Ondo Finance, a crypto startup offering structured products built on decentralized exchanges, has raised $20 million in Series A funding to build a decentralized investment bank.
Peter Thiel’s legendary VC firm Founders Fund and Pantera Capital jointly led the round. This is the first time Founders Fund has led an investment in a token-based project, Ondo’s founder and CEO, Nathan Allman, told The Block. Founders Fund previously participated in a token round for Parallel Finance.
An Ivy League foundation also joined Ondo’s Serie A, Allman said, but declined to name them.
According to Allman, the fundraising was through an equity round, but with token rights. Its native token ONDO and a decentralized autonomous organization (DAO) are expected to launch “in the next few weeks.”
Other investors in Ondo’s Series A funding included Coinbase Ventures, Tiger Global, GoldenTree Asset Management, Wintermute, Flow Traders and Steel Perlot, a deep tech management company led by former Google CEO Eric Schmidt.
This is how Ondo Finance works
Ondo offers investment products known as “vaults” built on top of decentralized exchanges. It offers two types of vaults: fixed return and variable return. Depositors in fixed return vaults receive a fixed percentage of the return on their initial investment. Depositors in variable-yield vaults receive any excess returns after the fixed-yield vaults receive their payout, Allman said.
Ondo also offers Liquidity-as-a-Service to DAOs. It pairs DAOs with underwriters (stablecoin issuers for now) to set up liquidity pools. DAOs provide their governance token and underwriters provide a base like stablecoins that Ondo uses to set up liquidity providers, Allman said.
“The goal is to help DAOs build their own liquidity without having to rely on liquidity mining or market-making companies,” he said, adding that these are “both expensive and unsustainable.” could be.
According to Allman, Ondo has worked with more than 10 DAOs – including NEAR, Synapse and UMA – and underwriters such as Fei, Frax, Terra and Reflexer.
Ondo currently only supports Ethereum-based protocols on its platform, but that will change soon. The platform plans to integrate multiple Layer 2 networks and alternate Layer 1s in the near future, Allman said.
The current total value of Ondo Finance is $120 million according to data from DeFi Llama.
Ondo plans to expand its team of around 20 people by hiring in various roles including engineering, design, marketing and business development.
The Series A round brings Ondo’s total funding to date to $24 million. Last August, the project raised $4 million in seed funding led by Pantera Capital. Ondo plans to raise more funds in the near future, said Allman, a Goldman Sachs alum.
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