Chapter · Master Ondo Finance
How tokenized treasuries work
Your token is a claim on a real portfolio of short-dated government debt held by a custodian. When you buy in, your money helps hold Treasury bills; those bills pay interest at the prevailing T-bill rate; and that interest flows back to token holders. Depending on the product, the token's price accrues upward over time (its net asset value, or NAV, rises) or new tokens are added to reflect the yield. Either way, the yield is the T-bill rate, minus fees.
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What you get asked
Where does the yield on a tokenized Treasury product ultimately come from?
Follow the money to its source: the government pays interest on its bills, and that interest is the yield you receive, less fees.
The tokens are a claim on real bills held by a ___ , not coins the blockchain created.
A custodian actually holds the Treasury portfolio off-chain. The token is your on-chain claim on that pile.
Order how yield reaches you in a tokenized Treasury product
Money in, bills held, interest earned, fees taken, yield out. Every honest yield product can be traced along a chain like this.
At roughly 5% a year, about how much yield would €10,000 earn in a year, before fees and tax? Answer in euros.
5% of €10,000 is roughly €500 before fees and tax. Fees trim it, and the real rate moves with T-bill rates, so treat this as an estimate.
What does it mean when a product's yield accrues through a rising NAV?
NAV is the net asset value per token. As interest accumulates in the portfolio, that value rises, and your token reflects it. 🐜
The rest of this chapter
Tokenized US Treasuries: real-world yield on-chain, and how redemption really works.