Tokenization brings a real-world asset onchain. Whether that asset scales depends on what holders can do with it next: borrow against it, restructure it, combine it with other positions, and exit when they need to.
Most tokenized capital has not reached that stage. Binance Research estimates that roughly 12% of tokenized real-world asset capital is deployed in onchain financial applications, a sign that issuance across much of the sector has moved faster than the infrastructure needed to put those assets to work.¹
ONyc offers a view of that infrastructure in practice, representing $285.5 million in reinsurance capital² held by more than 9,100 holders.³ Its DeFi active TVL across Solana exceeds $245 million, the most of any real-world asset on Solana by that measure.⁴ ONyc is used across lending markets, fixed-rate products, risk tranches, managed vaults, and liquidity infrastructure, all drawing on the same underlying source of yield.
Where the yield comes from
ONyc earns from reinsurance premiums, the payments insurers make to transfer catastrophe and specialty risk, and from returns on the collateral that backs those obligations. Capital that is not on risk in bound deals remains in collateral assets, where it continues to generate returns while available for future underwriting.
Both sources of return carry their own risks but have limited direct dependence on crypto market sentiment, trading volumes, or token incentives, all of which can shift quickly in DeFi. As a result, lending markets, fixed-rate protocols, and vaults can draw on real-world yield that behaves differently from the crypto-native assets most DeFi applications were designed around.
Collateral that keeps earning
Collateral is the first layer of utility. On Kamino, a holder can deposit ONyc and borrow stablecoins against it, accessing liquidity without selling the underlying exposure. The deposited ONyc continues to accrue its underlying yield while the borrowed capital is deployed elsewhere, so a single position can serve more than one purpose.
Holders seeking additional exposure can redeploy borrowed stablecoins into more ONyc and repeat the cycle to build a leveraged position. Kamino Multiply establishes that position in a single transaction, and Loopscale offers another venue for ONyc-backed borrowing and leveraged strategies. Leverage introduces its own risks, including variable borrowing costs, liquidation exposure, and changes in collateral value, so net returns depend on the underlying yield, the cost of borrowing, and the amount of leverage used.
Lenders form the other side of that market. Vaults managed by curators including Steakhouse, Elemental, RockawayX, and Allez Labs have contributed stablecoin liquidity to the OnRe Market on Kamino, where utilization has historically reached 90% to 95%. ONyc creates demand for stablecoin borrowing, lenders earn on that demand, and deeper stablecoin liquidity allows more holders to use ONyc as collateral.
Structuring risk and return
Beyond lending, ONyc can be structured into different financial products. Through Exponent, ONyc can be split into a principal token (PT) and a yield token (YT). PT-ONyc trades at a discount to its maturity redemption value, offering an implied fixed yield when held to maturity, subject to the underlying asset’s risks. YT-ONyc entitles its holder to the variable yield ONyc generates over the remaining term. One investor can take a fixed-rate position while another takes a view on future yield, and both positions trace back to the same reinsurance portfolio.
Tranching divides the same exposure by risk. Exponent's srONyc and jrONyc split ONyc into senior and junior positions. The junior tranche absorbs losses first and receives a larger share of the yield in return, while the senior tranche benefits from the first-loss protection provided by the junior capital.
The result is a single underlying asset that can serve investors with different objectives, from those seeking senior exposure or fixed-rate returns to those willing to take on more risk for higher potential yield.
ONyc can be positioned for different yield objectives and risk preferences.
On Exponent, holders can construct ONyc positions for fixed yield, leveraged yield, principal protection or amplified yield. Here's how each position works and what it enables.
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Composability across DeFi
Composability connects these layers, allowing an instrument created on one protocol to be used on another. PT-ONyc, itself a fixed-rate position, is accepted as collateral on Kamino and Loopscale, so a holder can lock in a rate and borrow against the same position. Loopscale also supports srONyc strategies, extending composability to the senior tranche. The same reinsurance exposure can therefore support several connected positions at once.
Managed vaults provide access to these strategies without requiring investors to manage individual positions. Vault strategies from teams including Allez Labs, RockawayX, and Elemental combine ONyc with lending, fixed-rate instruments, or other assets and DeFi positions, allowing its reinsurance-backed yield to contribute to diversified portfolios.
Liquidity as infrastructure
Each of these strategies depends on the ability to enter and exit positions. A lending market needs collateral it can sell during a liquidation, a leveraged position needs a way to unwind, and a vault needs a way to meet redemptions. Reinsurance capital, however, is committed to underwriting obligations over defined periods, creating a gap between the liquidity of the token and the liquidity of the assets behind it.
ONyc addresses that challenge through secondary trading on venues such as Orca and through OnRe's primary market. OnRe targets an allocation of approximately 15% of reinsurance capital toward ONyc liquidity, with a portion held in an onchain redemption vault to support execution. Eligible primary redemptions are priced and executed through OnRe's smart contracts.
The PropRFQ, built with Titan, connects OnRe's issuer-supported liquidity with secondary markets. Trades can be routed to competitive executable quotes, with pricing adjusting to available liquidity, net demand, and transaction size. Each trade executed through OnRe's contracts settles atomically against a minimum output set by the user.
Tokenized assets need reliable liquidity to function effectively across DeFi.
OnRe is expanding its dedicated liquidity infrastructure for ONyc with Titan, building on ONyc's existing architecture to make liquidity more accessible as its use across DeFi grows.
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Together, these mechanisms provide multiple ways to access liquidity and adjust or unwind ONyc exposure, subject to available liquidity and market conditions.
Expanding the market
Distribution extends ONyc's reach to capital that does not originate on Solana. RockawayX's OnRe Core Vault gives Ethereum users access to a managed strategy incorporating ONyc holding, looping, Exponent yield positions, and stablecoin lending. Through Plume Vaults, nONYC provides wrapped exposure to ONyc's yield, creating a distribution channel for other blockchain ecosystems, DeFi protocols, and neobanks. Vault infrastructure manages the positions and redemption processes behind that exposure, allowing investors on other networks to access ONyc-linked yield without necessarily holding ONyc natively.
Risk assessment also supports adoption. Allez Labs, OnRe’s risk partner, has assessed ONyc as High Quality Collateral, giving lenders and curators a documented framework for evaluating the asset.
Allez Labs has published its independent Asset Risk Assessment of ONyc, covering 13 risk components across market, technical, counterparty, and operational risks.
OVERALL ASSESSMENT
High Quality Collateral
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The broader RWA market is moving in the same direction. As Binance Research observes, the next phase of tokenization depends on building the liquidity, lending, and collateral infrastructure that makes real-world assets useful beyond issuance.¹
ONyc began as a way to bring reinsurance yield onchain. Today, it demonstrates what is possible when that yield becomes part of a broader financial market.
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