Ondo Finance has introduced a significant upgrade to its asset tokenization infrastructure, rolling out a new mechanism that allows eligible institutions to convert traditional stocks and exchange-traded funds directly into their onchain tokenized equivalents, or conversely, redeem those digital tokens for the underlying conventional shares.
Under the newly deployed system, approved institutional participants can seamlessly transfer shares held within their Alpaca accounts directly to Ondo via an internal book transfer process. Once received, corresponding Ondo Stocks tokens are officially issued onchain. The operational workflow is entirely bidirectional, meaning that the process also works in reverse, granting institutions the flexibility to redeem the digital tokens at any time in exchange for the underlying traditional shares.
This novel in-kind option serves as a major expansion of Ondo’s existing infrastructure, which has historically relied on a cash-funded model. Under the legacy cash-funded system, an institution that already held the underlying traditional shares was still legally and operationally required to provide separate, unencumbered cash to mint the corresponding digital tokens.
The introduction of the in-kind route changes the capital dynamics significantly, allowing institutions to utilize their existing equity shares directly. By doing so, market participants can potentially reduce the amount of additional capital needed to create and maintain tokenized inventory on public blockchains. According to commentary provided by Ondo, this structural change could effectively mitigate financing costs while simultaneously easing timing mismatches that frequently occur between the settlement of traditional legacy shares and onchain tokenized positions.
At launch, these streamlined conversions are fully available across two major blockchain networks: Ethereum and BNB Chain. However, access to the infrastructure remains strictly controlled and is currently restricted to institutional clients who have been thoroughly vetted and approved by Alpaca. Additionally, participants are required to maintain active, fully compliant accounts with both Alpaca and Ondo simultaneously to facilitate the underlying brokerage and tokenization linkages.
This development arrives as Ondo Finance continues to cement its status as a dominant player within the rapidly expanding real-world asset tokenization sector. Data aggregated by industry tracking platform RWA.xyz illustrates the protocol’s substantial footprint, positioning Ondo as one of the largest tokenization platforms measured by total onchain value. According to RWA.xyz metrics, the platform currently accounts for approximately $3.63 billion in distributed assets spread across 441 distinct products. This impressive volume places Ondo firmly as the second-largest tokenization platform in the ecosystem, trailing only Securitize in total assets under management.
The expansion of Ondo’s offerings reflects a broader, ongoing trend within the institutional finance sector, where traditional financial firms and decentralized finance protocols increasingly seek out ways to bridge the gap between legacy capital markets and high-efficiency blockchain rails. By streamlining the creation and redemption cycles of tokenized equities, initiatives like Ondo’s in-kind conversion system aim to reduce operational friction, lower liquidity hurdles, and make it easier for institutional balance sheets to participate in onchain financial ecosystems without incurring heavy liquidity penalties or unnecessary foreign exchange and capital lock-up costs.
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