Chapter · Master Ondo Finance
The risks
A tokenized Treasury is only as safe as the layers around the bonds. There is issuer and counterparty risk (the company behind the token could fail or misbehave), custody risk (whoever holds the bills could mismanage or lose access to them), smart-contract risk (the on-chain code could have bugs or exploits), and, crucially, regulatory and eligibility risk. These products are often not available to US retail, and access is gated by KYC and by your jurisdiction. Real bonds behind a token do not erase these layers.
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What you get asked
Why is 'backed by US Treasuries' not the same as 'risk-free'?
The bonds may be sound, but you reach them through a company and a custodian. Their failure can still hurt you.
Match each risk to what it means
Four separate layers, four separate failure points. A token wrapping real bonds inherits all of them, not none of them.
These tokenized Treasury products are often not available to US ___ , and access is gated by KYC and jurisdiction.
Eligibility rules frequently exclude US retail buyers and vary sharply by country. Being able to see a product is not the same as being allowed to hold it.
Which risk is specific to holding the token on-chain, rather than the bonds themselves?
Smart-contract risk lives in the code layer. Even flawless bonds and honest custody cannot protect you from an exploited contract.
What is the honest one-line summary of tokenized Treasury risk?
Keep the whole sentence in mind, not just the reassuring half. The bonds are the easy part; the wrapper is where the real risk lives. 🐜
The rest of this chapter
Tokenized US Treasuries: real-world yield on-chain, and how redemption really works.