It never rains but it pours! When many people were counting on RWA to save the recent Ethereum liquidity crisis, the emergence of Ondo chain undoubtedly closed this door.
#ONDO#RWA#ETH
For more information about the Ondo project and RWA, you can refer to my previous articles on the homepage
After Ondo Global Market, the project announced the arrival of Ondo chain two days later.
Ondo chain is an L1 chain designed specifically for institutional RWA and is a full Omnichain chain.
Omnichain, in simple terms, is interoperable with other large public chain assets. If Ethereum, Solana, Sui, etc. are compared to large cities, then Omnichain can be understood as the roads and sewers between cities.
Ondo believes there are several reasons why this chain was built instead of using a mature public chain like Ethereum:
1. Stocks and bonds are more like rebase assets like stETH because of dividends and interest, but large DeFi such as uniswap does not support such changing asset types, so ondo decided to develop a new chain to support similar DeFi. (But it can actually be developed on Ethereum, for example, Curve supports rebase assets)
2. If it is only issued on Ethereum, it will lose user resources on Solana. If chain bridging is used, it will create new cross-chain risks.
3. The high gas fee on Ethereum will result in a poor user experience
4. Stocks and bonds have lower volatility than cryptocurrencies. During a bear market, network security and asset prices will be affected, which is unacceptable to RWA.
5. Institutional supervision and compliance are at odds with the “unregulated” nature of blockchain
Ondo Chain is designed as POS proof of stake. Verification nodes must be licensed and continuously monitored, which means that the verification nodes come from within the issuing institution or custodian.
There are also benefits to connecting the verification node to the institution, which reduces the delay of institutional asset transactions and makes it more convenient. The purpose of adding the custodian as a node is also to monitor whether the issuing institution has issued too many tokens and compare them with its collateral.
At the same time, Ondo chain supports the use of RWA assets as gas fees, thereby enhancing the user experience and enabling regulated institutions to conduct transactions on the chain (equivalent to extracting stock transaction fees).
At the same time, Oracle is also provided by institutional validators for on-chain asset data, including asset prices, interest rates, market indices, etc., to ensure that only accurate, reliable and real-time information is published on the chain.
Ondo Chain uses the previously developed Ondo Bridge. Unlike the previous use of Axelar, this time it chose to cooperate with LayerZero and currently supports transfers between Ethereum, Mantle and Arbitrum.
The main validators of Ondo Bridge are collectively called decentralized verifier network (DVN), with verification support provided by Axelar, Polyhedra’s ZKBridge, and LayerZero Labs.
As Professor Chen Jian pointed out, the security that institutions are concerned about is management "security", while Ethereum is concerned about technical "security".
If institutional-level RWA is issued on Ethereum, the price, interest rate, etc. of tokenized stocks will be beyond the control of the institution, which can be said to be a huge "risk" for the institution.
Although RWA assets cannot be directly issued on Ethereum, the design of Omnichain will enable RWA assets to flow on various chains.
There is also a small detail worth noting here: Ondo’s official website UI uses the logos of American local chains such as Sui, Polygon, and Solana, but does not use the Ethereum logo. This shows that the blockchain industry has also been affected by the nationalization of the American right.
From this, it seems that Ondo chain is about to lead the development of the RWA track, and future RWAs may refer to Ondo's approach. As one rises and the other falls, the Ethereum RWA track that had been expected has basically failed.
