Tokenized stock collateral is now available to all Ondo Perps users.
Traders outside restricted jurisdictions can now post tokenized ETFs as margin, starting with SPYon and QQQon, and trade perps on the world's most active equities, indices, and commodities with up to 20x leverage.
The immediate benefit is clear: your holdings become productive capital. A holder of SPYon can open a leveraged NVDA perp position without selling, and because spot holdings and perp positions are connected to the same wallet, hedging a tokenized position is as simple as opening the opposite perp.
However, the larger impact extends beyond individual capital efficiency. Tokenized stock collateral changes the economics of liquidity provision by allowing the same asset to serve as both a hedge and margin. That shift puts Ondo Perps on a path to reach the depth and efficiency of traditional derivatives markets.
This is the productive capital thesis.
Why Equity Perps Lacked Liquidity
Perpetual markets for BTC and ETH are already deep and well established, while equity perps are now only starting to scale. The issue is not simply that the category is new, but that its market structure was inherently capital inefficient.
Consider a market maker quoting a sell order on an NVDA perp. A trader fills the order, leaving the market maker short the perp and exposed to a rise in NVDA. To hedge, the market maker buys NVDA through a traditional brokerage. That means the same economic exposure is now funded twice: once through stablecoin margin on the perp venue and again through cash or inventory at the brokerage. Each dollar of quoting can require nearly two dollars of capital.
Poor capital efficiency weakens market maker returns, pushing them to quote less size at wider spreads. Worse execution discourages traders, reducing order flow and making the market even less attractive to liquidity providers. The market settles into a low-liquidity equilibrium.
While incentives can paper over the challenge for a short time, the capital inefficiency underneath it never goes away. However, with deeply liquid tokenized stock collateral in place, incentives can kickstart a liquidity flywheel that ultimately brings perps platforms to par with traditional derivatives markets. More on that later.
Tokenized Stock Collateral Unlocks Up to 2x Capital Efficiency
In addition to stablecoins, Ondo Perps enables Ondo tokenized stocks and ETFs to be used as margin. This allows a market maker to use the same asset for both hedging and collateral, instead of maintaining separate pools of capital for each function.
Now consider a market maker quoting an offer on the NVDA perpetual. Once a trader fills that order, the market maker becomes short the perp and must acquire long NVDA exposure to hedge the position. Rather than funding a separate brokerage account, the market maker can purchase tokenized NVDA through Ondo Stocks and post those same tokens as collateral on Ondo Perps. Both steps happen within just a few clicks. Once posted, the tokenized NVDA serves two functions within the same collateral wallet. It offsets the market maker’s short perp exposure while also providing margin for other positions.
A single pool of capital replaces the two separate allocations required under the traditional model.
Tokenized Stocks Require Deep Liquidity to Serve as Efficient Collateral
The collateral model only works if the spot leg behind it is low-cost and reliable to put on. If tokenized stocks trade on thin books that experience high execution costs, the hedge becomes expensive and unreliable, and the capital efficiency gain disappears. What’s required is a perps engine and a deeply liquid tokenized stocks platform sharing a single collateral system.
Ondo Perps is the only venue with both. It's built on the same institutional-grade infrastructure powering Ondo Stocks, the world's largest tokenized stocks platform, which crossed $1 billion in TVL within eight months of launch and sources liquidity just-in-time from underlying traditional markets like the NYSE and Nasdaq.
How Tokenized Stock Collateral Leads to Liquidity on Par With Traditional Derivatives Markets
The benefits of unlocking tokenized stocks as collateral on Ondo Perps extend beyond a single efficiency gain. The system creates a reinforcing cycle in which each improvement supports the next.
How tokenized stock collateral drives the liquidity flywheel:
- By using the tokenized stock as both the hedge and margin, market makers can support the position without maintaining additional capital at an external brokerage.
- This can reduce the capital required by nearly half. Under the traditional model, quoting $1 million of exposure may require about $2 million in total capital, with $1 million posted as margin for perps trading and another $1 million held as cash or inventory at a brokerage. On Ondo Perps, the tokenized stock used to hedge the position can also serve as margin, allowing the same exposure to be supported with closer to $1 million and delivering roughly 2x greater capital efficiency.
- Reducing the capital needed to support the same level of quoting can effectively double the return on capital. For example, $100,000 in earnings represents a 5% return on $2 million of deployed capital, compared with a 10% return when only $1 million is required.
- Higher returns on each dollar deployed make the venue more attractive to market makers, encouraging them to allocate additional capital. Trades that were not economically viable under the traditional model can become profitable to quote.
- Tighter spreads and larger quotes give traders access to deeper liquidity with less slippage. Better execution attracts more trading activity, which creates additional two-sided flow.
- That additional flow creates more opportunities for market makers to earn. More fills increase spread capture and allow the same capital to be recycled through inventory more quickly.
- As trading activity grows, market maker returns improve further, reinforcing the cycle and accelerating the liquidity flywheel.
Now, with tokenized stock collateral helping drive the liquidity flywheel for equity perps, there is a clear path to scale and compete with traditional equity and commodities derivatives markets.
The Beginning of Onchain Prime Brokerage
Tokenized stocks gave the world a better way to hold assets, and perps provided a better way to trade them. Now, this tokenized stock collateral model for perps connects them in the first piece of a broader onchain prime brokerage layer for the Ondo ecosystem. The trading and margining infrastructure that now sits on top of tokenized assets not only transforms tokenized stocks and perpetuals trading, it serves as the foundation for what comes next. More markets, more liquidity, and more innovations are on the way.
