Real-world asset (RWA) tokenization is a multi-trillion-dollar frontier in finance, and Ondo Finance stands at the forefront of this transformation. As a structured DeFi protocol, Ondo has carved out a unique niche through its Liquidity-as-a-Service (LaaS) model—a framework that enables projects to access deep liquidity without relying on costly yield farming incentives. Despite the absence of token rewards, Ondo has attracted over $200 million in total value locked (TVL), with DefiLlama reporting $102 million in TVL secured entirely without ONDO-based incentives.
This success is rooted in Ondo’s innovative approach to blending traditional finance with decentralized infrastructure. Now, the protocol is expanding its vision with the launch of OMMF, a new dollar-denominated stablecoin backed by U.S. Treasury-backed money market funds (MMFs). This move signals a pivotal evolution in how digital assets can offer both stability and yield.
How Ondo’s Investment Model Works
Before diving into OMMF, it’s essential to understand Ondo’s foundational structure. When users invest USDC or other stablecoins into Ondo’s funds, the process follows five key steps:
- Ondo converts the deposited USDC into fiat USD, held securely in regulated bank accounts.
- These dollars are used to purchase real-world financial instruments such as ETFs or bond funds.
- New fund tokens are minted and delivered to the user’s wallet.
- As underlying assets generate returns, earnings are automatically reinvested—compounding yields over time.
- At any point, users can redeem their tokens; the fund token is burned, and USDC is returned.
This seamless bridge between on-chain activity and off-chain assets has powered three flagship products: OHYG, OSTB, and OUSG.
- OHYG: Offers exposure to high-yield corporate bonds.
- OSTB: Focuses on short-term investment-grade corporate debt.
- OUSG: Provides access to short-term U.S. Treasury securities.
Among these, OUSG has emerged as the most widely adopted. By depositing USDC, users receive OUSG tokens whose value appreciates as interest accumulates. In just 10 weeks post-launch, OUSG reached $100 million in assets under management (AUM). Currently, 1 OUSG trades at approximately $100.81, reflecting steady yield accrual.
👉 Discover how tokenized treasuries are reshaping DeFi yields
Expanding Utility with Flux Finance
To enhance the utility of OUSG, Ondo launched Flux Finance, a decentralized lending platform that bridges on-chain and off-chain asset ecosystems. Flux supports both permissionless assets like USDC and DAI, as well as permissioned tokenized securities like OUSG.
On Flux, lenders supply stablecoins to earn yield, while borrowers use OUSG as collateral to access liquidity. Since its mainnet launch in early February, Flux has grown to manage around $300 million in AUM—much of which stems from integrations with Frax and demand for OUSG-backed loans.
This synergy between Ondo’s yield-generating instruments and DeFi lending protocols underscores a broader trend: real-world assets are becoming core components of decentralized financial systems.
Introducing OMMF: The Next Evolution in Stablecoins
Ondo’s latest innovation—OMMF—marks a significant leap forward in stablecoin design. Unlike algorithmic stablecoins pegged by code or collateralized only by crypto assets, OMMF is a tokenized U.S. dollar money market fund (MMF), fully backed by low-risk, short-term debt securities such as U.S. Treasuries.
Why Tokenize a Money Market Fund?
Two primary motivations drive OMMF’s creation:
- Proven Institutional Demand: Money market funds have long served as a safe haven for capital preservation with modest returns. With over **$5 trillion** in assets under management in the U.S. alone, MMFs are trusted by institutions and individuals alike for their liquidity, safety, and consistent $1.00 net asset value (NAV).
- Need for Yield-Bearing Dollar-Pegged Assets: While users have experimented with using OUSG as a dollar alternative for settlements and collateral, its floating price makes it suboptimal for such use cases. A stablecoin pegged to $1.00—yet still generating daily yield—is far more suitable.
Enter OMMF: a rebase-style token that maintains a stable $1.00 peg while distributing interest daily through automatic supply adjustments. This means your token balance increases over time without changing the underlying value—similar to how OlympusDAO’s OHM operated, but with real-world backing.
Key Features of OMMF
- Daily Interest via Rebase Mechanism: Investors earn compounded returns daily as the token supply adjusts upward.
- Full Redemption Flexibility: Users can mint or redeem OMMF on business days.
- On-Chain Reserves: Stablecoin reserves are held on-chain to enable near-instantaneous subscriptions and redemptions.
- Settlement Finality: If reserves are depleted, redemptions settle within T+3 (three business days).
Use Cases Driving Adoption
OMMF isn’t just another stablecoin—it’s engineered for real financial workflows:
- Collateral: Institutions and OTC desks often use stablecoins like USDC as overcollateralized loan backing (e.g., borrowing BTC against USDC). OMMF enhances this model by offering yield-generating, low-risk collateral that supports 24/7 settlement.
- Settlement: Traders, exchanges, and institutional counterparties can use OMMF to settle USD-denominated trades. Both parties continue earning interest during settlement windows, improving capital efficiency and risk management.
- Interoperability with DeFi: Future integrations will allow OMMF to function across lending platforms, DEXs, and yield vaults—making it a versatile building block for next-gen financial applications.
👉 See how institutional-grade yield is entering DeFi
Advantages Over OUSG and Traditional Stablecoins
While OUSG offers excellent yield from U.S. Treasuries, its price floats above $100, limiting its usability in payment and collateral systems that require precise parity. **OMMF solves this** by maintaining a strict $1.00 peg while still delivering competitive yields.
Compared to traditional stablecoins like USDC or DAI—which offer little to no yield unless actively deployed—OMMF generates passive income simply by being held. This transforms stablecoins from idle balances into productive capital.
Moreover, unlike bank deposits exposed to fractional reserve risks and maturity mismatches, MMFs are required to hold fully liquid, short-duration securities—making them inherently safer and more transparent.
Bridging Crypto and Traditional Finance
OMMF enables seamless transitions between stablecoins and yield-bearing cash equivalents like Treasuries and MMFs—particularly valuable for startups, DAOs, and high-net-worth individuals (HNWIs) managing treasury operations.
As more organizations seek efficient ways to deploy idle capital without exiting the blockchain ecosystem, OMMF represents a compelling solution: a globally accessible, programmable, yield-generating dollar stablecoin rooted in real-world assets.
Frequently Asked Questions (FAQ)
Q: What backs OMMF?
A: OMMF is backed by U.S. dollar money market funds invested primarily in short-term U.S. Treasury securities—low-risk, highly liquid instruments regulated under SEC Rule 2a-7.
Q: Is OMMF a stablecoin?
A: Yes. It maintains a $1.00 peg through its underlying MMF structure and is designed for use as digital cash with built-in yield.
Q: How does OMMF pay daily interest?
A: Through a rebase mechanism—the total token supply increases daily based on fund returns, increasing each holder’s balance proportionally.
Q: Can I redeem OMMF anytime?
A: Redemptions are available on business days. Instant redemption occurs if on-chain reserves are sufficient; otherwise, settlement takes up to T+3.
Q: How is OMMF different from USDC or DAI?
A: Unlike USDC or DAI—which require active staking to earn yield—OMMF pays interest automatically just by holding it, thanks to its rebase design.
Q: Will OMMF be available on major exchanges?
A: While listing plans depend on regulatory compliance, integration with major DeFi protocols and centralized platforms is expected post-launch.
With OMMF, Ondo Finance isn’t just launching a new token—it’s redefining what a stablecoin can be. By merging the reliability of U.S. Treasuries with the innovation of blockchain finance, OMMF paves the way for broader adoption of RWA-powered ecosystems.
As digital economies evolve, assets like OMMF represent the future: programmable money that doesn’t sacrifice yield for stability, accessible to anyone, anywhere.