Investors in real-world asset platform Ondo brace for $737m of token unlocks

The circulating supply of Ondo Finance’s native token is about to jump by a whopping 61% as the protocol prepares for its third round of token unlocks.

On January 17, ONDO tokens worth $737 million will be unlocked for trading. Of that amount, $123 million worth will go to private sale investors, which include venture firm Pantera Capital and Peter Thiel’s Founders Fund. The remaining $614 million is earmarked for protocol development and ecosystem growth.

When DeFi protocols such as Ondo launch tokens, they often keep back the majority of the total supply, which is programmed to release on a pre-determined schedule.

They do this to prevent early investors from immediately cashing out all their tokens at once, to ensure the project’s team is motivated to create value for the token beyond its launch, and to reassure potential secondary market investors.

Still, many investors anticipate large unlocks will cause volatility, as those set to receive tokens such as team members, early investors, and nonprofit organisations cash out.

Since Ondo’s previous unlock, which took place in January last year, the price of the ONDO token has collapsed some 68%.

Selling tokens

Ondo is a DeFi protocol that lets users invest in tokens backed by real-world assets, such as stocks and US Treasury bonds.

The protocol holds just over $2 billion worth of deposits, according to DefiLlama data.

The ONDO token acts as the protocol’s governance token, allowing holders to propose and vote on changes to economic parameters and the underlying smart contracts.

Token unlocks don’t always translate into immediate selling, however. Investors may want to hold onto a token if they believe it will increase in value in the future.

Over-the-counter sales, the trading of assets done directly between two parties without the supervision of an exchange, further muddy the waters.

Those set to receive tokens often agree to see them at a discount to a third party ahead of the unlock date. Depending on the negotiated sale price, those who buy the locked tokens may not want to sell them when they unlock.

The trading of locked tokens is popular among venture firms, crypto hedge funds and sophisticated traders, among others.

But it can be risky.

In June, dozens of traders lost millions of dollars after Aza Ventures, an Indian over-the-counter deals broker, revealed it unwittingly helped mediate dozens of fraudulent deals over the course of several months.

Ondo’s next round of token unlocks will take place in January 2027.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.