Ondo Enables Direct Stock-To-Token Conversion via Alpaca
Institutions can now swap physical shares for Ondo tokens directly, bypassing the need for separate cash funding during the minting process.
Key points
- Ondo Finance allows institutions to convert stocks directly into tokens via Alpaca transfers.
- The new in-kind model removes the need for separate cash funding during tokenization.
- Ondo holds $3.63 billion in distributed assets, ranking second in the tokenization sector.
Ondo Finance now allows institutions to convert stocks directly into tokenized shares. This new pathway eliminates the requirement for separate cash funding.
The system uses an internal book transfer from Alpaca accounts to issue onchain tokens. This change reduces financing costs and timing mismatches for participants.
Mechanics of the Direct Transfer
Approved institutions transfer shares from Alpaca to Ondo through a book transfer. Corresponding Ondo Stocks tokens are then issued on the blockchain.
The process also works in reverse, allowing token holders to redeem for shares. This bidirectional flow creates a seamless bridge between traditional and digital assets.
Capital Efficiency Improvements
The previous cash-funded model required institutions to provide separate capital for minting. The new in-kind option lets them use existing shares instead.
This shift potentially reduces the additional capital needed to create tokenized inventory. Ondo states that this also lowers financing costs for institutional clients.
Market Position and Access
Conversions are currently available on Ethereum and BNB Chain networks. Access is restricted to institutional clients approved by Alpaca.
RWA.xyz data shows Ondo holds about $3.63 billion in distributed assets. It ranks second in the sector behind Securitize with 441 products.
