Author: imToken Source: X, @imTokenOfficial Translator: Shaw Jinse Finance Abstract This article outlines the development and future trends of equity tokenization, particularly the so-called "second growth curve" of derivatives and liquidity. Equity tokenization is emerging as one of the most compelling narratives at the intersection of traditional finance (TradFi) and Web3 in 2025. According to rwa.xyz data, the market capitalization of tokenized equities has grown from virtually zero to hundreds of millions of dollars this year, driven by the shift from early synthetic models to actual stock custody and the growing development of more advanced products such as derivatives. This article will explain the evolution of this model, introduce key players, and explore possible future developments.
1) The Path to US Stock Tokenization
What is stock tokenization?
In short, it represents traditional stocks as digital tokens on the blockchain. Each token represents a share of the underlying asset. These tokens can be traded on-chain 24/7, overcoming the time zone and trading venue restrictions of traditional markets and opening the door to global investors.
Stock tokenization is not new. In the previous cycle, projects like Synthetix and Mirror built on-chain synthetic asset systems. Users could mint and trade equity tokens (e.g., TSLA, AAPL) using overcollateralization (e.g., SNX, UST). This model was later extended to fiat currencies, indices, gold, oil, and other assets, using oracle pricing and on-chain matching for settlement. Because there is no real counterparty (it only provides price exposure), this system can theoretically provide deep liquidity and low slippage. Because there is no real counterparty (it only provides price exposure), this system can theoretically provide deep liquidity and smooth trading. Limitations: Synthetic models do not convey true ownership of the underlying stock—they merely provide price exposure. If the oracle fails or the collateral loses its peg (e.g., UST), these systems could face liquidation, price deviation, and a loss of trust. What’s different now?
Today’s momentum is driven by off-chain models that hold actual shares and issue 1:1 on-chain tokens. Currently, two main paths have emerged: Third-party compliant issuance, multi-platform access (e.g., Backed Finance/xStocks): xStocks acquires and custody stocks through partners like Alpaca Securities LLC. Broker-led closed-loop (similar to the Robinhood model): Licensed brokers acquire stocks and issue tokens themselves, covering the entire process from purchase to on-chain issuance. The key upgrade lies in verifiable real-world backing. This improves security and compliance, making this model more acceptable to traditional institutions. 2) Project Overview: From Issuance to Trading A complete tokenized equity ecosystem typically includes: Infrastructure: Base chain, oracles, and settlement rails Issuance: Regulated or compliant issuers Trading: CEX/DEX, DeFi (lending and other derivatives venues) Infrastructure is maturing, and the most intense competition—ultimately determining user experience and liquidity—is occurring in the issuance and trading areas. Below are some representative projects. Ondo Finance – Expanding from RWA Bonds to Equities Ondo initially gained recognition by tokenizing treasury bonds and bond exposure (e.g., USDY, OUSG), and it remains one of the largest RWA platforms. More recently, Ondo has expanded into the equity market, partnering with regulated custodians and clearing houses like Anchorage Digital to hold actual US stocks and issue corresponding on-chain tokens. This approach provides institutions with regulatory compliance assurance and creates cross-asset liquidity pools, enabling tokenized shares to interact with stablecoins and RWA debt. Ondo and Pantera Capital also announced plans to establish a $250 million fund to support RWA projects. Ondo's Chief Strategy Officer, Ian De Bode, stated that the funds will be used to acquire shares and tokens from emerging teams. Injective positions itself as a high-performance financial blockchain with native order book matching and derivatives modules. Its ecosystem encompasses over 200 projects, including decentralized exchanges (Helix, DojoSwap), lending platforms (Neptune), RWA participants (Ondo, Mountain Protocol), and NFT marketplaces (Talis, Dagora). RWA offers two key advantages: A wide variety of assets: Helix and other applications already list tokenized US tech stocks, gold, foreign exchange, and more. Traditional financial connectivity: Partnerships with companies like Coinbase, Circle, Fireblocks, WisdomTree, and Galaxy help combine off-chain custody and clearing with on-chain issuance and trading. The result is a low-latency, low-cost execution environment that supports collateralization, composability, and ultimately the development of a richer range of equity-pegged products. Backed Finance operates under the Swiss legal framework in compliance with European MiCA regulations. It issues fully collateralized tokenized securities and partners with firms such as Alpaca Securities LLC for stock acquisition and custody, ensuring a 1:1 mapping between off-chain assets and on-chain tokens. Backed covers US stocks, exchange-traded funds (ETFs), European securities, and select international indices. This provides investors with a single, on-chain platform, enabling access to multi-market, multi-currency investment opportunities—for example, combining US tech stocks, European blue-chip stocks, and global commodity ETFs—without being constrained by traditional trading venues and time constraints. Block Street—Unlocking Liquidity in Tokenized Equity Block Street specializes in lending and borrowing using tokenized equities as collateral. Holders can use assets like TSLA.M or CRCL.M as collateral to borrow stablecoins or other tokens, unlocking liquidity without having to sell their assets. Its beta version recently launched, enabling tokenized equities as collateral, filling a critical gap in the decentralized finance (DeFi) lending landscape. If lending, perpetual swaps, and options mature on the platform, they could drive "second-curve" growth for the entire category. The biggest advancement in this wave is the combination of actual stock custody and low-friction access. With just a wallet and a stablecoin, anyone can invest in US stocks on a DEX—without a brokerage account, time zones, or geographic barriers. However, most products are still in the voucher phase: they issue and trade tokens but haven't fully transformed them into financial building blocks for trading, hedging, and money management. This will pose a challenge if the goal is to attract professional capital flows, high-frequency liquidity, and institutional participation.
DeFi went through a similar phase before the "Summer of DeFi." Ethereum (ETH) was not widely used as collateral and a composable asset until the emergence of lending protocols. Once ETH became an acceptable collateral, liquidity increased significantly. Tokenized stocks may need to undergo the same transformation: becoming collateralized, tradable, and composable assets.
If the first growth curve represents spot trading volume, then the second growth curve will be driven by capital efficiency and activity driven by financial instruments. Expect to see:
Lending backed by tokenized shares and credit (e.g., Block Street)
Short exposure and hedging tools (inverse tokens, perpetual contracts, options)
Structured strategies and portfolio products that are interoperable in DeFi
Platforms that offer a unified on-chain experience (spot trading, shorting, leverage, and hedging) and make tokenized shares available across lending, options, and stablecoin protocols will have a competitive advantage.
Summary
Tokenizing US stocks and exchange-traded funds (ETFs) is not just about bringing Wall Street to the blockchain; it’s about bridging the final gap between traditional capital markets and blockchain. From issuance (Ondo) to multi-market access (Backed Finance) to liquidity unlocking (Block Street), the architecture of tokenized shares is steadily taking shape. As institutional participation expands and trading infrastructure matures, tokenized shares that are composable, tradable, and can be used as collateral may become one of the most influential and value-added asset classes in the RWA market.
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