Introducing Ondo Finance’s RWA Integration With Thala

Thala Labs
7 min readFeb 22, 2024

We are excited to announce Ondo’s further expansion into the Aptos ecosystem through a significant integration with Thala. This collaboration will see USDY launching in Thala’s AMM pools, enhancing liquidity options for users. Moreover, USDY will be whitelisted as collateral for the MOD stablecoin, strengthening our vision for a more resilient stablecoin backed by Real-World Assets (RWAs).

Why RWAs?

Real World Assets (RWA) bring a range of off-chain financial assets to the blockchain, encompassing everything from real estate to credit, from T-bills to green bonds. The tokenization of RWAs aids in creating a global financial infrastructure that is programmable, composable, and operational 24/7. According to estimates from BCG’s report, the tokenization of RWAs could reach a staggering $16 trillion by 2030. The adoption of RWA is accelerating, driven by the demand for stable yields in DeFi, although the current adoption still represents only a small fraction of its potential.

Specifically regarding tokenized treasuries, their growth is accelerating rapidly, with more than $840 million already issued — almost entirely in the past year. This surge has been primarily fueled by rising US treasury yields and treasuries seeking stable yields beyond what stablecoins can offer.

We are confident that the tokenization of all real-world assets is inevitable, and we are actively developing the next-generation financial infrastructure to enable the trading of the world’s tokenized assets soon.

What’s Ondo and USDY?

Ondo Finance offers institutional-grade, blockchain-enabled investment products and services. Ondo operates two main divisions: the Asset Management arm (creates and manages tokenized financial products), and the Technology arm (develops DeFi protocols).

Ondo’s flagship products are tokenized cash equivalents that provide very low-risk, high-quality yields from U.S. Treasuries, money market funds, and similar instruments, presenting on-chain investors with an alternative to stablecoins. According to rwa.xyz, Ondo is now the third-largest entity in tokenized treasuries with more than $115 million issued.

One of their premier products is USDY, a tokenized note predominantly backed by short-term U.S. Treasuries (~99%) and bank deposits (~1%). Think of USDY as a yield-bearing stablecoin where the yield compounds automatically; that is, the price of USDY gradually increases.

Key features of USDY include:

  1. Broadly Accessible: Tradable globally in secondary markets and available to non-U.S. investors.
  2. Yield-Bearing: It accrues a variable interest rate, which is adjusted monthly by the issuer. The yield is reflected in the increasing redemption value over time.
  3. Daily Liquidity: Non-U.S. investors can mint and redeem USDY daily.
  4. High-Quality Collateral: Secured by a portfolio of short-term U.S. Treasuries under control agreements.
  5. Compliance with Regulations: Issued in a continuous Reg S offering to offshore investors, incorporating best practices in KYC/AML/CFT procedures.
  6. Bankruptcy-Remote: Assets are structured to be insulated from any potential Ondo bankruptcy.

As of February 21st, 2024, the price of USDY is $1.0281, with a yield of 5.1%, and a Total Value Locked (TVL) of more than $71 million across chains such as Ethereum, Solana, and Mantle. Aptos is set to be included as the fourth chain, with further developments in new staking and re-staking processes to augment the utility of tokenized assets and the capital efficiency of DeFi protocols.

Thala — The Composability Hub for RWAs on Aptos

As a highly performant Layer 1 with robust asset standards like the Fungible Asset Standard, Aptos is one of the chains best suited for RWAs. Aptos enhances the trading and settlement of RWAs with:

  1. Sub-second finality and parallel execution for efficient transactions.
  2. Advanced security using Move Prover and exceptional throughput for robust performance.

Moreover, with the Aptos Foundation’s commitment to bringing RWAs onto Aptos, it has the potential to become the go-to chain for RWAs.

We see Thala as the ultimate hub for RWAs, facilitated by our products such as:

  1. AMM Pools — RWAs can be efficiently swapped along with other stablecoins and Aptos-native assets. We plan to seed liquidity for USDY against other stablecoins to enable investors to acquire USDY within the Aptos ecosystem.
  2. MOD Stablecoin Collateral — We intend to add RWAs as trusted collateral for our stablecoin, aiming to diversify our collateral reserves. Consequently, anyone will be able to deposit RWAs, like USDY, and mint MOD.

Looking ahead, we anticipate integrating RWAs into other innovative DeFi products launched by Thala.

Moving Forward:

We are confident that tokenized treasuries, such as USDY, have the potential to elevate the on-chain interest rates for lenders. The supply and borrow APRs are currently very sensitive to trading leverage demand. By integrating more RWAs like tokenized treasuries on-chain, lenders could earn yields from the real world (currently around 5%) at lower risks. This could incentivize on-chain borrowers to offer rates higher than 5% (presuming market rationality). Additionally, one could utilize advanced strategies through lending/borrowing platforms like Echelon Markets, all underpinned by Thala’s liquidity.

We are excited about our journey to introduce RWAs to Aptos, deepen their liquidity, and facilitate the pioneering of the open financial revolution.

About Thala:

Thala is a decentralized finance protocol powered by the Move language, enabling seamless borrowing of a decentralized, over-collateralized stablecoin, Move Dollar, and capital-efficient liquidity provisioning via a rebalancing AMM on the Aptos blockchain.

Website: http://thala.fi/

Foundry: https://thalalabs.typeform.com/foundry

Discord: https://discord.gg/thala

Twitter: http://twitter.com/thalalabs

Documentation: https://docs.thala.fi

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Thala Labs

Thala is a decentralized finance protocol on the Aptos blockchain.