Applicant information
Name: Ondo I LP, an affiliate of Ondo Finance Inc.
Email: partnerships@ondo.finance
Key Information: OUSG is a tokenized limited partnership interest in Ondo I LP, whose net asset value is backed by short-term US Treasuries via the LP’s investment in Blockrock’s BUIDL Fund and the Blackrock TFDXX
Expected APY: 4.96% as of 08/12/2024. Please note, APY is calculated daily by annualizing the increase in price over the past 30 days.
Underlying asset(s): The significant majority of this portfolio is currently in the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), with the remainder in BlackRock’s FedFund (TFDXX), bank deposits, and USDC for liquidity purposes.
Minimum/Maximum transaction size: Min- 10k, no maximum
Current AUM for asset: $226.11 million
Volume metrics: Please see rwa.xyz dashboard here.
Proposal Summary
Brief outline of the requested allocation of Ethena’s Reserve Fund to your asset/product and benefit to Ethena.
Basics and background
1. How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?
Ondo Finance (the parent company of the general partner and investment manager of Ondo I LP) is the market leader in tokenization, building a number of industry first products. We believe that building a relationship between Ondo Finance and Ethena will form the basis of deeper future initiatives. OUSG is a best-in-class product that provides liquid exposure to short-term US Treasuries with 24/7 stablecoin subscriptions and redemptions, however, Ondo’s mission extends beyond tokenizing yield bearing cash equivalents.
2. Please describe any experience your firm has in working with decentralized organizational structures
- Ondo Finance has extensive experience working with decentralized organizational structures. Most recently, for example, we were included in Arbitrum’s Stable Treasury Endowment Program (STEP) for diversifying their treasury.
3. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?
As of 08/12/2024 , Ondo I LP has $226.11M in TVL. Additionally, as of 08/12/2024, Ondo USDY LLC, a special purpose vehicle that is controlled by Ondo Finance and issues USDY (a tokenized note backed by a perfected, first-priority security interest in U.S. treasuries and U.S. bank demand deposits), has $331.26M in TVL
Legal design
1. Do holders of your product have any shareholder, investor, creditor or similar rights?
Yes, the Ondo I LP fund is structured using a traditional GP/LP model. When buying OUSG Ethena would be a limited partner of Ondo I LP, and as such would be protected in accordance with US securities laws, US bankruptcy laws and Delaware limited partnership laws.
2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.
OUSG is issued under the SEC’s Reg D exemption and is available to global Accredited Investors and Qualified Purchasers. OUSG is also an investment company that is exempt from registration in reliance on Section 3(c)(7) of the US Investment Company Act of 1940, as amended. As part of the onboarding process, investors must verify that they are an Accredited Investor, and attest to Qualified Purchaser status.
3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?
OUSG is set up in a traditional LP/GP structure. In the event of a bankruptcy or insolvency triggering liquidation of the fund’s assets, OUSG holders would be entitled to receive their pro rata share of net asset value. The fund is also designed for bankruptcy remoteness such that creditors and investors of fund affiliates should not have any claim on fund assets.
Smart Contract/Architecture
1. How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports.
2. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
Yes, the fund is permissioned to global Accredited Investors and Qualified Purchasers who have onboarded with Ondo. Once an investor completes the onboarding process and is approved for OUSG, we approve their given wallet(s) to interact with OUSG. OUSG has also been whitelisted as collateral on the Flux Finance decentralized lending protocol.
3. Is the asset/product present on several chains? Are there any cross chain interactions?
OUSG is currently available on Ethereum, Polygon, and Solana
4. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.
OUSG can be used as collateral for borrowing on the Flux Finance protocol (https://fluxfinance.com/). The protocol is a fork of Compound V2 with additional functionality to support both permissionless (e.g. USDC) and permissioned (e.g. OUSG) tokens. Permissions are enforced on a per-asset basis. For example, a USDC lender won’t have any restrictions, but a USDC borrower using OUSG as collateral will need to satisfy OUSG’s permissions. More information is available at https://docs.fluxfinance.com/.
5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
Investors trust Ondo Finance and their audited smart contracts to facilitate burns and mints of OUSG. All administrative permissions for the OUSG smart contract system are secured by industry leading Gnosis Safe multi-signature wallets. However, investors in OUSG are not only subject to smart contracts; they are also party to legal agreements with the fund itself.
6. Is there any custom logic required for your token/product? If so please give any details.
No custom logic is required as OUSG is ERC20 compliant and inherits from the Open Zeppelin ERC20 Standard. Holders, senders, and receivers of OUSG must be present on an audited whitelist contract maintained by Ondo.