Institutional Investors Gain Liquidity, Stability via Ondo-Figure Hybrid

Ondo Finance, a U.S.-based platform specializing in tokenizing traditional financial assets, has allocated $25 million to Figure Technology Solutions' yield-bearing stablecoin YLDS to bolster its tokenized U.S. Treasuries fund according to reports. This move aims to diversify the reserves backing the Ondo Short-Term US Government Bond Fund (OUSG), which already includes tokenized Treasuries from major asset managers like BlackRock, Fidelity, and Franklin Templeton as per financial data. The fund, designed for institutional investors, offers 24/7 redemptions and an estimated annual return of 3.68%, with approximately $777 million in total value locked (TVL) as of this writing according to market analysis.

The partnership underscores a growing trend in crypto-backed lending, where blockchain-based infrastructure is increasingly being leveraged to bridge traditional and digital finance. Figure, which operates on its Provenance blockchain, has originated over $19 billion in loans across home equity, mortgages, and crypto-backed credit. Its YLDS stablecoin, with a market capitalization of around $100 million according to market data, is now a key component of OUSG's strategy to enhance yield generation while maintaining stability.

Michael Tannenbaum, CEO of Figure, emphasized that the collaboration strengthens YLDS's position in the tokenized real-world assets (RWA) space, stating, "This partnership bolsters the dominance of the $YLDS stablecoin" in tokenized real-world assets. Ian De Bode, President of Ondo Finance, added that the investment "strengthens OUSG's position as the leading on-chain vehicle" for institutional clients.

The investment follows Figure's Nasdaq IPO earlier this year and aligns with Ondo's broader expansion into on-chain finance. In October, Ondo expanded its tokenized asset offerings to BNB Chain, adding over 100 tokenized Wall Street stocks and ETFs. The company also recently secured regulatory approval from the Liechtenstein Financial Market Authority to offer tokenized stocks in Europe.

The deal reflects a broader acceleration in crypto-backed lending, with firms like Block Earner and Ledn expanding Bitcoin-collateralized loan products. Tether, another major player, recently announced a $390 million investment in Ledn, while centralized exchanges are diversifying beyond Bitcoin to include a wider array of crypto-collateralized offerings.

For Figure, the partnership signals institutional confidence in its blockchain infrastructure. The company reported $156.37 million in third-quarter revenue, surpassing analyst expectations, and Mizuho analysts raised their price target for Figure's stock to $56 from $47 according to financial reports. Meanwhile, Ondo's strategic integration of YLDS into OUSG highlights the potential for hybrid models that combine tokenized Treasuries with yield-bearing stablecoins to offer investors both liquidity and resilience.

As the crypto and traditional finance sectors continue to converge, partnerships like this one between Ondo and Figure are likely to play a pivotal role in mainstreaming on-chain finance. By leveraging blockchain's transparency and efficiency, these innovations could redefine how institutional investors access and manage real-world assets in the digital age.