Ondo’s tokenized Treasury offering has surpassed BlackRock’s BUIDL in market size, yet the ONDO token continues its downward trend. The connection between Ondo’s expanding business and the value of its token appears to be different than what investors might believe.
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Ondo Finance’s tokenized Treasury product, known as the Ondo US Dollar Yield token (USDY), has now overtaken BlackRock’s BUIDL in terms of size. However, the value of the Ondo (CRYPTO:ONDO) token dropped 9% for the week ending October 17, 2026. Currently, USDY is valued at approximately $2.33 billion, slightly exceeding the $2.2 billion associated with BlackRock’s tokenized fund.
The ONDO token is trading at around 44 cents, reflecting a 3% decrease within a single day. This decline is significantly greater than Bitcoin’s 1.7% decrease and Ethereum’s 3.4% drop over the same period. The ONDO token is now 79.5% lower than its peak of $2.14 reached on December 15, 2024. Even as the USDY product experiences growth, the value of ONDO continues to decline. Does this rise in USDY hint that ONDO is undervalued?
USDY Delivers Returns to Holders, While ONDO Functions as Governance
USDY is a yield-generating token backed by short-term U.S. Treasuries and bank deposits, according to Ondo’s product details. Legally, USDY represents debt from another entity, which should protect its reserves from any potential claims by Ondo’s creditors if the company encounters financial issues. Importantly, USDY is available only to non-U.S. purchasers as it operates under Regulation S.
On the other hand, ONDO acts as a governance token. Those holding ONDO tokens have the authority to vote on proposals concerning the Ondo DAO, which manages various aspects of the platform. While buyers may create and redeem USDY using fiat or stablecoins, ONDO plays no part in that transaction. The $2.33 billion in USDY is owned solely by its holders.
Ondo earns revenue through the difference between two yields: the yield given to USDY holders and the yield generated by the portfolio that backs USDY. However, Ondo Finance does not publicly share the extent to which this yield gap contributes to its overall income.
The only link between Ondo’s commercial success and the ONDO token is its governance aspect. In June, a community member proposed an informal poll within the Flux Finance governance forum regarding the idea of using a portion of Ondo’s revenue to repurchase and eliminate ONDO tokens. It was specified that this was merely an informal gauge of opinions, not a definitive on-chain proposal.
Ondo’s Growth in the U.S. is Dependent on USD and Stablecoins, Not ONDO
Ondo also runs OUSG, a tokenized Treasury fund aimed at accredited investors, in addition to Ondo Global Markets. The BVI division of Ondo issues tokenized notes that mirror U.S. stocks and ETFs for non-U.S. clients, with broker Alpaca protecting the underlying shares. In a communication sent to the SEC on April 13, Ondo requested no-action relief, signaling its intention to track these positions on Ethereum’s main network, with BitGo ensuring the security of the tokens.
A key regulatory milestone for Ondo was the acquisition of Oasis Pro, which provided it with an SEC-registered broker-dealer, a trading system for matching buyers and sellers, and transfer agent services to monitor ownership of each security. On July 23, Oasis Pro Markets gained FINRA approval to offer tokenized stocks and funds to U.S. investors.
However, Ondo’s announcement regarding this approval mentioned that transactions could settle in fiat currencies or “supported stablecoins,” but did not refer to ONDO at all. Therefore, Ondo’s regulated activities in the United States could expand without any increase in demand for ONDO tokens.
BlackRock Continues to Generate Revenue While USDY Outpaces BUIDL
Suggesting that Ondo is a direct competitor to BlackRock might be a bit of an exaggeration. In March 2024, Ondo transferred its OUSG reserves into BlackRock’s BUIDL fund, effectively becoming a client of BUIDL. Furthermore, the USDY portfolio contains an Ondo-tokenized variant of the iShares 0-1 Year Treasury Bond ETF (NASDAQ:SHV), which is managed by BlackRock. Thus, BlackRock continues to earn fees as USDY rises beyond BUIDL.
Additionally, the two offerings target different customer bases. BlackRock developed BUIDL in collaboration with Securitize for large institutions, while USDY is designed for non-U.S. individuals and firms, along with crypto lending and trading platforms that accept it as collateral. At present, USDY leads BUIDL by a slim margin, around $130 million to $160 million depending on data sources, indicating that a single significant deposit into BUIDL could alter their standings.
ONDO’s Market Capitalization Does Not Include 5 Billion Tokens Yet to Be Released
Currently, ONDO’s market capitalization stands at approximately $2.13 billion, which is lower than USDY’s valuation. Its fully diluted market cap, accounting for all 10 billion tokens set to exist, amounts to around $4.38 billion. This gives ONDO a more appealing price point in comparison to USDY. However, this assessment misleadingly implies that the deposits held by customers are assets of token holders.
Supply also plays a crucial role in price dynamics. Out of a maximum of 10 billion ONDO tokens, roughly 4.87 billion are currently in circulation, meaning only 49% of the total supply is available to the market. Ondo still has 5.13 billion tokens awaiting release, which could further impact market conditions.
Is ONDO Undervalued Now That Ondo’s Tokenized Treasury Leads BUIDL?
Not necessarily. The growth of USDY does not imply that ONDO is undervalued, as ONDO holders have no rights to USDY’s reserves, nor any equity in Ondo Finance, and do not share in the company’s income. Owning ONDO allows for a vote on the direction of Ondo, but offers no entitlement to its cash flow, especially with 5.13 billion tokens yet to be unlocked.
We would reconsider our position if a formal proposal to allocate fees passes in an on-chain vote and Ondo begins using its revenue to repurchase ONDO. Until that occurs, USDY may continue to rise beyond BUIDL while ONDO trails behind Bitcoin, as seen in the week ending October 17.
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