Tokenized secure note issuer Ondo Finance and Web3 cross-chain platform Axelar have joined forces to introduce Ondo Bridge, a cross-chain mechanism designed to facilitate seamless transfers of Ondo tokens across different blockchains. This collaboration aims to meet the growing demand for improved stablecoins in various Web3 ecosystems.
The Need for Better Stablecoins
“Demand for better stablecoins is growing – and it isn’t limited to a single Web3 ecosystem,” said Nathan Allman, founder and CEO of Ondo. “The Ondo Bridge enables us to meet that demand wherever it exists, with a superior and safer yield-generating stablecoin.”
In April 2023, Ondo Finance introduced USDY, the world’s first tokenized note secured by US Treasuries and bank deposits. Nathan Allman, CEO of Ondo Finance, emphasized the importance of financial inclusion and revealed their excitement in offering a yield-bearing product that provides financial structuring and investor protections to both individual and institutional investors. USDY aims to expand the universe of investors seeking a more global and digitally-native approach to saving and spending, with improved transparency and security compared to conventional stablecoins.
Ondo Bridge: Facilitating Liquidity and Price Stability
Ondo Bridge will not only support the issuance of yield-bearing tokens but also foster liquidity and ensure price stability for these tokens. The platform incorporates a “burn-and-mint” system, which serves as an innovative strategy for mitigating risks associated with traditionally wrapped assets. By partnering with Axelar and utilizing their state-of-the-art multi-chain communications primitives, Ondo Finance has implemented a novel risk management layer that enables token holders to bridge Real World Assets (RWAs) in a safe and efficient manner.
“We have partnered with Axelar and incorporated their state-of-the-art multi-chain communications primitives together with a novel Ondo risk management layer to help Ondo tokenholders bridge Real World Assets (RWAs) in a safe and efficient manner,” states Ondo Finance’s website.
Additionally, Axelar’s programmable cross-chain platform plays a vital role in managing the supply of USDY. The platform allows Ondo Finance to burn tokenized representations of its real-world assets (RWAs) on one chain and subsequently mint them on another. This burn-and-mint approach ensures seamless and automatic management of USDY supply, increasing convenience and efficiency.
Leveraging Circle’s Cross-Chain Transfer Protocol
Ondo Bridge draws inspiration from Circle’s Cross-Chain Transfer Protocol, which aims to enhance security and price stability. Axelar, with its support for over fifty blockchain networks, introduces its own cross-chain liquidity router called Squid to facilitate the bridge and ensure seamless token transfers.
Valuation and Future Prospects
According to DefiLlama, Ondo Finance is currently valued at over $200 million, demonstrating significant market recognition for its offerings. The total value of USDY stands at over $35 million, further indicating the trust and demand for this yield-bearing stablecoin.
“Native stablecoins are preferred over wrapped versions, but managing supply across multiple chains is complex,” explained Sergey Gorbunov, CEO and co-founder of Axelar Inc. “Together, Axelar and Ondo are pioneering a solution that gives stablecoin innovators tools to achieve better products for their users.”
