As the digital bond market expands, more tokenized government bonds arrive at Polygon.

Ondo Finance, which already offers tokenized U.S. Treasury bonds on the Ethereum blockchain, has expanded this offering to the Polygon network.

According to a press release on Thursday, the company said it has issued OUSG tokens, essentially a tokenized version of BlackRock’s short-term U.S. government bond exchange-traded fund (ETF), from Polygon.

The company also plans to launch a tokenized money market fund called OMMF, a soon-to-launch yield-generating stablecoin alternative, and Flux Finance, a decentralized lending marketplace developed by Ondo (pending governance approval), according to Ondo President and Chief Operating Officer Polygon. I plan to bring it to . Justin Schmidt said in an interview:

This development comes as demand for tokenized versions of traditional financial instruments, such as U.S. Treasuries, has grown among investors as bond yields outpace interest rates in the decentralized finance (DeFi) lending market. Asset management firm Bernstein predicts that tokenization of real assets (RWA) could grow to a market value of $5 trillion in the next five years.

Tokenized government bonds have grown into a $600 million market, with Ondo Finance’s OUSG token accounting for a significant portion of $140 million since its launch in January. Developed by the Ondo team and governed by a community-voted Decentralized Autonomous Organization (DAO), Flux Finance allows investors to borrow against OUSG. According to DefiLlama, a total of $44 million in value is locked on the platform.

Ondo’s move follows asset management giant Franklin Templeton, which launched the tokenized Franklin OnChain US Government Money Fund (FOBXX) on Stellar in 2021 and then made it available on Polygon.

Polygon is Ethereum’s layer 2 extension network, allowing users to trade cheaper and faster than the mainnet, which is prone to blockages during periods of high blockchain activity, while relying on the security of Ethereum.

“Building Ondo Finance on Polygon is an important step toward bridging the gap between DeFi and institutional-level finance,” said Colin Butler, Global Head of Institutional Capital at Polygon Labs.