Ondo Scraps Its Own L1 for the Ondo Network

Ondo Finance abandoned the blockchain it had been building for more than a year and replaced it with something narrower. The company, which issues tokenized versions of US Treasuries and stocks, said on Tuesday that it had dropped the layer-1 Ondo Chain it announced in February 2025 — a full blockchain of its own, running its own validators and settling its own transactions — in favor of the Ondo Network, a private execution layer aimed at institutions. Its first application is Ondo Perps, a market for perpetual futures, derivatives contracts with no expiry date, collateralized by tokenized assets. CoinDesk, which reported the change on 28 July, quoted Ondo's chief executive framing it as a continuation rather than a retreat: "The Ondo Network is the continuation of what we set out to build with the Ondo Chain. It's where we landed when we looked at the actual needs we had for the applications we were building."

The Business: $2.6 Billion in Treasuries and $850 Million in Equities

Ondo's core activity is tokenization: taking a conventional financial asset, holding it through a regulated structure, and issuing a blockchain token that represents a claim on it. Roughly $2.6 billion of tokenized US Treasuries sit across its two main products, OUSG and USDY, and about $850 million of tokenized equities sit alongside them. The company's broker-dealer arm holds FINRA approval to operate regulated markets in tokenized securities, which is the permission that separates a token issuer from a venue where those tokens can actually be traded. That combination — an inventory of tokenized assets plus a license to run markets in them — is what the new network is built to serve.

The Abandoned Design: A Chain of Its Own, Announced in February 2025

The original plan was a layer-1, the base layer of a blockchain system that maintains its own ledger and finalizes its own transactions rather than borrowing security from an existing network. Building one is a substantial commitment: validators have to be recruited, a token economy designed, wallets and bridges integrated, and liquidity persuaded to move across. For a tokenization business the calculus is less obvious than it looks, because the assets it issues already live where the buyers are. Tokenized funds have generally expanded by deploying onto established chains rather than by asking holders to follow them somewhere new, and the same pattern shows up when traditional asset managers bring a fund on-chain through existing infrastructure. A private chain solves distribution problems that a tokenization issuer does not have, while creating a cold-start problem it would rather avoid.

The Replacement: Execution in Private, Settlement in Public

The Ondo Network separates the two halves of a trade. Order matching happens privately on the network, where speed is the priority and the order flow is not visible to anyone outside it; the resulting transfers of assets are finalized on public blockchains, which retain the record of ownership. That split responds to a specific institutional objection to trading on public infrastructure: every order, position and rebalancing is broadcast in real time to competitors who can read it. Keeping execution private while settlement stays public is an attempt to preserve the auditability of an open ledger without publishing a trading desk's intentions to the market. It also removes the reason to run a chain at all, since settlement is delegated outward rather than reproduced in-house.

What Comes Next: Perps First, Then Spot, Lending and Structured Products

Ondo named perpetual futures as the first market on the network, with spot trading, lending, structured products and settlement infrastructure described as later scope. Perps are a logical opening because they are the highest-volume instrument in crypto markets and because collateralizing them with tokenized Treasuries gives the collateral a yield that cash margin does not earn. What is unresolved is whether institutions accept a venue whose execution layer is operated by the same company that issues much of the collateral, and whether a private matching engine attracts the market makers that a derivatives book needs to quote tightly. Neither question is answered by the launch itself; both will be visible in whatever volume the perps market records over its first months.

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