Particula Rating Report: Ondo Finance ($OUSG), April 2024

For the first time, Particula is opening up its digital asset risk assessment methodology by sharing one of its recent rating reports of the Ondo $OUSG token, which currently is assigned with a BB rating (speculative, high risk). Since March 27, 2024 the $OUSG token primarily reflects participation in BlackRock’s newly introduced USD Institutional Digital Liquidity Fund (BUIDL).

Growth & Maturation of Tokenized Government Securities Market

In 2023 and 2024, the tokenization market experienced significant growth and maturation due to favorable macroeconomic conditions and increased investor interest. By April 24, 2023, the tokenization of the government securities market had reached $1.2 billion, with major players including Franklin Templeton, BlackRock, Ondo Finance, Superstate, Hashnote, Maple Finance, Backed Finance, and Matrixdock [1].

Market data highlights the profitability of the tokenization of Real World Assets (RWAs), which achieved substantial returns of 285.6% in Q1 2024 [2]. This positions RWAs as the second most profitable crypto narrative during the period, surpassing other lucrative narratives like AI. This strong performance underscores the growing acceptance and recognition of tokenized assets as viable investment instruments, reflecting a maturing market environment.

The growing acceptance of tokenized assets as viable investment instruments is further demonstrated by a survey conducted by EY among 256 institutional investors [3]. The survey found that 57% of respondents expressed interest in investing in tokenized assets, particularly in tokenized private funds, securities (e.g., bonds and stocks), and public funds. Hedge funds were among the institutions most likely to invest initially, with significant interest in tokenization across public, private, and real estate funds.

[1] Report by Roland Berger on The Tokenization of Real World Assets

[2] Top crypto narratives of Q1 2024 by Coingecko

[3] Article written on EY survey

Risk Rating Assessment of $OUSG Token by Ondo Finance

Particula’s rating report on the Ondo’s $OUSG token highlights several positive factors about the issuance, including the issuer’s strong market presence, robust technical infrastructure, ongoing technical security assessments, and the quality of the underlying asset.

However, the rating report discusses challenges related to the $OUSG token, such as the token holder rights, level of investor protection available, reporting practices around financial stability and business continuity as well as, risks related to the $OUSG price development.

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The information and analyses related to crypto values, crypto tokens, and other digital assets (“Digital Assets“) provided by Particula GmbH (“Particula“) are exclusively made available to entrepreneurs within the meaning of § 14 BGB and are intended solely for informational purposes. The provided information and analyses do not constitute a rating as defined in Art. 3 para. 1 lit. a) of Regulation EG/1060/2009 (“Rating Regulation“). A creditworthiness assessment as defined in Art. 3 para. 1 lit. a) of the Rating Regulation, evaluating the issuer’s creditworthiness, is expressly not part of the analysis.

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This assessment is solely based on publicly available information, and Ondo has not reviewed or commented on the content of this assessment.
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