Ondo Finance Tokenizes Pre-IPO AI Stocks: Private Market Open 24/7

Ondo Finance Tokenizes Pre-IPO AI Stocks

Ondo Finance, a leader in the tokenization of real-world assets (RWA), has launched Ondo Private Markets, a new financial product linked to the pre-IPO valuation of companies.

As the first offering, trading of tokenized products targeting well-known private AI (artificial intelligence) companies will commence. The new service will provide not actual shares but tokenized "notes (bonds)." By holding these notes, investors can receive returns linked to the value realized per common share when the target company undergoes liquidity events such as an IPO (Initial Public Offering) or M&A (Mergers and Acquisitions) in the future.

The most significant feature is the high convenience enabled by blockchain technology. Qualified investors can securely store the acquired notes in their self-custody wallets and trade them in the secondary market (liquidity market) 24/7. This allows for liquidity to be secured through the market even before the company actually goes public, enabling buyers and sellers to transact.

Rights and Considerations: No Ownership of Shares and Restrictions on Participation

While boasting innovative convenience, investors need to understand several important specifications.

First, this product provides only "economic exposure (involvement in price fluctuation risks)" and is treated as a debt of the issuer. Therefore, holders do not possess any actual ownership rights, voting rights, or other management participation rights concerning the target company.

Moreover, not everyone can freely purchase these notes. Ondo Private Markets has strict restrictions regarding jurisdiction and eligibility, prohibiting purchases, acquisitions, and redemptions by U.S. residents or "U.S. persons" in principle. It is essential to note that it is primarily designed for qualified investors outside the U.S.

In terms of information disclosure, it has been pointed out within the industry that the information available to purchasers is limited, as it involves private companies that do not bear the same obligations as publicly listed companies. Specific details such as the issuer and payment calculation formulas, available exchanges, and DeFi (Decentralized Finance) protocols will need to be confirmed in advance through related offering documents.

Expanding RWA Market and Future Developments

Ondo Finance has previously established a track record in the tokenization of publicly traded stocks, ETFs, and U.S. Treasury bonds (Ondo Stocks). The existing Ondo Stocks handles over 450 types of securities, with total assets under management (TVL) exceeding $1 billion (approximately ¥158.45 billion).

The approach to the private equity market is not limited to Ondo; it is becoming active across the financial industry. For example, Robinhood's venture fund has invested in common stock of OpenAI to provide exposure to individuals, and Citi is advancing the construction of a blockchain marketplace for private companies, with competitors entering the space.

With this AI company as a starting point, Ondo plans to gradually expand its target to a wide range of growth sectors, including robotics, cybersecurity, biotechnology, infrastructure, and even defense, energy, and space-related private companies.

The attempt to ease the barriers of traditional private markets and open access to private companies through on-chain infrastructure 24/7 is likely to become a significant milestone in the future development of the RWA market.

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