Ondo’s Tokenized Treasury Product Just Passed BlackRock’s BUIDL. Is ONDO Undervalued?
Ondo's tokenized Treasury product just dethroned BlackRock's BUIDL in size, yet the ONDO token keeps sliding deeper into the red. The relationship between Ondo's growing business and its token's value may not be what investors assume.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Ondo Finance’s tokenized Treasury product, the Ondo US Dollar Yield token (USDY), has surpassed BUIDL from BlackRock (NYSE:BLK | BLK Price Prediction) in size. Despite this achievement, the Ondo (CRYPTO:ONDO) token fell 9% during the week ending October 17, 2026. USDY currently holds about $2.33 billion, slightly more than the $2.2 billion held by BlackRock’s tokenized fund.
ONDO is trading at around 44 cents, down 3% in one day. Its weekly drop is considerably steeper than the 1.7% decline in Bitcoin (CRYPTO:BTC) and the 3.4% dip in Ethereum (CRYPTO:ETH). ONDO is now 79.5% below its all-time high of $2.14, reached on December 15, 2024. While the USDY product continues to grow, the ONDO token’s value keeps falling. Does this increase in USDY suggest that ONDO is undervalued?
USDY Pays Yield to Its Holders, While ONDO Offers Only Governance
USDY is a yield-bearing token backed by short-term US Treasuries and bank deposits, as Ondo states on its product page. Legally, USDY represents debt from a separate entity, which should protect its reserves from Ondo’s creditors if Ondo Finance faces financial difficulties. Notably, USDY is sold under Regulation S, which means only non-US buyers can purchase it.
In contrast, ONDO serves as a governance token. Holders of ONDO tokens have the right to vote on proposals for the Ondo DAO, the community organization overseeing parts of the platform. While buyers can create and redeem USDY using dollars or stablecoins, ONDO has no role in that process. The $2.33 billion in USDY belongs to its holders.
Ondo generates revenue from the difference between two yields: one yield paid to USDY holders and another earned by the portfolio backing USDY. However, Ondo Finance is a private company that does not disclose how much of this yield gap contributes to its revenue.
The only connection between Ondo’s business and the ONDO token is its governance function. In June, a community member proposed a temperature check on the Flux Finance governance forum about using part of Ondo’s revenue to buy back and eliminate ONDO tokens. The post clarified that this was only a temperature check, not a binding on-chain proposal.
Ondo’s US Expansion Relies on USD and Stablecoins, Not ONDO
Ondo also operates OUSG, a tokenized Treasury fund designed for qualified investors, along with Ondo Global Markets. The BVI unit of Ondo issues tokenized notes that track US stocks and ETFs for non-US investors, with broker Alpaca holding the underlying shares. In a letter sent to the SEC on April 13, Ondo sought no-action relief, indicating that it aims to record these positions on Ethereum’s main network, with BitGo safeguarding the tokens.
A significant regulatory advancement for Ondo was acquiring Oasis Pro, which gave it an SEC-registered broker-dealer, an alternative trading system for matching buyers and sellers, and a transfer agent to track ownership of each security. On July 23, Oasis Pro Markets received FINRA approval to offer tokenized stocks and funds to US investors.
However, Ondo’s announcement of this approval said trades could settle in fiat currencies or “supported stablecoins” and did not mention ONDO. Thus, Ondo’s regulated operations in the US could continue to grow without creating demand for ONDO.
BlackRock Continues to Earn Fees While USDY Leads BUIDL
Claiming that Ondo is a direct rival to BlackRock may be overstating the competition. In March 2024, Ondo transferred its OUSG reserves into BlackRock’s BUIDL fund, making it a BUIDL client. Additionally, USDY’s portfolio includes an Ondo-tokenized version of the iShares 0-1 Year Treasury Bond ETF (NASDAQ:SHV), which is managed by BlackRock. So, even as USDY grows past BUIDL, BlackRock still earns fees as Ondo grows.
Moreover, the two products serve different buyers. BlackRock developed BUIDL in partnership with Securitize for large institutions, while USDY appeals to non-US individuals and organizations, as well as to crypto lending and trading applications that accept it as collateral. Currently, USDY’s lead over BUIDL is quite narrow, at roughly $130 million to $160 million depending on the count, meaning a single large deposit into BUIDL could change their rankings.
ONDO’s Market Cap Excludes 5 Billion Tokens Yet to Be Released
Currently, ONDO’s market cap is about $2.13 billion, less than USDY’s. Its fully diluted valuation, which factors in all 10 billion tokens that will ever exist, is about $4.38 billion. This makes ONDO appear more affordable than USDY. However, this comparison mistakenly treats customer deposits as if they belong to token holders.
The supply also affects the price. Of the 10 billion ONDO token maximum, about 4.87 billion are currently in circulation, meaning only 49% of the total supply is available. Ondo still has 5.13 billion tokens to release, which could further affect market dynamics.
Is ONDO Undervalued Now That Ondo’s Tokenized Treasury Leads BUIDL?
No. USDY’s growth doesn’t make ONDO undervalued because ONDO holders have no claim on USDY’s reserves, no ownership stake in Ondo Finance, and no claim on the company’s fees. Holding ONDO for the tokenization theme buys a vote on Ondo’s direction, but no share of its cash flow, and 5.13 billion tokens still have to unlock.
We’d change our view once a binding fee-switch proposal passes an on-chain vote and Ondo starts using its revenue to buy back ONDO. Until then, USDY could keep growing past BUIDL while ONDO lags Bitcoin, as it did the week ending October 17.
Contact [email protected] for any questions or corrections.
Sam Daodu is a crypto analyst who's spent nearly a decade making blockchain understandable—no easy task when most whitepapers read like fever dreams. He writes for 24/7 Wall St., covering Bitcoin, altcoins, and crypto market analysis for investors. Before crypto, he was a tech writer (back when explaining "the cloud" was peak innovation). Since 2018, he's written for CoinTelegraph, Yahoo Finance, The Block, Cryptonews, Zypto, Rain, and more—basically anywhere people want crypto news without the headache. Sam runs MacLabs Marketing, a content agency for crypto brands tired of sounding like AI wrote their website. He also publishes free crypto education on his site for Web3 enthusiasts who think "gas fees" is a typo. When he's not writing or staring at charts, Sam's either: - Watching anime (currently convinced One Piece has better tokenomics than most altcoins) - At the gym sculpting himself into a Greek god - Listening to the music your mum warned you only bad boys listen to Connect: LinkedIn | Email | MacLabs Marketing
