Key facts
- Ondo Finance launched an in-kind conversion system for tokenized stocks and ETFs.
- Institutions can now use underlying securities to mint tokenized assets, in addition to cash.
- The system allows for redemption of tokenized assets back into traditional shares.
- The feature is available on Ethereum and BNB Chain.
- Access is restricted to approved institutional clients of Alpaca and Ondo.
Ondo Finance has launched a new in-kind conversion system that allows eligible institutional clients to directly convert traditional stocks and exchange-traded funds (ETFs) into their tokenized equivalents, or redeem the tokens for the underlying securities. This new feature complements Ondo's existing cash-funded model, where institutions typically had to provide separate cash to mint tokenized assets even if they held the underlying shares.
The in-kind option enables institutions to transfer shares from their Alpaca accounts to Ondo via an internal book transfer, after which corresponding Ondo Stocks tokens are issued on-chain. The reverse process allows for the redemption of these tokens back into the actual shares. Ondo stated that this approach could potentially lower the capital required to create tokenized inventory and mitigate financing costs and timing mismatches between traditional and tokenized positions.