Ondo Finance is launching a new stablecoin alternative called OMMF that will pay its holders interest via a tokenized money market fund. Unlike other stablecoins, OMMF will be backed by conventional money market funds and available only to qualified purchasers and accredited investors. However, retail investors can lend against the tokens through Ondo's DeFi protocol Flux to indirectly access the yield.
Flux Finance is a decentralized lending protocol backed by Ondo. Retail investors can access OMMF’s yield without owning the security outright by lending non-yield stablecoins like $USDT and $USDC into Flux, a protocol “similar to Aave and Compound” but without the overcollateralization. Then, whitelisted institutional clients can borrow the stablecoins in the Flux pool and mint OMMF, pocketing a small spread and paying out some yield to the protocol, which is passed onto retail investors.
The company's website lists an APY of 4.5%, in line with publicly traded money market funds' current yields.
Stablecoins such as Tether's $USDT and Circle's $USDC do not pay out interest to holders, even amid a rising-rate environment, as doing so would strengthen the case that such stablecoins are unregistered securities.
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DeFi
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