What to know:
- Ondo Perps now accepts SPYon, QQQon and other tokenized stocks/ETFs as margin, letting users trade without selling holdings.
- Using tokenized stocks as both hedge and collateral cuts required capital nearly in half for market makers, enabling tighter spreads.
- With $1B TVL on Ondo Stocks, the setup aims to deepen equity perp liquidity and bridge on-chain trading.
Ondo Finance has made available tokenized stocks and ETF collateral to all Ondo Perps users apart from those restricted jurisdictions. With this change, traders are not bound by the requirement to sell their holdings. Their assets (e.g. SPYon and QQAon) can be used as leverage to trade futures contracts on assets including equities, indices, and commodities.
Spot and Perps Unified
With this change, Ondo Perps has been tied up with Stocks of Ondo, the issuer’s platform of security tokens.Key entities are Ondo Finance, liquidity venues, retail traders, institutional participants, and market making firms which provide underlying exposure from NYSE and Nasdaq.
Source: CryptoRank
Users can now hedge directly on the chain because holding position and perp positions are in the same wallet and don’t need to go separate brokerages for hedging.
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Halving Capital Needs With Tokenized Collateral
As was with equity perps in the past, the problem was that there was a structural inefficiency. Short hedging at the market maker level for a short NVDA perp, hedging was done by depositing margin of stablecoins on the platform, and And a cash or shares was held on the brokerage account. In other words, market makers were effectively paying twice for the same exposure.
Ondo is able to reduce the hedging to one pool by using tokenized stocks as both the hedge and collateral. Per them, this means that capital requirements can be cut by almost half, which in turn boosts the returns of market-makers and permits lower spread prices.
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RWA Momentum Builds Path To Deeper Equity Perps
The decision to go ahead with launching tokenized real-world assets (RWAs) has become a new trend with the wider adoption of tokens in institutional circles, because these days companies are looking forward to getting access to traditional derivatives through on-chain.
Source: Ondo Finance
Ondo tokenized stocks exceeded the $1 billion mark in TVL (total value locked) eight months after their debut. If trading costs remain low, the platform would create a liquidity circuit leading to a better supply of equity perps. As such, it may not only bring the perps closer to the level of traditional derivatives venues but also make them more accessible to a wider public.
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