Author: 137Labs
I. The Starting Point: Why Have Stock Perps Always Underperformed?
If we look back at the development path of DeFi over the past few years, a clear divergence emerges: the derivatives market for crypto-native assets (BTC, ETH) has matured considerably, while derivatives related to real-world assets (RWA) have remained in the "experimental phase."
Stock perpetual contracts are a classic case study.
From the demand side, the market is actually very clear: global users want to participate in US stock trading with lower barriers and higher efficiency, while also using tools like leverage and hedging for risk management. But from the supply side, whether it was early synthetic asset protocols (like Synthetix) or later on-chain orderbook or AMM models, none have truly solved the core problems.
These attempts often provided price exposure initially but struggled to sustain continuous trading, eventually falling into a cycle of drying liquidity, widening slippage, and user attrition.
Meanwhile, tokenized stocks are rapidly developing as another path. According to mainstream media reports, these assets already offer advantages like 24/7 trading and instant settlement, but their market size remains limited, and they function more as "holding tools" rather than being part of a complete financial system.
Therefore, the key issue is not "whether people want to trade stocks," but rather:
Why can't these assets form a self-sustaining, continuously expanding market structure?
In other words, what's truly missing is not the product, but the underlying mechanisms that allow these products to operate.
II. The Current State: Structural Flaws in DeFi and Tokenized Stocks
If we further deconstruct the existing system, the problems concentrate on two levels: collateral structure and liquidity structure.
First, in the DeFi derivatives system, collateral is highly singular. Mainstream protocols almost exclusively rely on stablecoins as margin. This means all trading activity must be completed using stablecoins as the intermediary. If users hold other assets, be it ETH or tokenized stocks, they must first convert them into stablecoins to participate in derivatives trading.
This design was reasonable in the early days due to the price stability and liquidation convenience of stablecoins. But as asset types increased, it gradually became a structural constraint. Direct relationships cannot be established between assets, causing the entire system to exhibit an "isolated island" characteristic.
Second, while tokenized stocks have made progress in asset representation, their financial functions remain extremely narrow. They can be held, transferred, and even used for simple lending in some scenarios, but they lack more complex uses, such as serving as efficient collateral for derivatives trading or playing a role in multi-asset portfolios.
The deeper issue lies in liquidity. Most tokenized stock projects attempt to "rebuild a market" on-chain, providing trading depth through AMMs or synthetic order books. However, this method is inherently limited by the scale of on-chain capital and cannot compete with the liquidity of traditional exchanges, leading to price deviations, slippage, and transaction cost issues.
Therefore, the core flaws of the current system can be summarized as:
Assets are tokenized, but they cannot form effective financial relationships with each other, and the market also lacks sufficient liquidity support.
III. What Ondo Perps Does: A Three-Part Structural Innovation
Against this backdrop, the emergence of Ondo Perps is not simply providing a new trading platform, but an attempt to simultaneously restructure collateral logic, asset relationships, and liquidity sources.
First, it introduces a key change: allowing tokenized stocks to be used directly as margin. This change might seem like just a parameter adjustment, but it actually alters the entire system's capital flow. Users no longer need to liquidate assets into stablecoins; they can directly use their existing holdings for leverage or hedging operations.
This mechanism brings not only efficiency gains but, more importantly, a change in asset properties. Stocks are no longer just "yield assets" but become a "credit base" that can support other risk exposures. In financial terms, this means assets begin to possess "collateral attributes."
Second, Ondo introduces the concept of cross-asset margin. Traditional DeFi protocols typically use an isolated margin model, where each position's risk is calculated independently. Ondo, however, treats the entire asset portfolio as a whole. This design is closer to portfolio margin in traditional finance, allowing different assets to hedge and support each other.
The change behind this is structural: risk is no longer calculated per single asset but per portfolio. The resulting outcome is significantly improved capital utilization, alongside the introduction of more complex risk transmission paths.
Third, and most crucially, is the change in the liquidity model. Ondo does not attempt to build liquidity on-chain from scratch. Instead, through the issuance and redemption mechanism of tokenized stocks, it connects the on-chain market to traditional exchanges. This means price discovery and liquidity depth can be inherited directly from Nasdaq and NYSE, rather than relying on limited on-chain capital pools.
If this mechanism can operate stably, on-chain trading would no longer be constrained by TVL but could tap into a market worth trillions of dollars.
IV. The Essence: What Is It Actually Doing?
From a higher level, the significance of Ondo Perps lies not in "improving the trading experience" but in redefining the basic structure of the financial system.
Traditional DeFi is more like a "collection of trading tools" where users can switch between different protocols to complete operations like lending, trading, and staking. But these operations are independent of each other, lacking a unified risk management and asset perspective.
Ondo's direction is closer to the prime brokerage system in traditional finance. In this system, users are not operating individual products but managing a complete balance sheet. All assets and liabilities are incorporated into a unified risk framework and dynamically adjusted through portfolio margin.
Therefore, Ondo can be understood as a combination of three functions:
-
A multi-asset collateral system
-
A portfolio risk management engine
-
A clearing layer connecting on-chain and traditional markets
From this perspective, it resembles a "financial account system" more than a single trading platform.
V. Why This Matters: Three Tiers of Impact
If this model can be successfully implemented, its impact will extend beyond a single protocol and could potentially change the entire development path of DeFi.
First is the improvement in capital efficiency. Assets can participate in various financial activities without conversion, reducing intermediate steps and transaction costs while increasing capital turnover speed. This difference is further amplified in high-frequency trading and hedging scenarios.
Second is the dissolution of asset boundaries. In the past, assets like crypto, stocks, and bonds belonged to different systems. In the Ondo model, they can coexist and interact within the same account. This fusion will make asset allocation more flexible and may also give rise to new strategies and products.
Third is the change in user structure. As system complexity increases, average users might find it difficult to fully utilize these functions, while institutional investors and professional traders will become the main participants. This means DeFi is gradually evolving towards "institutionalization," and its market behavior will more closely resemble traditional finance.
VI. Risks and Uncertainties: The More Complex the Structure, the More Hidden the Risks
Despite the promising prospects, this model also introduces new risk dimensions.
The core uncertainty remains liquidity. If the on-chain market cannot stably access the liquidity of traditional exchanges, all mechanisms based on it will be affected, and price deviations and liquidation risks will quickly amplify.
Second is the complexity of the liquidation mechanism. In a multi-asset, cross-market environment, risk transmission paths become more complex. A fluctuation in one asset's price could affect another asset through collateral relationships, triggering a chain reaction. This kind of systemic risk has not been fully validated in DeFi.
Finally, there are regulatory issues. Tokenized stocks involve securities attributes, and their compliance varies across different jurisdictions. If the regulatory environment changes, it could directly impact the sustainability of asset issuance and trading.
Conclusion: A Paradigm Upgrade, or Complex Packaging?
Overall, the core of Ondo Perps is not launching a new type of derivative, but an attempt to build a new financial structure where assets can mutually support each other, price each other, and be cleared within a unified system.
The success of this attempt depends on two key factors: whether liquidity can truly connect to real-world markets, and whether the risk system can remain stable in a complex environment.
Therefore, a relatively clear judgment can be made:
If the liquidity model holds, and risk control can withstand the test of market volatility, then Ondo has the potential to become an important part of on-chain financial infrastructure; conversely, if these prerequisites cannot be met, it might ultimately remain a derivatives platform with more complex functions but a similar essence.
From a more macro perspective, the significance of this attempt might lie in the fact that it raises a more fundamental question:
When different types of assets can all serve as collateral for each other and participate in a unified market, does the traditional boundary between "money" and "assets" still exist?
This is perhaps the proposition that Ondo truly touches upon.
