Ondo's BUIDL-Beating Token Surpasses BlackRock's in Value, But Is ONDO Token Undervalued?

Precedent & Market Context The tokenized stock market has grown significantly since 2026-10-18, driven by synthetic tokens and issuer-sponsored shares. However, the growth may not be solely attributed to issuer-sponsored models, with potential implications for the future of DeFi and tokenized stock adoption. Synthetic tokens dominate the market, with Ondo Global Markets and Binance's bStocks leading the charge. Issuer-sponsored tokens require company participation, which can be a barrier to entry. Securitize and Superstate are betting on the issuer model, with Securitize adding over $250M to tokenized stock market cap in just 30 days.

Main Event Ondo's tokenized Treasury product, the Ondo US Dollar Yield token (USDY), has surpassed BUIDL from BlackRock in size. Despite this achievement, the Ondo (CRYPTO:ONDO) token fell 9% during the week ending October 17, 2026. USDY currently holds about $2.33 billion, slightly more than the $2.2 billion held by BlackRock’s tokenized fund. ONDO is trading at around 44 cents, down 3% in one day. Its weekly drop is considerably steeper than the 1.7% decline in Bitcoin (CRYPTO:BTC) and the 3.4% dip in Ethereum (CRYPTO:ETH). ONDO is now 79.5% below its all-time high of $2.14, reached on December 15, 2024. While the USDY product continues to grow, the ONDO token’s value keeps falling. Does this increase in USDY suggest that ONDO is undervalued? USDY is a yield-bearing token backed by short-term US Treasuries and bank deposits, as Ondo states on its product page. Legally, USDY represents debt from a separate entity, which should protect its reserves from Ondo’s creditors if Ondo Finance faces financial difficulties. Notably, USDY is sold under Regulation S, which means only non-US buyers can purchase it. In contrast, ONDO serves as a governance token. Holders of ONDO tokens have the right to vote on proposals for the Ondo DAO, the community organization overseeing parts of the platform. While buyers can create and redeem USDY using dollars or stablecoins, ONDO has no role in that process. The $2.33 billion in USDY belongs to its holders. Ondo generates revenue from the difference between two yields: one yield paid to USDY holders and another earned by the portfolio backing USDY. However, Ondo Finance is a private company that does not disclose how much of this yield gap contributes to its revenue. The only connection between Ondo’s business and the ONDO token is its governance function. In June, a community member proposed a temperature check on the Flux Finance governance forum about using part of Ondo’s revenue to buy back and eliminate ONDO tokens. The post clarified that this was only a temperature check, not a binding on-chain proposal. Ondo also operates OUSG, a tokenized Treasury fund designed for qualified investors, along with Ondo Global Markets. The BVI unit of Ondo issues tokenized notes that track US stocks and ETFs for non-US investors, with broker Alpaca holding the underlying shares. In a letter sent to the SEC on April 13, Ondo sought no-action relief, indicating that it aims to record these positions on Ethereum’s main network, with BitGo safeguarding the tokens. A significant regulatory advancement for Ondo was acquiring Oasis Pro, which gave it an SEC-registered broker-dealer, an alternative trading system for matching buyers and sellers, and a transfer agent to track ownership of each security. On July 23, Oasis Pro Markets received FINRA approval to offer tokenized stocks and funds to US investors. However, Ondo’s announcement of this approval said trades could settle in fiat currencies or “supported stablecoins” and did not mention ONDO. Thus, Ondo’s regulated operations in the US could continue to grow without creating demand for ONDO. Claiming that Ondo is a direct rival to BlackRock may be overstating the competition. In Marc

Analysis & Market Impact The relationship between Ondo's growing business and its token's value may not be what investors assume. Ondo's tokenized Treasury product, USDY, has surpassed BUIDL in size, but the ONDO token has fallen 9% in the past week. The ONDO token's governance function is the only connection between Ondo's business and the token. Ondo generates revenue from the difference between two yields: one yield paid to USDY holders and another earned by the portfolio backing USDY. However, Ondo Finance is a private company that does not disclose how much of this yield gap contributes to its revenue. The lack of transparency in Ondo's revenue model may be contributing to the decline in the ONDO token's value. Additionally, the ONDO token's governance function may not be sufficient to justify its current price. The ONDO token's price may be undervalued due to its lack of connection to Ondo's business operations.

Implications & Outlook The implications of Ondo's tokenized Treasury product surpassing BUIDL in size are significant. The relationship between Ondo's growing business and its token's value may not be what investors assume. Ondo's tokenized Treasury product, USDY, has surpassed BUIDL in size, but the ONDO token has fallen 9% in the past week. The lack of transparency in Ondo's revenue model may be contributing to the decline in the ONDO token's value. Additionally, the ONDO token's governance function may not be sufficient to justify its current price. The ONDO token's price may be undervalued due to its lack of connection to Ondo's business operations. In the future, Ondo may need to address the disconnect between its token's value and its business operations to restore investor confidence. The SEC's no-action relief and FINRA approval for Ondo's regulated operations in the US could also impact the ONDO token's value. If Ondo can demonstrate its ability to manage its revenue model and connect its token's value to its business operations, the ONDO token's price may increase. However, if the disconnect between Ondo's token's value and its business operations persists, the ONDO token's price may continue to decline.