Ondo, the Solana-based tokenization platform, has launched a new system that lets institutions turn real-world stocks and ETFs into digital tokens without asking for cash first. The in-kind conversion system allows approved institutions to mint and redeem tokenized securities using the underlying securities themselves. The source describes the system as a direct path from physical asset to digital token and back, one that removes a step in the settlement process for institutions that already hold the underlying assets.
The System In Action
The system works by allowing approved institutions to mint tokenized stocks and ETFs from the underlying securities they already hold. When those tokens are redeemed, the system releases the underlying holdings rather than paying out cash. It is a direct path from physical asset to digital token and back.
The Tokenized US Stocks Push
Ondo is pushing to bring tokenized US stocks to Solana. The in-kind conversion system is one piece of that effort. By allowing institutions to mint tokens from their own holdings, Ondo is cutting out the step of exchanging cash for shares. That effort is separate from the system itself, which is described as a path from physical asset to digital token and back.
How It Works
The system uses the underlying securities as the basis for minting and redeeming tokens. That is the sum of what the source describes about the technical architecture.
The Institutional Target
Ondo’s system is built for financial institutions that already hold the underlying securities. Those institutions can use the platform to manage their digital assets alongside their physical ones.
The Key Facts
- Platform: Ondo, on Solana
- Function: In-kind conversion of stocks and ETFs
- Method: Mint and redeem using underlying securities
- Target: Approved institutions
The Comparison
| Feature | In-Kind Conversion | Traditional Settlement |
|---|---|---|
| Basis | Underlying securities | Cash |
| Path | Direct mint and redeem | Exchange cash for shares |
What This Means
The system removes a step in the tokenization process. Instead of settling in cash, institutions can settle directly with the underlying holdings. For institutions that already hold the underlying assets, the system offers a smoother path between the physical and digital worlds.
The Verdict
Ondo’s in-kind conversion system is a useful addition to the tokenization space. It removes a step in the settlement process for institutions that already hold the underlying assets.
Whether it changes the way tokenized stocks are traded is not addressed by the source. The source does not offer a timeline for broader adoption or detail how the system performs under real-world load.
What is clear is that Ondo has put a system in place that allows institutions to mint and redeem tokenized stocks and ETFs using the underlying holdings. The next test will be whether institutions actually use it.
See the a run of 18 images at Cointelegraph.
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