BlackRock's Name on Ondo Tokens Masks Unconventional Business Model

Ondo Finance launched three tokens on Wednesday that track diversified portfolios built by BlackRock. These tokens, called Ondo Intelligent Portfolios, are aimed at eligible non-US investors and trade peer-to-peer across wallets, exchanges, and DeFi venues.

The fine print of the product reveals a unique business model where BlackRock licenses portfolio construction, collects fees on underlying funds it sponsors, but has no obligation to update strategies or see its strategy reflected in the final product. Investors hold 'separate and distinct securities issued by Ondo' with no claim on the underlying funds.

The arrangement is similar to an index licensor like MSCI, where BlackRock owns intellectual property without taking on liability. The economics of the deal favor BlackRock as it earns management fees from its own products without acquiring any advisory clients or marketing obligations.

The launch coincided with a week that filled in the rest of the tokenized equities infrastructure, including the SEC's innovation exemption and announcements from Ledger and Payward about self-custody options for onchain stocks.