Ondo Finance today announced that Ondo Stocks now supports in-kind conversion between underlying shares and tokenized stocks and ETFs, adding a new primary market route alongside its existing cash-funded flow. The functionality is powered by Ondo Stocks and Alpaca’s Instant Tokenization Network (ITN), enabling approved institutions to contribute existing shares to mint corresponding Ondo Stocks tokens, or redeem tokens to receive the underlying shares.
The addition allows institutions to convert existing share inventory directly into onchain liquidity, supporting tighter spreads and deeper liquidity for Ondo Stocks across secondary markets.
How It Works
The integration automates the conversion process, removing the need for manual approval on each transaction and allowing institutions to move quickly between traditional share inventory and tokenized positions.
To mint, an approved institution transfers underlying shares from its Alpaca account to Ondo’s Alpaca account via an internal book transfer; the corresponding Ondo Stocks tokens are then issued on the supported blockchain. Redemption reverses the process, returning the underlying shares to the institution’s Alpaca account in exchange for the tokens.
Key Details
- Eligibility: Access is limited to institutions approved by Alpaca on a case-by-case basis. ITN is not a generally available Ondo Stocks feature.
- Account requirements: Institutions must hold active accounts with both Ondo and Alpaca and complete applicable onboarding and approval requirements. Interested institutions should contact Ondo and Alpaca to request activation.
- Supported networks: Conversions are live now on Ethereum and BNB Chain.
Why It Matters
Ondo Stocks connects tokenized stocks and ETFs to the liquidity of traditional markets, including Nasdaq and NYSE, through a just-in-time minting and redemption model. This integration extends that model by making it more capital-efficient for institutions to supply liquidity across secondary markets.
Under the cash-funded model, an institution holding underlying shares must source separate cash to mint tokens — a step that can introduce financing costs and a timing mismatch between its share inventory and tokenized positions. Direct access to Alpaca’s ITN removes that step, making it easier for market makers to replenish token inventory, manage exposure, and respond to demand across trading venues. As a result, institutional capital becomes a more readily available source of tokenized stock liquidity in secondary markets — supporting tighter spreads and greater depth across the exchanges, wallets, and DeFi applications connected to the Ondo Stocks ecosystem.
