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What is ONDO and what is its role in Ondo Finance?

ONDO is the governance token for Ondo Finance, the protocol behind yield-bearing tokens like USDY and OUSG. Holders vote on the Ondo DAO and Flux Finance.

Vahe HakobyanEditor-in-chief Updated Oct 6, 20263 min readFact-checked

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What is ONDO and its role?How does Ondo Finance work?Who created Ondo and when?How is ONDO different and regulated?FAQ

Short answer

ONDO is the governance token for Ondo Finance. Ondo Finance is a protocol that turns US Treasuries and bonds into yield-bearing tokens. Holders use ONDO to vote in the Ondo DAO, while products like USDY and OUSG provide the yield.

The token sits apart from the yield products it helps govern. Ondo Finance was created by Nathan Allman, and ONDO arrived in a public airdrop in January 2024. The Ondo Foundation issues ONDO and was founded in 2022.

What is ONDO and its role?

ONDO is the governance token for Ondo Finance's tokenized real-world asset protocol. A governance token gives holders voting rights over a protocol. ONDO is not a share in Ondo Finance, and it is not backed by the assets the protocol tokenizes.

How does Ondo Finance work?

Ondo Finance tokenizes US Treasuries and bonds into yield-bearing tokens such as USDY and OUSG. A yield-bearing token pays income based on the assets behind it. ONDO holders govern the Ondo DAO, which controls protocol changes and the DAO treasury. The Ondo Foundation helped launch the Ondo DAO, and the DAO governs Flux Finance.

Who created Ondo and when?

Ondo Finance was created by Nathan Allman. The Ondo Foundation issues ONDO. It is a nonprofit Cayman Islands foundation company with no beneficial owners, and it was founded in 2022. The ONDO token launched in a public airdrop in January 2024.

How is ONDO different and regulated?

ONDO is not a stablecoin. It is a governance token, and it is not pegged to the US dollar or backed by US Treasuries. US securities rules limit Ondo's yield products: USDY is not offered to US persons, and OUSG is sold only to accredited investors. Tokenized Treasuries still carry issuer and smart-contract risk.

ONDO compared with a typical stablecoin
Criterion	ONDO	Stablecoin
Main role	Governance token for Ondo DAO	Pegged token for payments
Peg	Not pegged to a dollar	Usually pegged to a fiat currency
Yield	Token itself pays no yield	May pay yield from reserves
Backing	Not backed by US Treasuries	Backed by issuer reserves
US access	Sold on exchanges that list it	Issuer rules vary by coin

Frequently asked questions

US residents may be able to buy ONDO on exchanges that list it, depending on the platform's rules. ONDO is not the same as Ondo's yield products, which have US restrictions.

No. ONDO is the governance token for Ondo Finance, while USDY is one of Ondo's yield-bearing tokens tied to US Treasuries.

Flux Finance is a lending protocol that supports tokenized securities as collateral. The Ondo Foundation helped launch it, and the Ondo DAO governs it.

No. ONDO is a governance token and does not pay a yield by itself. Ondo's yield-bearing products are where the income comes from.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.