Author: 137Labs
I. The Starting Point of the Issue: Why Have Stock Perps Always Underperformed?
Looking back at the development trajectory of DeFi over the past few years, a clear divergence emerges: derivative markets for crypto-native assets (BTC, ETH) have become highly mature, while derivatives tied to real-world assets (RWA) have remained in the "experimental phase."
Stock perpetual contracts are a prime example.
From the demand side, the market is very clear: global users want to participate in U.S. stock trading with lower barriers and higher efficiency, while using tools like leverage and hedging for risk management. However, from the supply side, whether early synthetic asset protocols (such as Synthetix) or later on-chain order book or AMM models, none have truly solved the core issue.
These attempts often provide price exposure initially but struggle to sustain trading activity, eventually falling into a cycle of liquidity depletion, increased slippage, and user attrition.
Meanwhile, tokenized stocks are rapidly developing as another pathway. According to mainstream media reports, these assets already offer the advantages of 24/7 trading and instant settlement, but their market size remains limited and they are still largely viewed as mere “holding tools” rather than integral components of a full financial system.
Therefore, the key issue is not whether "someone wants to trade stocks," but rather:
Why can't these assets form a self-sustaining, continuously expanding market structure?
In other words, what's truly missing is not the products themselves, but the underlying mechanisms that support them.
II. Current Situation: Structural Deficiencies in DeFi and Tokenized Stocks
Further breaking down the existing system reveals that the issues are concentrated at two levels: collateral structure and liquidity structure.
First, in the DeFi derivatives ecosystem, collateral is highly centralized. Major protocols rely almost entirely on stablecoins as margin, meaning all trading activities must be mediated through stablecoins. Users holding other assets—whether ETH or tokenized stocks—must first convert them into stablecoins to participate in derivatives trading.
This design was reasonable in the early stages, as stablecoins offered price stability and convenient settlement. However, as the variety of assets increased, it gradually became a structural constraint. The inability to establish direct relationships between assets has led the entire system to exhibit a “siloed” characteristic.
Second, tokenized stocks, while making progress in asset mapping, remain extremely limited in financial functionality. They can be held, transferred, and even used for simple lending in certain scenarios, but they lack more complex applications, such as serving as efficient collateral in derivatives trading or playing a role in multi-asset portfolios.
A deeper issue lies in liquidity. Most tokenized stock projects attempt to “recreate a market” on-chain by providing trading depth through AMMs or synthetic order books. However, this approach is inherently limited by the scale of on-chain capital and cannot compete with the liquidity of traditional exchanges, leading to price deviations, slippage, and higher trading costs.
Therefore, the core flaw of the current system can be summarized as:
The assets have been tokenized, but they cannot form effective financial relationships, and the market lacks sufficient liquidity to support them.
Three: What Ondo Perps Did: Three Structural Innovations
Against this backdrop, Ondo Perps is not merely introducing a new trading platform, but aims to simultaneously reimagine collateral logic, asset relationships, and sources of liquidity.
First, it introduces a key change: allowing tokenized stocks to be used directly as collateral. This adjustment may seem like a simple parameter tweak, but it fundamentally alters the way funds flow through the system. Users no longer need to liquidate their assets into stablecoins; instead, they can directly leverage or hedge their existing holdings.
This mechanism brings not only improved efficiency but, more importantly, a change in the asset's nature. Stocks are no longer merely a "yield-generating asset" but become a "credit foundation" that can support other risk exposures. In financial terms, this means the asset begins to exhibit "collateral characteristics."
Second, Ondo introduces the concept of cross-asset margin. While traditional DeFi protocols typically use isolated margin, where each position is risk-calculated independently, Ondo treats the entire portfolio as a single unit. This design closely mirrors portfolio margin in traditional finance, enabling different assets to hedge and support each other.
The underlying change is structural: risk is no longer calculated on a single-asset basis, but rather on a portfolio basis. As a result, capital utilization has increased significantly, while more complex pathways for risk transmission have been introduced.
Third, and most importantly, is the change in the liquidity model. Rather than attempting to build liquidity from scratch on-chain, Ondo connects on-chain markets to traditional exchanges through a tokenized stock issuance and redemption mechanism. This means price discovery and liquidity depth are directly inherited from Nasdaq and NYSE, rather than relying on limited on-chain liquidity pools.
If this mechanism operates stably, on-chain transactions will no longer be limited by TVL but can instead access a market worth trillions of dollars.
Four: The Essence—What It Actually Does
At a higher level, the significance of Ondo Perps lies not in “improving the trading experience,” but in redefining the fundamental structure of the financial system.
Traditional DeFi is more like a “collection of trading tools,” where users switch between different protocols to perform operations such as lending, trading, and staking. However, these operations operate independently, lacking unified risk management and an integrated view of assets.
Ondo’s approach is more aligned with the prime brokerage model in traditional finance. In this model, users are not managing individual products but rather overseeing an entire balance sheet. All assets and liabilities are incorporated into a unified risk framework and dynamically adjusted through portfolio margining.
Therefore, Ondo can be understood as a combination of three functions:
A multi-asset collateral system
A combined risk management engine
A clearing layer connecting on-chain and traditional markets
From this perspective, it is more like a "financial account system" than a single trading platform.
Five: Why This Matters: Three Levels of Impact
If this model can be implemented, its impact will extend beyond a single protocol and could potentially reshape the entire trajectory of DeFi.
First, there is an improvement in capital efficiency. Assets can participate in multiple financial activities without conversion, reducing intermediate steps and transaction costs while accelerating capital turnover. In high-frequency trading and hedging scenarios, this advantage is further amplified.
Second, the disappearance of asset boundaries. Previously, assets such as crypto, stocks, and bonds existed in separate systems, but in the Ondo model, they can coexist and interact within the same account. This convergence will enable more flexible asset allocation and may give rise to new strategies and products.
Third is the shift in user structure. As system complexity increases, retail users may find it difficult to fully utilize these features, while institutional investors and professional traders will become the primary participants. This means DeFi is gradually evolving toward “institutionalization,” and its market behavior will increasingly resemble that of traditional finance.
Six: Risks and Uncertainties—the more complex the structure, the more hidden the risks
Despite its promising prospects, this model introduces new risk dimensions.
The most critical uncertainty remains liquidity. If on-chain markets cannot reliably access liquidity from traditional exchanges, all mechanisms built on this foundation will be affected, leading to rapid amplification of price deviations and liquidation risks.
Secondly, there is the complexity of the liquidation mechanism. In a multi-asset, cross-market environment, the pathways for risk transmission become more intricate. Price fluctuations in one asset can affect another through collateral relationships, triggering a chain reaction. This systemic risk has not yet been sufficiently validated in DeFi.
Finally, there are regulatory issues. Tokenized stocks have securities characteristics, and their compliance varies across different jurisdictions. Changes in the regulatory environment could directly impact the sustainability of asset issuance and trading.
Conclusion: Paradigm shift or complex packaging?
Overall, Ondo Perps is not primarily about launching a new type of derivative, but rather about building a new financial structure where assets can support each other, price each other, and be cleared within a unified system.
The success of this attempt depends on two key factors: whether liquidity can truly connect to real-world markets, and whether the risk system can remain stable in complex environments.
Therefore, a relatively clear conclusion can be drawn:
If the liquidity model holds and risk controls can withstand market volatility, Ondo could become a key component of on-chain financial infrastructure; conversely, if these prerequisites cannot be met, it may ultimately remain just a more complex but fundamentally similar derivatives platform.
From a broader perspective, the significance of this attempt may lie in the fact that it raises a more fundamental question:
When different types of assets can serve as collateral for one another and participate in a unified market, does the traditional distinction between “money” and “assets” still hold?
This may be the very issue that Ondo truly addresses.