Ondo Finance collateral role grows as Spout sets 50% cap

Ondo Finance collateral role grows as Spout sets a 50% loan cap

Spout Finance will lend USDC worth up to 50% of a borrower’s Ondo Stocks on Solana with no interest charged, Ondo Finance said at 6:59 a.m. ET on Nov. 12.

The quick take

Price: $ONDO trades at $0.347, down 6.9% in 24 hours (CoinGecko, as of 12:40 p.m. ET, Nov 12).
Trigger: Spout Finance will accept Ondo Stocks as collateral for interest-free USDC loans once it launches on Solana.
Watch: a launch date for Spout on Solana, which Ondo has not given yet.

A new Ondo Finance collateral option is on the way for Solana users. Ondo Finance ($ONDO) said on Thursday that the lending app Spout Finance will take its tokenized stocks as backing for loans.

What happened

Ondo posted the news on its official blog at 6:59 a.m. ET (11:59 UTC) on Nov. 12. Spout will support Ondo Stocks as collateral when it goes live on Solana ($SOL). Ondo gave no date.

Borrowers will deposit the tokens and take out USDC worth up to 50% of their value. In Ondo’s own example, $10,000 of tokens backs a loan of up to $5,000.

Spout will charge no interest. Instead, it will turn the tokens into the real shares through Alpaca’s Instant Tokenization Network and sell covered calls on them each week. The option premiums, after fees, pay the lenders.

When a call is exercised, Spout sells the shares at the strike price and buys them back at the market price. Ondo says this can leave a borrower with fewer tokens while the loan stays the same size.

Borrowers also give up gains above the strike price in weeks when calls are sold. If the stocks fall, they must add collateral or risk having it sold to repay the loan.

Spout is part of Ondo Catalyst, a $250 million program that invests in projects built around Ondo’s products. Ondo Stocks now count more than 470 tokenized stocks and ETFs on Ethereum, BNB Chain and Solana, according to Ondo’s product page. They are not offered to U.S. users.

Why it moved

The news did not lift the token. $ONDO slipped 6.9% in 24 hours as the wider market dipped: Bitcoin ($BTC) fell 3.6% and Ethereum ($ETH) 3.9%, according to LiveCoinWatch at 12:40 p.m. ET.