Ondo Finance, a decentralized investment platform set up by a pair of former Goldman Sachs Group Inc. associates, has launched a new fund through which holders of stablecoins can invest in bonds and US Treasuries.
(Bloomberg) — Ondo Finance, a decentralized investment platform set up by a pair of former Goldman Sachs Group Inc. associates, has launched a new fund through which holders of stablecoins can invest in bonds and US Treasuries.
The fund will be split between three tokenized share classes, each of which invests in a single exchange-traded fund from either BlackRock Inc. or Pacific Investment Management Co., according to a news release. Neither asset manager is directly involved in the new fund’s management.
Investors in the fund will receive tokens on the Ethereum blockchain representing their ownership, which can then be traded and borrowed between other investors white-listed by the fund, through programs running on the blockchain. The fund will process stablecoins at its discretion — including USDC, USDT and DAI — and fiat.
Ondo was founded by former Goldman Sachs staffers Nathan Allman and Pinku Surana. Its investors include Peter Thiel’s Founders Fund, Coinbase Ventures and Tiger Global.
“The crypto market is in desperate need of low-friction access to traditional capital markets,” Allman said in the release. “Large stablecoin holders, including start-ups and DAOs, are faced with a choice between having their purchasing power eroded away by inflation or taking too much risk with the current set of on-chain yield offerings.”
The fund will target investors who collectively hold more than $100 billion in stablecoins which they don’t currently receive yield on, reads the release. Ondo Capital Management will act as investment adviser, Clear Street as prime broker and qualified custodian of the securities and Coinbase as qualified custodian of the USDC. NAV Consulting will be fund administrator and Richey May fund auditor.
Ondo is not the first DeFi project to seek out safe havens within traditional finance. One of the original DeFi projects, MakerDAO, which supports the DAI stablecoin, announced last October that it was moving $500 million worth of the token into short-term US Treasuries and corporate bonds.
Over the past year, the DeFi corner of the crypto market has seen the prices of its underlying tokens take a beating, exacerbated by a slew of hacking attacks.
“DeFi in the last few years has been a sandbox and experimentation around how to build lending, trading and derivatives protocols based entirely on crypto assets,” said Allman in an interview with Bloomberg News. “And suddenly the landscape has shifted a lot.”
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