Ondo Stocks now provides support for interest-free lending to Spout Finance.

Covered call options on underlying stocks provide funding for the returns of lenders, enabling qualified investors outside the United States to undertake portfolio financing.

Tortola, British Virgin Islands, November 12th / PRNewswire / -- Ondo Finance Today, it was announced that Ondo Stocks will be listed on Solana on its first day of operation and will be available as collateral for Spout Finance. Users will be able to borrow USDC using tokenized stocks and ETF as collateral, with Spout not charging any interest.

Ondo Stocks provides tokenized exposure to U.S. stocks and ETF economic performance. This integration is built on the foundation of Ondo enabling the physical conversion between tokenized stocks and the underlying stocks through Alpaca's Instant Tokenization Network ( ITN ). Spout utilizes this channel to exchange Ondo Stocks for underlying stocks, and then sells covered call options on these stocks in the traditional options market. Borrowers do not pay interest; instead, the option premiums provide funding for the returns to lenders.

Traditional securities firms typically charge interest on loans secured by stocks. Spout allows users to take out interest-free loans by using Ondo Stocks as collateral. In exchange, borrowers give up any potential profits that exceed the exercise price of the option, which is the case when a call option is sold.

Spout Finance is a part of Ondo Catalyst. Ondo Catalyst is a $250 million initiative aimed at making strategic investments to accelerate the transformation of the Ondo ecosystem and capital markets. Ondo Catalyst supports construction projects within the Ondo ecosystem, with a focus on promoting next-generation technologies that enhance the usability, scalability, and adoption rate of tokenized assets.

Ondo Finance The person in charge of the ecosystem Armand Khatri stated: "Borrowing against stocks has always meant having to pay interest; the only question is what the interest rate is." Spout has changed the way borrowers make payments. It involves selling covered call options on the stocks behind the collateral and using the premium to pay back the lender, allowing eligible Ondo Stocks holders outside of the United States to borrow USDC at zero interest, at the cost of giving up any upside gains above the strike price. This is feasible because each Ondo Stock is backed by actual stocks, and approved institutions can directly redeem the tokens for these stocks, which gives Spout the real stocks that can be used to sell options. Covered call options are an old strategy, but running it behind tokens in a wallet is a new approach.

Operation Method

The borrower deposits Ondo Stocks as collateral and can borrow up to 50% of the value of that collateral, which is USDC. For example, collateral worth $10,000 can support a loan of up to $5,000. The loan does not accrue interest, and Spout will periodically aggregate the underlying stocks of each asset on a weekly basis and sell covered call options based on those stocks:

• If the option does not expire and is not exercised: The borrower will not give up any upside gains during that period.
• If the option is exercised: The relevant stock will be sold at the exercise price, and then repurchased at the market price at that time. This may result in a decrease in the tokens held by the borrower, while the loan balance remains unchanged.

Borrowers must also maintain sufficient collateral. If the value of their tokenized stocks declines, the collateral may be sold to repay the loan.

Behind-the-Scenes Mechanisms

The conversion of physical assets to Ondo Stocks has added a main market pathway, operating in parallel with the cash-backed minting process. Approved institutions can transfer their existing stocks from their Alpaca accounts and receive the corresponding Ondo Stocks tokens in return. The redemption process is reversed, with stocks being returned instead of cash.

Spout utilizes the redemption mechanism based on physical asset conversion to support its covered call option strategy:

• Users deposit the supported Ondo Stocks as collateral.
• Spout Redeem these tokens for the underlying stocks held in their Alpaca brokerage account.
• The matching receipt tokens represent these shares in the Spout on-chain fund pool.
• Spout Sells covered call options on these stocks and pays the premium to the lender after deducting fees.
• Before the start of each option period, there is a reconciliation between the broker's positions and the on-chain records.

With the Spout processing of institutional conversion procedures, borrowers can benefit from a simplified covered call option lending strategy.

Former Chairman, Spout Finance Inc. Strategic Advisor J. Christopher Giancarlo stated: "For decades, the profit-making strategies of Wall Street trading desks have been mostly accessible only to Wall Street's best clients. Spout is bringing a proven covered call option method onto the blockchain, where its rules are transparent and its operations are visible to everyone. The investment from Ondo is an important recognition, coming from one of the leaders in providing the infrastructure at the scale required to implement such solutions."

Next

Ondo Stocks has been deployed as productive collateral within DeFi. Spout will add a borrowing feature supported by option funds for this continuously expanding range of uses.

About Ondo Stocks

Ondo Stocks is a platform used for issuing and redeeming tokenized U.S. listed stocks and ETF. It enables qualified investors outside of the United States to gain exposure to the economic performance of these assets by minting, transferring, and redeeming tokens backed by securities. Each token is fully supported by the corresponding stock or ETF (as well as cash on hand).

About Spout Finance

Spout Finance is a lending protocol on Solana that targets the tokenization of US stocks and ETF. It allows qualified users outside of the United States to borrow USDC using their tokenized stocks as collateral, without any interest charges. The return for lenders is provided by the covered call options sold on the underlying stocks of the borrowers. Borrowers can borrow up to 50% of the value of their collateral.

【*】The tokenized assets mentioned in this article are: (i) the tokenized shares, tokenized shares, and tokenized shares (collectively, “BJW_KEEP_00003”) now known as Ondo Stocks, formerly known as Ondo, tokenized, stocks, and, ETFs, or Ondo Global Markets, tokens; and (__BJW_KEEP_00013). The USDY tokens (collectively, "Tokens") are not registered under the U.S. Securities Act of 1933, as amended ("the Act"), or the securities or financial instruments laws of any other jurisdiction. Unless registered under the Act or an applicable registration exemption applies, these tokens may not be offered or sold in the United States or to U.S. persons. In certain jurisdictions, including the United Kingdom, Switzerland, and Singapore, the Ondo Stocks and USDY tokens are offered and sold only to accredited investors or professional clients (or the corresponding category in that jurisdiction). Other jurisdictional prohibitions and restrictions also apply. The token issuer is not registered as an investment company under the U.S. Investment Company Act of 1940, as amended, nor as an alternative investment fund or a collective investment scheme of transferable securities in the European Economic Area, nor is it registered under the securities or financial instruments laws of any other jurisdiction.

Ondo Stocks allows holders to gain economic exposure to the value of their underlying assets, including dividend value (after deducting applicable tax withholdings). However, Ondo Stocks itself is not a stock, ETF or ADR; holders do not have the right to hold or receive the corresponding underlying assets. Similarly, USDY tokens provide holders with economic exposure to short-term U.S. Treasury bonds, but USDY tokens themselves are not U.S. Treasury bonds and do not grant holders the right to hold or receive any U.S. Treasury bonds.

In the European Economic Area/EU, the prospectuses for these tokens have been approved by the Financial Markets Authority of Liechtenstein ( FMA ), and upon the request of the issuers, notifications have been sent to several member states of the European Economic Area ("relevant European Economic Area countries"). As a result, many of these Ondo Stocks tokens are available for purchase by both professional and retail investors. However, some Ondo Stocks tokens are only accessible to professional investors within the European Economic Area/EU. The prospectuses are available on the respective token pages on app.ondo.finance. The approval of the prospectuses should not be construed as an endorsement of these tokens. Investors residing in the EU/European Economic Area should read the prospectuses, as well as the relevant final terms and conditions of the tokens, before making any investment decisions in order to fully understand the potential risks and returns associated with such investments. This notice is for marketing purposes only and does not constitute a prospectus.

Certain Ondo Stocks (referred to as “Digital Securities” in the UAE) are listed and traded on the Nest Exchange Limited, a digital asset multilateral trading facility operated by Binance and authorized by the Financial Services Regulatory Authority (FSRA) within the Abu Dhabi Global Market (ADGM). Such digital securities are available for trading by investors who meet the qualifications of a Binance account. ADGM FSRA assumes no responsibility for reviewing or verifying any documents related to the trading of such digital securities on ADGM. FSRA has not approved the documents related to the trading and has not taken measures to verify the information listed therein, and therefore assumes no responsibility for the same. ADGM has not conducted any securities issuance. Investors intending to purchase such listed digital securities should conduct their own due diligence.

In the UK, the communication content in this document may be considered financial promotion as defined under Section 21 of the Financial Services and Markets Act 2000. To the extent that such a determination is made, the content of this document is intended for and directed solely at investment professionals as defined under Section 19 of the Financial Promotion Order 2005 ( FPO ), who have experience interacting with Ondo Stocks and USDY tokens; high-net-worth individuals as defined under Section 49 of FPO; and/or any other persons who are legally entitled to receive such communication. No person who does not fall into the above categories shall act on the basis of the content of this document, nor shall they have any right to rely on it. Ondo Global Markets ( BVI ) Limited will not enter into any arrangements regarding Ondo Stocks and USDY tokens with such persons as a result of this document or any other communication.

These tokens are issued by Ondo Global Markets, BVI, and Limited, which are British Virgin Islands-based commercial companies. OUSG tokens are issued by Ondo I LP (a Delaware limited partnership, also known as a "fund"). Ondo Finance Inc is a Delaware corporation that provides tokenization services for Ondo Global Markets ( BVI ) and Limited, and holds equity in them.

This article is intended solely for qualified purchasers of tokens, or parties with actual or potential business relationships or technical integrations related to tokens. This article does not constitute any offer to sell or an invitation to purchase. It also does not provide investment, legal, tax, or financial advice. Acquiring these tokens involves risks, and holders may suffer losses, including a total loss of the purchase price. Past performance does not guarantee future results. Investors are responsible for conducting their own research, investigations, verifications, checks, or consulting professional or investment advisors.

This document may contain forward-looking statements, including but not limited to statements regarding the future financial performance, business strategies, or growth and development expectations of Ondo Finance, Ondo Global Markets, BVI, Limited, or their respective affiliates (hereinafter referred to as “the applicable entities”). These statements are based on management's current expectations, estimates, forecasts, and judgments, and are subject to various risks, uncertainties, and assumptions, which could lead to significant differences between actual results and expectations. Forward-looking statements can be identified by phrases such as “may”, “will”, “should”, “expect”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, and their negative forms, as well as other similar expressions. Factors that could cause significant differences between actual results and forward-looking statements include, but are not limited to, economic, competitive, legal, governmental, and technological factors that affect the operations, markets, products, services, or prices of any applicable entity. Except as required by law, no applicable entity assumes any obligation to update or revise forward-looking statements due to new information, future events, or other reasons.

Additional terms and restrictions apply. For details, please refer to docs.ondo.finance / legal / terms-of-service, docs.ondo.finance / ondo-stocks, ondo.finance / stocks, app.ondo.finance, and (if applicable) the relevant token issuance documents.

According to local regulatory requirements, tokenization services may be subject to additional geographical restrictions. Instant Tokenization Network of Alpaca is owned and developed by AlpacaDB and Inc. AlpacaDB, Inc, and Alpaca Securities LLC do not issue tokenized assets nor perform asset tokenization; tokenization is carried out by third-party issuers. Alpaca Securities LLC only provides brokerage, custody, clearing, and settlement services for the underlying securities.