. In fact, these issues do take time to resolve. Given the complexity of regulatory actions and approvals, the SEC has publicly stated that they are willing to work with issuers to explore various tokenization models. We are also involved in these discussions and hope to see some new solutions in the near future.

Ryan:

Do we need active action from Congress to drive these changes? Is this something that can be resolved through the existing regulatory framework? Is it possible to achieve this within the next six months or a year?

Nathan:

Actually, we typically do not need direct action from Congress. It is clear that the U.S. already has tokenized securities. For example, our licensed tokenized government bond product USG is available in the U.S., but only for qualified investors.

Additionally, there are some tokenized securities in the U.S. that are available to ordinary investors, such as tokenized funds from WisdomTree and Franklin Templeton. These funds are open to ordinary U.S. investors. Although these tokens were not attractive in the early stages because they were just simple ownership certificates with no operational capabilities, asset management companies have made progress in enhancing the utility of these tokens. Now users can self-custody these tokens and transfer them between whitelisted wallets, achieving changes in ownership. These advancements are exciting, and some of them were even achieved under the previous SEC regulatory framework. However, the promotion of these products still requires exemption relief to gain clearer legal support.

As for how to further promote the development of tokenized securities in the U.S., while clear regulatory rules would help, it is more important to address issues in the distribution chain, such as how to define distributors or brokers, and whether the front end of wallets or decentralized exchanges falls under distributors. These issues have led to slower progress in the U.S. Frankly speaking, the value proposition for the ordinary investor market is still not clear enough, and we need more time to refine the relevant ecosystem while addressing regulatory uncertainties. However, these changes are gradually happening.

If you just want to simply buy and hold for the long term, rather than comparing different margin rates or using assets as collateral for derivative positions, existing solutions like Robinhood can already meet basic investment needs. But to truly unlock the potential of tokenized securities, a more complete ecosystem is needed, and this is where we require clearer regulatory support.

Tokenized Stocks

Ryan:

Since we mentioned Robinhood, they are currently trying to bring some stocks on-chain. Currently, they have about $150 billion to $160 billion in stocks that have not been tokenized, so there is tremendous potential to push these assets on-chain. It is reported that these stocks will be traded on-chain through Ethereum's layer two network. Meanwhile, Ondo has just launched its tokenized stock products. Unfortunately, these services are currently only available to users outside the U.S., so there are certain limitations. But as Nate and Ian mentioned, they are very confident about the future of this technology and believe that U.S. users will soon be able to participate.

Let's take a look at the market situation for tokenized stocks. Currently, the scale of tokenized stocks on-chain is relatively small, at only about $400 million. Compared to stablecoins (about $270 billion) and tokenized government bonds (about $10 billion), the market for tokenized stocks is still in its infancy. Some existing projects are more experimental tools, and some even simply map stocks onto the chain without much uniqueness. However, there are also some projects attempting to bring the functionalities of traditional brokerage firms on-chain. Now, Ondo has launched over 100 tokenized stock assets, so let's discuss the current state of tokenized stocks and Ondo's innovations.

Ian:

We are very pleased to have officially launched the global market platform last week. However, as you mentioned, this is not the first attempt at tokenized stocks. For example, on June 30, Xstocks was launched, indicating strong market interest in tokenized stocks and ETFs. We welcome this trend, as we have been working in this field for some time.

When discussing tokenized stocks, there are two key points to focus on. First, is this a permissionless tool or a closed ecosystem? This is a very important distinction. Second, how is the liquidity of these assets? Can users trade large amounts at reasonable prices? These two factors directly affect the practicality of tokenized stocks.

The global market platform has made breakthroughs in both areas. It supports permissionless trading and allows users to buy and sell large amounts at prices similar to those of traditional brokerage accounts. This is a very important innovation. In contrast, while Robinhood's tokenized stocks support large transactions, they belong to a closed ecosystem, limited to Robinhood users, and cannot transfer assets to other platforms.

Another example is Xstocks, which is currently the most well-known permissionless tokenized stock project. These assets can be freely traded in the secondary market, but the model of Xstocks has some issues. It relies on an on-chain inventory pool, and the liquidity and pricing mechanisms of these decentralized exchanges are not well established. As a result, many users may have purchased Tesla X stocks at incorrect prices that do not reflect the actual market situation. Additionally, due to insufficient liquidity, large transactions may lead to significant slippage (i.e., the transaction price deviating from expectations). Therefore, while the concept of permissionless stocks is exciting, the existing implementations still have significant room for improvement in pricing and liquidity.

Liquidity of Tokenized Stocks

David:

I want to discuss two issues: permissionlessness and liquidity. Each of these issues is important, but I think the liquidity issue is relatively smaller, so let's start here. For emerging markets, insufficient liquidity seems to be a common problem. In traditional finance, market makers are responsible for providing liquidity for buy and sell transactions. In the early stages of tokenized securities, such as the first day, week, or year, insufficient liquidity is to be expected. As more buyers and suppliers join, along with the participation of market makers, liquidity will gradually improve.

So, how are you addressing the liquidity issue? What is the specific mechanism?

Nathan:

The tokenized securities market is still in its early stages, and liquidity will gradually improve over time. However, the model we use on the global market platform is fundamentally different from the Xstocks model, which also leads to a significant difference in liquidity creation costs. Xstocks is actually a rebranding of Backed Finance, launched in partnership with Kraken. Backed has been around for a few years and relies on pre-funded liquidity pools so that secondary market investors can access liquidity. This model is the way most crypto asset trading currently works, where trading and settlement occur simultaneously, requiring funds to be prepared in advance. Simply put, it passively deposits assets into a liquidity pool, waiting for investors to buy, but this approach is not suitable for handling hundreds or even thousands of securities. It is unrealistic to have market makers hold inventory on every chain and wait for buyers and sellers to trade.

The trading and settlement methods in traditional finance are completely different from those on-chain. In traditional finance, trades usually need to be agreed upon across different venues or brokers, and the settlement process can take days. We shorten the settlement time to seconds or even less by supporting instant redemptions. This way, we can directly transfer liquidity from traditional finance onto the chain without requiring market makers to hold inventory. We only mint tokens and purchase the corresponding underlying stocks to support that token when users attempt to buy securities on our platform or other secondary markets.

David:

So, when the tokens circulate outside your platform, such as on-chain on Uniswap or elsewhere, that portion of liquidity is not under your direct management. Your focus is on connecting the liquidity of traditional finance with the liquidity between platforms, correct?

Nathan:

The two are very related. We do not provide liquidity in the secondary market, but the ability of other market participants to provide liquidity in the secondary market is closely related to their access to liquidity. Many market participants mint these tokenized securities from us on a real-time basis, and only after a purchase request is made in some other venue will they resell.

Ian:

Further clarification: if you want to launch 1,000 stocks on-chain and rely on liquidity pools from decentralized exchanges, as some other companies do, it requires a massive capital investment. Assuming you need at least one million dollars to support the liquidity of certain assets, to provide meaningful liquidity for 1,000 stocks, you might need $100 billion in funding. Additionally, if you want to operate across multiple chains, you would need extra funding. This approach is clearly not scalable, as it merely attempts to replicate the liquidity of traditional finance, but at a huge cost, especially for market makers. Therefore, most people are unwilling to lock capital on-chain. This is also why, in the Backed Finance model, as the number of Xstocks increases, liquidity becomes increasingly thin. These assets begin to decouple frequently, with prices deviating from their actual value. For example, someone might purchase Tesla X stock at an incorrect price, potentially deviating by 10%, which is akin to buying a stablecoin at $1.10, directly leading to a loss.

The real way to transfer the liquidity of traditional finance onto the chain is to ensure that anyone wanting to purchase on-chain can immediately access the liquidity of traditional finance. This is the core goal of our platform.

David:

From a legal perspective, are these tokens IOUs (I Owe You) for securities? Are they real securities or a form of wrapping?

Nathan:

It is essentially a debt security, backed by the underlying stocks, and provides returns corresponding to those underlying stocks. We reinvest the dividends into more underlying stocks, so it is essentially a "total return tracker."

David:

So, if I hold a stock with dividends, I won't receive the dividends directly, but the dividends will somehow be reflected in the value of the token, right?

Nathan:

That's correct. We reinvest the dividends into more underlying stocks, which better integrates with the DeFi ecosystem, as the distribution of dividends could disrupt many on-chain mechanisms, but investors have priority secured rights to the underlying stocks. We also introduce third-party collateral agents who check the collateral sufficiency of the tokens daily. If we violate collateral or other debt terms, the collateral agent has the right to intervene, take over the assets, and liquidate them.

Interestingly, these investor protection measures were actually introduced when we launched USDY. At that time, we found these measures to be very common in traditional finance but almost absent in the stablecoin space. Anytime securities are wrapped into a new structure, it increases structural, operational, legal, and counterparty risks. However, traditional finance is very mature in these aspects, especially in the field of securitization. For example, there are many best practices in bankruptcy protection, the independence of issuing entities, etc., to ensure that these tokens are not affected by the hypothetical bankruptcy of a financial company. At the same time, we have set up an independent board and service agreements to minimize risks as much as possible. These measures are crucial in the tokenization process.

Property Rights

Ryan:

We have discussed liquidity and permissionlessness, but there is another important dimension that has not been explored in depth, which is the property rights issue. Your tokenized securities seem to differ somewhat from the stocks held by traditional brokerage firms. For example, if I hold stocks in a brokerage firm, I have the right to receive dividends and participate in shareholder governance, such as voting. But in your on-chain tokenized securities, these rights seem to be absent. This contrasts with the Galaxy Tokenize launched by Galaxy Digital last week, which issues shares on Galaxy Chain and is more like a native asset. So, what are the property rights protections for these tokenized assets? What category do they actually belong to?

Nathan:

Regarding the issue of voting rights, I think there may be some misunderstandings. In fact, we can grant voting rights to token holders if there is market demand for it. However, currently, this is not a feature that users genuinely need, so we haven't focused on it specifically.

If you hold securities in a Charles Schwab brokerage account, and the account type is a margin account (which is the type most people have), you can buy another security before selling the first one without waiting for cash settlement.

Essentially, what you own is an IOU from the broker. This is actually how most Americans hold securities. In contrast, in our tokenized securities, you own a senior debt obligation backed 1:1 by actual stocks. These stocks are held in a special purpose vehicle (SPV) specifically for holding these stocks and issuing tokens, with a collateral agent responsible for protecting your rights. From a risk perspective, this method is safer in many ways than holding stocks through traditional brokerage firms.

Of course, this is different from holding shares directly on the issuer's books. This method is called native tokenization, and some industry professionals support it, but I believe it introduces additional risks. Native tokenization requires the issuer or its transfer agent to track the separation of tokenized and non-tokenized shares. Whether relying on DTC (Depository Trust Company), brokers, or custodians, someone needs to be responsible for tracking these changes. In contrast, the wrapping model is more mature. Public companies issue all shares and store them in DTC. Then, custodians hold a portion of those shares and store them in the SPV to issue tokens. When users mint or burn tokens, the stocks are transferred based on the SPV's inventory. Custodians and DTC are very experienced in handling these legal ownership transfers. Native tokenization, however, requires a brand new system to track the relationship between on-chain assets and off-chain assets, which could introduce technical and legal risks.

Ian:

There has indeed been a lot of discussion about the wrapping model, and we essentially adopt the wrapping model to achieve tokenized stocks. While some advocate for native tokenization, I believe they overlook the fact that stablecoins are essentially a form of wrapping as well. Although the legal rights of stablecoins are not entirely the same as cash in a bank account, this has not hindered their widespread use. As Nate mentioned, our wrapping model introduces many investor protection measures that are almost absent in the stablecoin space. Frankly, our protective measures may even be more comprehensive than those of traditional brokerage margin accounts.

Nathan:

Moreover, the flexibility of this approach is very high. We can tokenize any investable asset, which avoids many of the limitations faced by advocates of native tokenization. Typically, issuers who cannot raise funds through traditional means will attempt to sell assets on-chain to crypto users or stablecoin holders. This has led to the failure of many on-chain lending projects and many issues in past cycles of real-world assets.

Is Permissionless Tokenization Possible?

David:

I want to pause and discuss our current topic, particularly the concept of "native tokenization." From my understanding, native tokenization means that the token is completely equivalent to the actual asset, such as the tokenization of Apple stock. Such tokens are not just IOUs for Apple stock but represent the actual stock itself. However, this model faces many issues, one of which is the incompatibility between blockchain technology and national regulatory systems.

In my view, native tokenization undermines some of the core advantages of tokenization, such as complete transferability between participants and the free transfer without permission. If this cannot be achieved, these tokens will struggle to integrate into DeFi, or may not integrate at all. While I hope the SEC can provide clear guidance for native tokenization, allowing us to achieve Nasdaq-like trading on Ethereum, I also understand that the SEC will never allow permissionless, non-whitelisted ERC20 tokens to simultaneously become true 1:1 securities. Because native tokenization inherently requires KYC (Know Your Customer), permissionless operations are nearly impossible to achieve. Therefore, I believe that native tokenization of securities may not become the mainstream model, while the wrapping model may become the ultimate solution. The wrapping model allows assets to be freely transferred among all participants without KYC, while still integrating into DeFi. You seem to support this non-native tokenization path, so how do you view the challenges of native tokenization and the incompatibility between blockchain and regulatory systems?

Ian:

I don't completely agree with your perspective, but history can provide some reference. Stablecoins, as a form of wrapping, have integrated into DeFi in a permissionless manner and quickly adapted to market demands. Today, many users globally view stablecoins as a convenient way to access dollars, and it has become a core layer of liquidity in the on-chain economy.

If stablecoins were initially issued in the form of native cash in bank accounts, I believe they might not have developed to the scale they are today. The importance of stablecoins is increasing, and the Treasury Secretary even predicts that this market could grow to $3 trillion in the future. Recently, Congress passed a bill that explicitly recognizes the legality of stablecoins and treats them as legal tender. I believe the growth and structure of stablecoins provide us with many lessons. Stablecoins are essentially a form of wrapping, and I wouldn't be surprised if in the future, assets in the U.S. capital markets on-chain also choose a similar path.

David:

If I want to transfer money to your account via PayPal, you need to register on that platform and complete KYC; otherwise, the transaction cannot be completed. But stablecoins changed that. They allow me to send funds directly to your Ethereum address without you needing any account. The emergence of stablecoins has enabled cash to circulate in a completely new way, something that had never been achieved before.

The rapid growth of stablecoins has found a foothold in the regulatory environment. As someone who values freedom and privacy, I believe the existence of permissionless technology is a wonderful thing. Perhaps tokenized securities will also undergo a similar process. As the industry rapidly evolves, new user rights and property rights may become the norm, and the wrapping model aligns better with the operational logic of blockchain. This trend may even influence regulatory directions, promoting individual autonomy and freedom.

Ian:

I agree with your point that our current model combines investor protection with the ability for on-chain innovation. From the perspective of the SEC or the U.S. government, they are not opposed to innovation; rather, they hope that the U.S. capital markets can innovate responsibly. Ondo's wrapping model offers many advantages, such as investor protection, the design of tokenized debt instruments, support from third-party collateral agents, while still maintaining permissionless characteristics. This model allows for innovation on-chain without causing too much disruption to existing systems. I believe the added value of this model may even make U.S. regulators aware of its potential demand.

Nathan:

Our current model can actually be extended to a native tokenization model. For example, operating companies can issue securities directly from their own entities, just like our global market securities, in a manner compliant with Reg S. The tokens issued by our global market entity are, to some extent, native; it's just that the SPV's business is to hold other securities and issue these tokens.

The main reason we chose the wrapping model is not just because it allows for permissionlessness, although it does have that advantage, but because it can scale to all listed securities without needing permission from each issuer. This enables us to offer investors a broader selection of assets, not just those specific securities.

24/7 Market?

Ryan:

So you’ve adopted an “instant minting” approach, for example, when I purchase $100,000 worth of Tesla stock, those stocks are not pre-prepared but are minted in real-time by you. This approach reduces capital costs. I know you are using Ethereum's infrastructure, which plays a key role in this process. If the audience understands this, they will see how you leverage this technology.

However, I have a broader question. Traditional stock markets are not open around the clock, while crypto markets operate 24/7. So does your market need to follow bank operating hours? Or if I want to buy or sell Tesla stock on Saturday night, can your system still support real-time minting or burning?

Ian:

Our system supports minting and burning 24 hours a day, 5 days a week. This means the U.S. market has developed the capability to offer 24/7 trading, specifically from Sunday at 8 PM (Eastern Time) to Friday at 8 PM (Eastern Time). Many Robinhood users are already accustomed to this 24/7 trading experience. Our platform also connects to the same liquidity sources as Robinhood.

Ryan:

So during non-trading hours, like weekends, will the prices of these assets change? What if the market becomes open 7 days instead of 5?

Ian:

Generally speaking, when the market is closed, the prices of assets are fixed at the closing price of that day. In traditional financial markets, there is no additional trading activity after the market closes. Therefore, stock prices typically remain unchanged until the market reopens.

David:

But even when the market is closed, I can still sell these tokens on Uniswap or other platforms, right?

Ian:

Anyone can create a permissionless liquidity pool based on these assets. However, there may indeed be price deviations on weekends.

In fact, many centralized exchanges that wish to list these assets place a high value on a 24/7 trading model. Sometimes we tell them that if you have inventory on your platform and market makers willing to provide liquidity, then you can achieve around-the-clock trading. However, our system currently cannot support real-time minting and burning on weekends. But as long as there is inventory on-chain and market makers provide support, this 24/7 trading model is entirely feasible.

I think this point has not been sufficiently emphasized. Some large traditional financial market makers are viewing the tokenization of stocks and ETFs as an important step towards a 24/7 market. Because once these large centralized exchanges start adopting these assets, their users are already accustomed to trading around the clock. Therefore, these market makers are preparing for this possibility, such as establishing weekend trading desks and exploring how to provide 24/7 pricing mechanisms for these assets in anticipation of future crypto exchanges potentially listing them.

Ondo Global Market

Ryan:

One advantage of the crypto market is its ability to provide market discovery over the weekend. If the crypto market becomes the only place where effective trading can occur on weekends, then more assets will be minted during the weekdays to meet market demand. This can further expand the market size while achieving more price discovery and trading on weekends. This is a typical example of how the crypto market is ahead of traditional finance, providing functionalities that traditional finance cannot achieve and driving market growth through this advantage, right?

We previously discussed liquidity and property rights, and you mentioned that these assets can be freely used on exchanges. So when you say "permissionless," does it mean that if I mint Tesla stock and store it in my wallet, I can use it freely? For example, if I mint these assets in other countries or regions, can I freely create a Uniswap liquidity pool or send them to anyone I want? Is this level of freedom similar to my experience using USDC in a crypto wallet?

Ian:

This situation is indeed a unique advantage of blockchain technology that enables 24/7 operations.

Based on this freedom, we still need to comply with some regulatory restrictions, such as handling OFAC (Office of Foreign Assets Control) sanctions and oracle-related requirements. Therefore, we have the ability to freeze these assets. However, we designed these assets as permissionless foundational tools precisely to allow users to use them freely in decentralized finance (DeFi). If you are willing to submit a governance proposal, I would fully support it. Of course, implementing this functionality may take some time.

Ryan:

What is the current scale of this market? I see that the tokenized assets you have on Ethereum are about $60 million.

Ian:

If I remember correctly, the tokenized amount has already surpassed $70 million today. We have indeed exceeded the total value of certain stocks since our launch.

Ryan:

So what assets can users purchase? Can they buy stocks of all major U.S. companies? Or indices like SPY, NASDAQ, or QQQ, can these assets be purchased?

Ian:

Currently, the most popular assets include all major stocks and major ETFs. One advantage of our model is that it is very simple to bring additional assets on-chain because we do not need to recreate liquidity. We can directly tap into traditional financial markets. This means we can regularly bring more assets online, which is very easy for us. All that is required is to deploy a smart contract. After that, users can repurchase these assets through the platform and trade at the best prices and liquidity because we directly connect to the liquidity sources of traditional financial markets.

Why Choose Ethereum?

Ryan:

Why did you choose Ethereum as your starting point?

Ian:

I think there are three main reasons. First, Ethereum leads in total locked value (TVL) in the tokenization of real-world assets (RWAs). In other words, the liquidity of assets on Ethereum is very abundant, especially in the stablecoin space.

At the same time, Ethereum has a mature decentralized finance (DeFi) ecosystem. The concept of DeFi was originally born on Ethereum, so if you want to design these assets as permissionless foundational tools, choosing Ethereum as a platform can help you build an ecosystem around these assets. As Nate mentioned, ultimately, the greater utility of these assets can form, making the tokenized versions truly superior to the assets existing in traditional financial accounts.

Finally, Ethereum has a robust technical architecture, which is crucial for achieving "instant liquidity." The so-called instant liquidity refers to the ability to bring liquidity from traditional financial markets into the blockchain in real-time. This architecture makes Ethereum the most suitable platform for tokenizing traditional financial assets among all blockchains. Through Ethereum, we can establish a bridge connecting traditional financial liquidity and blockchain technology, and start achieving this goal.

The Combination of Stocks and DeFi

David:

As more and more tokenized stocks go on-chain, I believe these assets will no longer be confined to the framework of traditional finance but will possess entirely new characteristics. In a traditional brokerage account, like Robinhood, I only have a few operational options: buying and selling stocks or engaging in margin trading. But when stocks are tokenized and exist on Ethereum, they will integrate into the entire decentralized finance (DeFi) ecosystem, a realm that traditional stocks have never experienced. You could say that in the second half of 2025, we witnessed the fusion of stocks and DeFi.

This makes me feel that putting stocks on Ethereum is very meaningful. While traditional finance can meet basic trading needs, such as buying and selling stocks, what is truly attractive is integrating stocks into a rich and vibrant DeFi ecosystem. In this system, users can not only buy and sell stocks but also send stocks or participate in liquidity provision. Although the current on-chain liquidity may not yet match that of traditional financial markets, in the future, we may achieve a balance between the two.

**However, I don't think this is the main goal. The real goal is to deeply integrate stocks with ** DeFi ** applications. This is what I believe the significance of stocks existing on-chain is, especially on Ethereum. I wonder if this aligns with your views? Is the primary task of tokenized stocks this, or are there other goals?**

Nathan:

I think your point is partially correct. While the innovations in DeFi are exciting, some innovations may be overly complex, and most investors do not need complicated financial instruments like interest rate swaps or structured products. We are still in the early stages of tokenized stocks, and many use cases will take time to develop. As you mentioned, in the short term, on-chain liquidity may not be comparable to traditional stock markets. This is also why we focus on bringing the liquidity of traditional financial markets on-chain.

In terms of DeFi applications, we try to keep it simple. We want to provide a similar experience to global investors as clients of major U.S. brokerage firms while lowering the cost of leveraged capital. Currently, ordinary investors typically have to pay high leverage fees, while institutional investors have very low costs. We aim to provide global investors with lower capital costs through on-chain tokenized stocks. This includes combining lending protocols and RFQ (Request for Quote) decentralized trading environments to achieve this goal. At Ondo, much of our work involves applying existing technologies, such as lending protocols and decentralized exchanges, to traditional financial markets.

Ryan:

I completely understand. I think the key point David mentioned is that the innovations in DeFi have matured, and as asset issuers, you only need to focus on issuing tokenized stocks or other assets. After that, DeFi will find various ways to unlock the potential of these assets. For example, right now, I cannot buy Tesla stock with Ethereum, let alone at 10 PM on a Saturday night.

David:

Now, stocks have essentially become an open API interface for Solidity developers to use freely. DeFi provides this capability. In the past, stocks never had such functionality. And now, stocks have become "financial Lego modules" that DeFi developers can use. This is the goal we have always pursued. In this way, we can stimulate permissionless innovation, which is very important.

Ian:

I completely agree, this means that the way assets are managed will undergo a fundamental change. When individual stocks can circulate freely on-chain and allow for permissionless innovation, the entire market will change. For example, if I want to invest in a defense ETF but want to include Palantir stock, it would be nearly impossible to ask a fund manager to create such a product. But if all of this is on-chain, I believe someone will develop a kind of ChatGPT interface that can automatically generate and dynamically adjust a portfolio based on my needs. This personalized investment approach will become possible. The "financial Lego modules" you mentioned in the form of individual stocks are indeed very interesting, and I think it will surprise many people.

Which Chains Will Settle RWAs?

Ryan:

We are now thinking about which blockchains will benefit the most as real-world assets (RWAs) gradually go on-chain, such as government bonds, stablecoins, and even stocks. How will different chains develop and change?

This morning, I looked at some data and found that Ethereum dominates the real-world asset space. I was somewhat surprised because Ethereum currently holds about 70% of real-world assets, mainly due to the issuance of stablecoins, with Layer 2 (L2) networks also accounting for a portion. If we look at EVM, this ratio is as high as 93%. This indicates that Ethereum has a significant network effect in this area, especially when we consider the widespread application of EVM. At the same time, we are also seeing some enterprise-level Layer 1 chains emerging and gradually developing. For example, Stripe launched Tempo, which is an EVM-based chain but is an independent L1. Circle also launched Arc, specifically for stablecoins. These are new chains focused on real-world assets, and some issuers are even starting to design their own L1. I know Ondo also has its own L1, but I'm not sure if it is still in the testnet phase or has officially launched. As far as I know, it is also EVM-based.

Can you talk about these changes? Which assets will circulate on open, permissionless, fully decentralized public networks like Ethereum? What role will enterprise-level L1s play? How will Ondo's L1 position itself? How will these different chains and ledgers work together, and what are their respective roles?

Ian:

That's a very good question and a hot topic in the industry right now. We are seeing many asset issuers choose their infrastructure based on their specific needs, such as Ethereum, Solana, and other public blockchains that are already very mature. However, if certain issuers need additional features, such as controlling block time and latency, adding privacy protection, or meeting specific issuance requirements, then designing their own L1 becomes meaningful. Especially when dealing with real-world assets, its trust mechanism is completely different from cryptocurrencies.

So, I don't think it's a bad thing for issuers to design their own chains. As you mentioned, we were one of the earlier companies to announce the design of our own chain, and our Ondo L1 is also EVM-based. But it is actually a specially built environment designed to simplify the issuance of tokenized stocks, ETFs, and other securities while also having some additional features. Once these assets enter Ondo's L1, they can circulate freely to Ethereum and other public blockchains. We design all assets as Layer 0 OFTs (Open Fungible Tokens) because we want these assets to go where the users are and support the DeFi ecosystem for these assets. Therefore, I see this as just another sign of our evolution towards a multi-chain world, where certain chains will focus on specific use cases.

Ondo Chain will particularly focus on the stock sector and gradually expand into brokerage and prime brokerage, but that doesn't mean we don't support Ethereum. In fact, we chose to issue on Ethereum for the global market first because it has excellent infrastructure and strong liquidity. Therefore, I believe we are moving towards a world of multi-chain collaboration, where different chains will optimize based on demand. Ultimately, this diversification will drive asset innovation and distribution, as users can choose the appropriate environment based on their needs. For example, the current state of DeFi.

David, you previously mentioned that in traditional brokerage accounts, users can easily buy and sell stocks and engage in margin trading, while DeFi currently cannot support providing margin for 1,000 different assets simultaneously; its design does not support such scale. So, if you could design an L1 that could easily support margin trading for prime brokerage and cover 1,000 different assets, that would be very attractive. Some L1s are not designed in this way, and that's okay. But it means that we, as asset issuers, and the use cases we envision for our roadmap must be built for this.

David:

So, what are the design characteristics of an L1 that unlock this capability? My understanding is that the application layer can theoretically achieve any functionality. What is the unique advantage of L1 that enables it to achieve such capability?

Ian:

I don't think the application layer can solve all problems. The latency of a specific network is an unavoidable limitation, and privacy protection features may also be difficult to implement in certain networks. Additionally, the design of network security may impact certain applications. Therefore, I believe issuers will face certain limitations when choosing networks, but that does not mean the problems cannot be solved. I also don't think a single L1 can meet all needs. In fact, we have already seen how Ethereum and Solana optimize in different areas; this diversification is normal and necessary.

The key is that we need to ensure that these different L1s and technology stacks can communicate efficiently with each other to avoid creating liquidity islands. If we ultimately just create a blockchain ecosystem that does not interconnect, have we really solved the problems of traditional finance? Because that is precisely the current state of traditional finance.

Nathan:

Yes, that is exactly the goal of Ondo Chain. We want to help issuers easily achieve multi-chain support while connecting their assets to a broader public blockchain ecosystem like Ethereum, Solana, BNB Chain, etc. For issuers, distributing assets across multiple chains may face many management challenges, and we have experienced similar pain points. As we become increasingly complex in our infrastructure for instant minting and burning thousands of different assets, this challenge will only increase. Therefore, we see Ondo Chain as a hub where issuers can first import their assets, and then we help them migrate those assets to a broader ecosystem. I think the latency issue is indeed very important.

We also need to consider risks like front-running, which may affect the investor experience on public Ethereum and may not be suitable for all use cases.

Ryan:

I want to explore this topic further. We recently held a debate discussing whether real-world assets should exist on public blockchains. One professor argued that the immutability of real-world assets is a flaw rather than an advantage. For crypto-native assets, immutability is a feature, but for real-world assets, if an account is hacked and assets are transferred to a malicious organization, that would be a serious issue. Therefore, he believes that real-world assets are not suitable for public blockchains. Another professor argued that the neutrality of public blockchains is precisely their advantage. All industries can coordinate using this neutral infrastructure.

If we want to avoid the situation where every institution in traditional finance has its own independent ledger, then we need to use public blockchains as a unified state. What do you think? Are public chains suitable for real-world assets? Is immutability and decentralization an advantage or a flaw?

Nathan:

I think this question can be discussed separately. First, regarding the view that public blockchains are not suitable, I believe that the trading of real-world assets does not necessarily require immutability.

You do not need a permissioned blockchain to achieve transaction reversibility; transaction reversibility can be implemented through token contracts or the application layer. It depends on the scale of the transaction, the use case, and the needs of both parties involved. For example, in traditional finance, different settlement times and reversibility options already exist, such as the difference between wire transfers and ACH. Therefore, I believe a spectrum will emerge in the market that allows for the choice of instant settlement or reversible transactions. I think there will be more cases where trading real-world assets is set to be reversible for a period of time. This is also the benefit of separating trading from settlement, just like in traditional finance, allowing you at least several hours or once a day to correct mistakes.

As for the broader question, I think we need to reach a consensus on what we are discussing before we can even answer it. Public chains and permissioned chains are not in a binary opposition. You can insert permission controls at many different levels of the technology stack, such as the ability to deploy code, the ability to view the blockchain explorer, the ability to run validators, the ability to own wallets, etc.

In the case of Ondo Chain, validators will largely be permissioned, as this helps with compliance for some highly regulated activities we are targeting, especially in the brokerage dealer space. Clearly, for many activities, this is not necessary, as asset managers can bring tokenized securities onto public chains. But when broker-dealers handle transactions on behalf of clients, they have a responsibility to ensure proper routing, best execution, and that clients' orders are not front-run. From a legal compliance perspective, this could be problematic, especially in the presence of malicious MEV, so controlling permissions on validators can address these issues. This is helpful for certain applications, but we can still achieve permissionless code deployment and permissionless wallets.

So, from a practical perspective, Ondo Chain can still be considered a public blockchain. Many of the public blockchains and cryptocurrencies we might think of now actually have a basic set of permissioned validators.

Ian:

I find this debate a bit interesting. Stablecoins have actually simplified the debate, as stablecoins have thrived on public permissionless chains. They are not built in the form of some permissioned asset. They have some compliance controls and can thrive in this model. This is not a permissioned launch at all. As for the question of the legality of this model and what issuers should do, this is part of what the Genius Act aims to address.

So I don't think this is a debate. I believe real-world assets can thrive on public permissionless chains. This is where all the innovation happens. Fundamentally, this is about permissionless access. Global access is clearly what stablecoins and other real-world assets need, as well as the innovations designed around these assets in DeFi that make them better than traditional finance.

Therefore, if you believe that real-world assets cannot truly operate on permissionless chains, then I don't know what that means. When you look at the history of real-world assets in this space so far, it clearly shows that real-world assets on public permissionless chains can thrive, bringing about tremendous innovation, and have now received approval from the U.S. Congress with support from the Genius Act.

Is Wall Street Ready?

Both of you come from Wall Street. What is Wall Street's attitude towards these changes? Are they aware of what is about to happen? Are they optimistic about tokenization? While it seems they are starting to pay attention to stablecoins, do they truly understand the impending transformation?

Ian:

To be frank, I don't think they fully realize the profound impact of these changes. But at the same time, many institutions are actually preparing for this moment, which is worth noting. As the regulatory framework gradually becomes clearer, I am optimistic about the actions being taken by asset management companies, especially some banks. Our goal at Ondo has never been to replace banks or the traditional financial system, but rather to enhance the existing system through technological innovation, enabling it to go on-chain and become a more efficient and open version, thus achieving global access and a scale of innovation that was previously hard to reach.

Therefore, we are very willing to collaborate with traditional financial institutions. For example, Ryan, you mentioned Fidelity; they just launched the first money market fund on-chain, and they are one of the largest issuers of money market funds in history. Ondo provided initial funding support for this fund—$100 million came from our OUSG product. This is a successful case of our collaboration with Fidelity, helping them smoothly complete their first attempt on-chain. Earlier this year, we also partnered with JPMorgan to conduct a pilot project that connected their Kinexys platform with the Auto Chain testnet, achieving around-the-clock liquidity support between traditional finance (TradFi) and the on-chain environment.

We are pleased to help these traditional financial institutions go on-chain. But to answer your question, do all of them realize the changes that are about to happen? Frankly, no. Even the future of cryptocurrency is sometimes difficult for me to predict completely.

What Will Happen Next?

Ryan:

What do you think the future will look like? If we look ahead to 2030, what do you think capital markets will look like? What will traditional finance be like? How will Wall Street respond to these changes? What will the market size of tokenized assets be? Currently, we are still at a stage of less than one trillion dollars, around $250 billion. How large will this market expand? How fast will the changes occur? What will the future landscape look like?

Ian:

That's a difficult question to answer. Because from the current situation, we see that the market adoption trend is actually a typical "hockey stick" growth—slow progress at first, with almost no visible change, but over time, as key technologies and market conditions mature, the adoption rate suddenly starts to soar. I think the rise of stablecoins is a classic example. Stablecoins have formed a complete DeFi ecosystem, with asset sizes rapidly growing to $280 billion and continuing to expand. This is because more and more people realize that stablecoins are a convenient way to access dollars. I believe that in the future, U.S. Treasury bonds, U.S. stocks, and U.S. ETFs will also experience similar growth trends.

I cannot provide specific numerical predictions, but I am very confident that by 2030, many people opening investment accounts for the first time will choose to trade on the blockchain, holding stocks or other asset classes through on-chain technology. At the same time, they will enjoy a 24/7 trading experience, buying or selling without being restricted by traditional market hours.

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