Same Asset, Different Tokens: A Comparative Analysis of Ondo’s OUSG, Mountain Protocol’s USDM, and BlackRock’s BUIDL

Introduction

The recent accomplishment of BlackRock’s BUIDL fund, surpassing $500 million in assets under management within just four months of its launch, serves as a testament to the accelerating adoption of digital assets within the financial industry. This achievement underscores the robust growth and confidence in tokenized assets and highlights the trend of other notable tokens, such as USDM and OUSG, reallocating their assets to BUIDL due to its compelling features and strategic advantages. Notably, OUSG by Ondo Finance contributes to 40% of the assets under management of BUIDL, illustrating the substantial impact and trust in the BUIDL fund. Moreover, integration of the BUIDL token as collateral by leading institutional brokers like FalconX and Hidden Road is further enhancing its utility and accelerating its adoption.

Amidst this dynamic backdrop, three tokens—BUIDL, USDM, and OUSG—stand out, each tailored to distinct market demands. Both USDM and OUSG tokens provide exposure to BUIDL, making it noteworthy to compare them, especially as tokenization is fundamentally transforming all major product features.

Consequently, as the tokenized asset market continues to grow, it is increasingly important for investors to understand the token level to make informed investment decisions. This article aims to compare BUIDL, USDM and OUSG tokens by examining their operational strategies, market positioning, and regulatory compliance, to exemplify their unique strengths and  delineate the challenges they face from a risk perspective. We will also analyze the product structures, associated investor rights and conditions attached to each token. By exploring these aspects, we offer insights into navigating the complexities of the digital finance landscape and making well-informed investment choices.

BlackRock USD Institutional Digital Liquidity Fund (BUIDL) Token:

BUIDL, issued by BlackRock and tokenized through Securitize, is structured as an ERC-20 token operating on the Ethereum network. Based in the British Virgin Islands, BUIDL primarily invests in low-risk, short-term US Treasury securities, aiming to offer security and liquidity to its investors. A significant feature of BUIDL is its USDC liquidity facility, which is managed through smart contracts, facilitating immediate token exchanges. This feature significantly enhances liquidity and focuses on offering an efficient means of managing digital asset investments.

Ondo Short-Term US Government Bond Fund (OUSG) Token:

OUSG, offered by Ondo Finance, provides liquid exposure to short-term US Treasuries with 24/7 tokenized subscriptions and redemptions. Operating as an ERC-20 token on Ethereum, Polygon, and Solana, OUSG focuses on ultra low-risk investments in US Treasury bills. The majority of its portfolio is invested in BlackRock’s BUIDL fund, with additional allocations in FedFund, bank deposits, and USDC for liquidity. Key features include instant minting and redemption, low minimum investment amounts, and two versions of the token: accumulating (OUSG) and rebasing (rOUSG). The USDC liquidity facility offered with BUIDL further enhances immediate liquidity, making OUSG a flexible and efficient investment option. (Read our full OUSG report here)

Mountain Protocol USD (USDM) Token:

USDM, offered by Bermuda-based Mountain Protocol Limited, is a yield-bearing stablecoin initially launched on the Ethereum network and expanded operations to Polygon, Arbitrum, Optimism, and Base. As an ERC-20 rebasing token pegged 1:1 to the US dollar, USDM is redeemable by primary users on the Mountain Protocol platform. It is backed by low-risk assets, including U.S. Treasury bills, notes, obligations guaranteed by the U.S. Treasury, reverse repurchase agreements with the Federal Reserve, and cash. USDM accrues daily rewards through a manual adjustment of the rewardMultiplier and is also available as a non-rebasing token (wUSDM) for easier integration with DeFi protocols.

In conclusion, it is important to carefully evaluate all investment options, and consider the distinct advantages each token offers. By doing so, you can make strategic decisions that align with your financial goals and risk tolerance. Stay proactive and engaged to leverage the opportunities presented by these innovative digital assets.