Ondo Finance has shifted its on-chain infrastructure strategy, abandoning its previously proposed traditional Layer 1 solution and instead launching a trading network called Ondo Network, which focuses on serving institutions' needs for speed and privacy.

First used for perpetual contract trading

The new network will initially be used on Ondo Perps, Ondo's recently launched perpetual contract platform. According to the company's design, users will be able to use tokenized assets as collateral for perpetual contract trading, while trade execution and final settlement will be handled separately.

Unlike other blockchains that process all transactions on the public blockchain, Ondo Network employs a model of private order execution and public on-chain settlement. Orders are first matched in a private environment, and the final asset transfer is then completed on the public blockchain.

Business shifts from issuance to trading

Ondo was previously a major issuer in the tokenized US Treasury and tokenized equity markets. According to rwa.xyz data, the company had approximately $2.6 billion in tokenized US Treasury products (OUSG and USDY) and approximately $850 million in tokenized equity.

This adjustment signifies that Ondo's business is expanding beyond simply issuing tokenized assets to include building the trading infrastructure for those assets. The report notes that this change comes at a time when Wall Street's interest in tokenization and 24-hour markets continues to grow.

Institutional transactions emphasize privacy

Ondo stated that after developing Ondo Perps, the company determined that traditional blockchains are not suitable for meeting the execution speed and transaction privacy requirements of institutional traders. Institutions would find it even more difficult to accept if all order flows, positions, and trading activities were directly exposed on the public blockchain.

The company stated that, in addition to perpetual contracts, this network may also support scenarios such as spot markets, lending, structured products, and settlement infrastructure.

Additional information:The report also mentioned that Ondo's brokerage firm received approval from the Financial Industry Regulatory Authority (FINRA) last week to launch a regulated tokenized securities market and related services.