Tokenization of Shares on Solana: Ondo Finance's Strategic Move in 2026

Ondo Finance has announced the expansion of its RWA asset platform through the launch of U.S. equity securities and exchange-traded funds on the Solana blockchain in early 2026. This development represents a crucial step toward transforming how global investors access traditional equity markets, combining real custody with the speed of blockchain settlement.

From Government Bonds to Equities: The Evolution of the RWA Vision

The shift from fixed income products to equity markets highlights Ondo’s ambition to become a comprehensive bridge between traditional and decentralized finance. The company has already established its position through USDY, which manages over $500 million in assets, offering tokenized exposure to U.S. Treasuries and short-term bank deposits. This operational base provides the regulatory sophistication and institutional partnerships necessary to address the complexities of equity tokenization.

Ondo’s approach stands out for its qualified custody structure, where underlying securities are held by institutional custodians. Each tokenized share represents actual ownership of real securities rather than synthetic exposure or derivatives, differentiating it from protocols that only offer contractual exposure.

Why Solana? The Infrastructure Choice

The selection of Solana as the base blockchain reflects concrete economic considerations. The network processes thousands of transactions per second with fees under a cent, making frequent operations and small transfers feasible. This sharply contrasts with Ethereum’s historically higher costs, a critical difference for high-frequency trading and cost-effective fractional ownership.

The already established availability of USDY on Solana provides the technical foundation and network relationships that accelerate the deployment of equity products, demonstrating that the Solana ecosystem can support complex financial instruments with significant volumes.

The Advantage of 24/7 Markets

Traditional U.S. equity markets operate about 6.5 hours per day on weekdays, from 9:30 to 16:00 EST. Pre-market and after-hours sessions offer limited liquidity and wide spreads. Through blockchain tokenization, Ondo enables continuous trading 24/7, with near-instant settlement.

This shift has significant implications for international investors facing time zone challenges, allowing them to operate during their local working hours. It also eliminates the issue of overnight slippage when underlying markets close but demand for continuous exposure remains.

The Technical Architecture Behind the Vision

The functional structure requires sophisticated infrastructure. A qualified custodian (potentially BNY Mellon, State Street, or similar) holds the physical share certificates or book-entry positions, while tokenized representations circulate on Solana. Minting and redemption mechanisms allow authorized participants to create new tokens when securities are acquired and burn them when underlying positions are redeemed, maintaining a 1:1 backing.

Pricing during market hours can reference real-time prices from traditional exchanges, ensuring market-driven price discovery. However, off-hours pricing presents challenges: tokenized versions might rely on the last closing price or fair value estimates until reopening, creating potential arbitrage opportunities.

Corporate actions—including dividends, splits, and mergers—require automated smart contract logic or manual intervention to distribute benefits proportionally to tokenized shareholders. Voting rights add further complexity, as blockchain addresses may not meet proxy voting requirements, necessitating additional verification mechanisms.

Navigating the Regulatory Maze

The announced timeline of early 2026 recognizes the substantial approval processes required in the U.S. The registration with the Securities and Exchange Commission is the main hurdle, as tokenized shares and ETFs clearly constitute securities requiring registration statements or exemption qualifications prior to public offering.

Additional regulatory complexities include:

• Transfer agent compliance: governance on how ownership records are maintained
• Broker-dealer requirements: depending on distribution and trading
• Custody regulations: requiring qualified custodians with strict operational, financial, and insurance standards
• AML/KYC compliance: robust Know Your Customer procedures despite blockchain’s pseudonymous nature
• Accredited investor limitations: initial offerings likely restricted to qualified investors before broader retail distribution

This complex regulatory pathway justifies the over-12-month timeline, reflecting extensive engagement with regulators and necessary legal structuring.

Market Dynamics and Liquidity Fragmentation

The parallel operation of tokenized shares alongside traditional markets creates new structural dynamics. Liquidity could fragment between traditional exchanges (NYSE, Nasdaq), and on-chain tokenized markets, potentially reducing overall depth and widening spreads on both sides.

Efficient arbitrage between traditional and tokenized versions becomes crucial to maintain price parity despite differing market structures and participant bases. Market makers face unique challenges in maintaining inventory across both venues while managing custody and settlement. Authorized participants, similar to traditional ETF structures, could facilitate arbitrage through privileged minting and redemption capabilities.

Adoption Targets: Institutional vs. Retail

Success will likely depend more on institutional adoption than mainstream retail investors. Key candidates include:

• Hedge funds and proprietary traders leveraging 24/7 markets for algorithmic risk management
• International asset managers accessing U.S. equities during their local working hours
• Crypto funds and treasuries diversifying into traditional stocks
• Family offices and high-net-worth individuals valuing programmability and DeFi integration

Pension funds and insurance companies face regulatory and operational barriers that may delay short-term adoption. Mainstream retail investors, satisfied with zero-commission brokers and familiar interfaces, may lack compelling incentives to switch to tokenized alternatives.

Economics and Revenue Model

Ondo’s business case relies on multiple revenue streams. Management fees, similar to ETF expense ratios (typically 0.10%-0.50% annually), provide scalable recurring revenue with adoption. Transaction fees on minting and redemption could generate additional income, though competitive pressure might minimize them. Spread capture between bid and ask offers further revenue if Ondo provides market-making.

However, regulatory, technological, and custody fixed costs are significant. Achieving profitability requires substantial AUM to absorb these costs while maintaining competitive pricing.

Competitive Positioning in the RWA Landscape

Ondo enters an increasingly crowded space of Real World Asset tokenization. Backed Finance offers tokenized shares from Switzerland, leveraging a favorable regulatory environment. Synthetix and other DeFi protocols provide synthetic equity exposure via derivatives. BlackRock, Franklin Templeton, and other traditional asset managers focus on money market and fixed income funds, not yet on equities.

Securitize provides infrastructure for securities tokenization, collaborating with KKR and others on private market tokenization. INX Limited operates a registered security token trading platform with the SEC, though with limited product range and volumes.

Ondo’s competitive advantages include a consolidated RWA platform, well-integrated Solana infrastructure, proven institutional relationships, and regulatory experience navigating fixed income products.

Multidimensional Risks

Numerous factors could complicate post-launch rollout and adoption. Regulatory rejection or delays pose the primary existential risk, with the SEC potentially denying approval or requiring limiting modifications. Custody risk persists even with strict qualifications and insurance coverage. Smart contract vulnerabilities could enable theft or loss despite audits and best practices.

Market acceptance remains uncertain given the learning curve compared to familiar brokers. Liquidity challenges could result in wide spreads if insufficient market participants provide depth. Off-hours pricing risks during underlying market closures could enable manipulation. The complexity of corporate actions—including acquisitions, bankruptcies—may be difficult for automated smart contract logic to handle.

The Road Ahead

The launch of Ondo Finance’s tokenized shares on Solana represents a significant ambition to converge traditional finance with blockchain infrastructure. While the early 2026 timeline reflects the reality of complex regulatory processes, successful implementation could truly transform global access to U.S. equity markets. However, success will heavily depend on regulatory approval, market liquidity development, and institutional acceptance. The vision is bold; its realization remains uncertain.