Panoramic view of stock tokenization: From real stock custody to derivatives, how to open up the last mile?

A Brief Review of the Evolution of Stock Tokenization Models and an Exploration of the Second Growth Curve in Future Derivatives and Liquidity Release

Author: imToken

Stock tokenization is emerging as the best narrative for the integration of TradFi and Web3 in 2025.

Data from rwa.xyz shows that since the beginning of this year, the scale of stock tokenized assets has jumped from almost zero to hundreds of millions of dollars. Behind this is the acceleration of stock tokenization from concept to implementation - it has gone through an evolutionary process from synthetic assets to physical stock custody models, and is now extending to more advanced forms such as derivatives.

This article will briefly sort out the evolution of stock tokenization models, review core projects, and look forward to its potential development trends and pattern changes.

Source: rwa.xyz

I. The Past and Present of US Stock Tokenization

What is stock tokenization?

Simply put, it is the mapping of traditional stocks into digital tokens through blockchain technology. Each token represents a portion of ownership of the underlying asset. These tokens can be traded on-chain 24/7, breaking the time and geographical restrictions of traditional stock markets and allowing global investors to participate seamlessly.

From the perspective of tokenization, the tokenization of US stocks is actually not a new concept (extended reading: "Behind the 'Stock Tokenization' Boom: The Evolution Roadmap of the Tokenization Narrative"). After all, in the previous cycle, representative projects such as Synthetix and Mirror had already explored a complete set of on-chain synthetic asset mechanisms:

This model not only allows users to mint and trade "US stock tokens" such as TSLA and AAPL through over-collateralization (e.g., SNX, UST), but can even cover fiat currencies, indices, gold, crude oil, and almost all tradable assets. The reason is that the synthetic asset model tracks the underlying assets and uses over-collateralization to mint synthetic asset tokens.

For example, users can pledge $500 worth of crypto assets (such as SNX, UST) to mint synthetic assets (such as mTSLA, sAAPL) that are pegged to the price of the underlying assets and conduct transactions. The entire operation mechanism uses oracle pricing + on-chain contract matching, with no real counterparty. Therefore, in theory, it can achieve infinite depth and slippage-free liquidity experience.

However, this model does not actually own the ownership of the corresponding stocks, but only "bets" on the price. This means that once the oracle fails or the collateral assets collapse (Mirror collapsed due to the crash of UST), the entire system will face the risks of liquidation imbalance, price depegging, and collapse of user confidence.

Source: Mirror

The biggest difference in this wave of "US stock tokenization" boom lies in the adoption of the underlying model of "physical stock custody + mapping issuance". This model is currently mainly divided into two paths, with the core difference being whether it has the qualification for compliant issuance:

One type is the "third-party compliant issuance + multi-platform access" model represented by Backed Finance (xStocks) and MyStonks. Among them, MyStonks cooperates with Fidelity to achieve 1:1 pegging to real stocks, and xStocks purchases and custodizes stocks through Alpaca Securities LLC, etc.;

The other type is the licensed brokerage self-operated closed-loop like Robinhood, which relies on its own brokerage license to complete the entire process from stock purchase to on-chain token issuance;

From this perspective, the key advantage of this round of stock tokenization boom is that the underlying assets are truly verifiable, with higher security and compliance, and are more easily recognized by traditional financial institutions.

II. Review of Representative Projects: The Upstream and Downstream Ecosystem from Issuance to Trading

From the perspective of operational architecture, a fully functional tokenized stock ecosystem needs to include at least the infrastructure layer (public chain, oracle, and settlement system), issuance layer (various issuers), trading layer (CEX/DEX, lending and other derivative trading platforms), etc. Without any layer, it is difficult for the ecosystem to achieve safe issuance, effective pricing, and efficient trading.

Around this framework, we can see that the main participants in the current market are deploying around different links. Considering that the infrastructure (such as public chains, oracles, settlement networks) is relatively mature, the issuance and trading links are the main battlefield for the competition of tokenized stocks. Therefore, this article will focus on these representative projects that directly affect user experience and market liquidity.

Ondo Finance: The Extension of RWA Leader to Stock Tokenization

First, there is naturally Ondo Finance. As a leading project in the RWA tokenization track, it was initially positioned as an on-chain bond and treasury bond tokenization platform. As of the time of writing, relying on its two flagship products USDY and OUSG based on US Treasury bonds, Ondo Finance still firmly occupies a core position in the top ten in terms of volume in the RWA tokenization track.

Source: rwa.xyz

However, since last year, Ondo Finance has tried to expand its territory to the stock market, including cooperating with regulated custody and clearing institutions such as Anchorage Digital to securely custody real US stocks and issue equivalent tokenized assets on-chain. This model not only provides compliance guarantees for institutional investors but also builds cross-asset liquidity pools on-chain, allowing tokenized stocks to be traded in combination with stablecoins, RWA bonds, and other assets.

Moreover, last month, Ondo Finance and Pantera Capital planned to launch a $250 million fund to support RWA projects. Ian De Bode, Chief Strategy Officer of Ondo, said that the funds will be used to acquire equity and tokens of emerging projects.

Injective: A Public Chain Tailor-Made for Financial RWA

Injective has always been positioned as "financial infrastructure" and is one of the public chains focusing on high-performance financial applications. Its independently developed on-chain matching and derivatives trading modules enable it to have targeted optimizations in terms of latency, throughput, and order book depth.

Up to now, the Injective ecosystem has aggregated more than 200 projects, covering decentralized exchanges (Helix, DojoSwap), on-chain lending (Neptune), RWA platforms (Ondo, Mountain Protocol), NFT markets (Talis, Dagora), and other fields.

In the RWA track, Injective's advantages are mainly reflected in two aspects:

Wide coverage of asset categories: Injective ecosystem projects represented by Helix already support the trading of various tokenized assets such as US tech stocks, gold, and foreign exchange, expanding the asset spectrum of RWA on-chain;

Direct connection capability with traditional finance: Injective has established cooperation with well-known financial institutions such as Coinbase, Circle, Fireblocks, WisdomTree, and Galaxy, opening up a closed-loop process from off-chain custody, clearing to on-chain mapping and trading;

Thanks to this positioning, Injective is more like an exclusive public chain base for RWA, providing issuers with stable compliance implementation and asset management channels, offering high-speed and low-cost execution environments for trading platforms and aggregation tools, and laying the foundation for the derivative and combinatorial development of stock tokenization in the future.

Source: Injective

MyStonks: The Pioneer of On-Chain US Stock Liquidity

As a pioneer in this wave of US stock tokenization, many users should have come into contact with tokenized US stocks issued by MyStonks on-chain. It also cooperates with Fidelity to ensure that on-chain tokens are fully pegged to real stocks.

In terms of trading experience, MyStonks adopts the Payment for Order Flow (PFOF) mechanism, routing order flows to professional market makers for matching, thereby significantly reducing slippage and transaction costs, and improving order execution speed and depth. For ordinary users, this means that when trading US stocks on-chain, they can enjoy liquidity close to that of traditional brokers while retaining the advantage of round-the-clock trading.

It is worth mentioning that MyStonks is not limited to on-chain spot trading but is actively expanding into diversified financial services such as derivatives, lending, and staking. In the future, users will not only be able to conduct leveraged trading of US stock tokens but also use their holdings as collateral to obtain stablecoin liquidity and even participate in portfolio investment and yield optimization strategies.

Backed Finance: The Compliant Expander Across Markets

Different from MyStonks, which focuses on US stocks, Backed Finance has a more cross-market and multi-asset vision from the beginning. One of its highlights is the high alignment of its compliance model with the European MiCA regulatory route.

The team conducts business based on the Swiss legal framework, strictly following local financial regulatory requirements, issuing fully pegged tokenized securities on-chain, and establishing a stock purchase and custody system with partners such as Alpaca Securities LLC to ensure a 1:1 mapping relationship between on-chain tokens and off-chain assets.

In terms of asset scope, Backed Finance not only supports US stock tokenization but also covers ETFs, European securities, and specific international index products, providing global investors with multi-market, multi-currency, and multi-target investment options. This means that investors can configure US tech stocks, European blue-chip stocks, and global commodity ETFs on the same on-chain platform, thus breaking the geographical and time restrictions of traditional markets.

Block Street: The Liquidity Releaser of Tokenized Stocks

Block Street, as one of the few DeFi protocols currently focusing on tokenized stock lending, has set its sights on a more downstream segment with potential explosive power in terms of liquidity release.

This is also a细分赛道 (niche track) that is still blank in the "trading layer" of tokenized stocks. Taking Block Street as an example, it directly provides on-chain collateral and lending services to holders - users can directly deposit tokenized US stocks such as TSLA.M and CRCL.M into the platform as collateral to obtain stablecoins or other on-chain liquid assets according to the collateral ratio, realizing a capital utilization model of "keeping the assets, getting the liquidity".

Block Street just launched a test version last week, allowing users to experience converting tokenized stocks into liquid capital, enabling holders to release funds without selling their assets. This fills the gap in the DeFi lending field for tokenized stocks, and it is worth observing whether similar lending, futures, and other derivative directions will build a "second curve" for the tokenized stock market.

Source: Block Street

III. How to Further Tear Down the Walls?

Objectively speaking, the biggest progress in this new wave of US stock tokenization is the "physical stock custody" model and the elimination of entry barriers:

Any user only needs to download a crypto wallet and hold stablecoins to directly buy US stock assets through DEX anytime and anywhere, bypassing account opening thresholds and identity verification - no US stock account, no time difference, no geographical or identity restrictions.

However, the problem is that most current products are still focused on the first step of the issuance and trading layer, essentially remaining in the initial stage of digital certificates, and have not really transformed them into on-chain financial assets that can be widely used for trading, hedging, and fund management. This means that they have obvious shortcomings in attracting professional traders, high-frequency funds, and institutional participation.

This is a bit like ETH before DeFi Summer. At that time, it could not be lent, used as collateral, or participate in DeFi. It was not until protocols such as Aave endowed it with functions such as "collateralized lending" that hundreds of billions of dollars in liquidity were released. For US stock tokens to break through the predicament, this logic must be replicated, making the deposited tokens "living assets that can be collateralized, traded, and combined".

Therefore, if the first curve of the tokenized US stock market is the growth of trading volume, then the next second curve will be to improve the capital utilization rate and on-chain activity of tokenized stocks through the expansion of financial tools. Such product forms are more likely to attract a wider range of on-chain capital flows and form a complete capital market cycle.

In this logic, in addition to the instant trading of tokenized stocks, more abundant derivative transactions in the "trading layer" are particularly critical - whether it is DeFi lending protocols like Block Street, or shorting tools, options, and structured products that support reverse positions and risk hedging in the future.

The core lies in who can first create products with strong composability and good liquidity, and who can provide an integrated on-chain experience of "spot + shorting + leverage + hedging". For example, allowing tokenized US stocks to be used as collateral in Block Street to complete fund lending, form new hedging targets in option protocols, and constitute combinable asset baskets in stablecoin protocols.

Overall, the significance of stock tokenization is not only to move US stocks and ETFs onto the chain but also to open the "last mile" between the real-world capital market and the blockchain:

From Ondo in the issuance layer, to MyStonks and Backed Finance in trading and cross-market access, to Block Street in liquidity release, this track is gradually building its own underlying infrastructure and ecological closed-loop.

Previously, the main battlefield of RWA was dominated by US bonds and stablecoins. When institutional funds accelerate their entry and on-chain trading infrastructure continues to improve, and tokenized US stocks become combinable, tradable, and collateralizable living assets, stock tokenization is undoubtedly expected to become the largest and most incremental asset category in the RWA track.

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