Original: The Round Trip
Compiled by: Yuliya, PANews
In an era where encryption and AI intersect, the truly important stories are often hidden outside the hustle and bustle. In order to find these overlooked truths, PANONY and Web3.com Ventures jointly launched the English video program "The Round Trip". Co-hosted by John Scianna and Cassidy Huang, this episode will focus on the new wave of financial tokenization, deeply analyze how companies such as Robinhood and Kraken compete for market dominance through tokenized stocks, explore the compliance advantages of the current model compared to the former Mirror Protocol, and look forward to the far-reaching impact of this trend on global capital flows, transaction efficiency and market volatility.
*Note: This video was released on July 4, and some data and dynamics may differ from the current situation.
Giants’ entry and strategic layout
Robinhood’s Tokenized Stock Expansion Plans
Robinhood made headlines last week with its plans to support tokenized versions of over 1,000 U.S. stocks by the end of the year. Highlights of the plan include:
All-weather trading: 24-hour trading is possible without being restricted by the opening hours of traditional markets.
Fractional ownership: Lowers the investment threshold so that ordinary investors can also participate in the stock market.
Global accessibility: Providing more convenient investment opportunities for global investors.
Currently, the service is limited to the EU market, but Robinhood has announced that it will launch a Layer 2 blockchain based on Arbitrum. This move not only expands the Ethereum ecosystem, but also marks a further move of traditional financial companies towards blockchain technology.
However, this innovation is not without controversy. For example, OpenAI has pointed out on social media that these tokenized shares are not equivalent to real stocks because OpenAI's shares are not public. In addition, according to Robinhood's FAQ, users are actually buying tokenized contracts, not actual stocks. This difference emphasizes the need for companies to communicate clearly to users when promoting tokenized financial products to avoid misunderstandings.
Kraken’s Tokenized Stock Plan
Compared to Robinhood, Kraken has taken a different strategy. It has reached a new cooperation with Backed to launch xStocks on Solana, providing more than 60 tokenized US stocks and ETFs, and has opened it to non-US users.
Kraken’s tokenized stocks have the following features:
Issued on the Solana blockchain: These tokens can be withdrawn to self-custodial wallets and are compatible with decentralized finance (DeFi) protocols.
Low investment threshold: Users only need $1 to participate in tokenized asset investment.
Asset flexibility: Tokenized stocks can be used in DeFi protocols to earn yield or as collateral to obtain leverage.
Interestingly, despite Kraken owning the OP Stack-based Layer 2 network Ink, it has chosen to lean towards the Solana ecosystem in the tokenized stock space. Whether this strategic choice will bring long-term advantages remains to be seen.
Other players entering the market: Bybit and Gemini
In addition to Kraken and Robinhood, other companies are also actively entering the tokenized stock space:
Bybit: reached a strategic cooperation with Backed , and launched xStocks tokenized US stocks and ETF products on its spot platform, but its strategy is to directly integrate tokenized stocks into the spot market. These assets are 1:1 linked to real stocks, and support both Ethereum and Solana networks, and it is possible to achieve on-chain dividend distribution in the future.
Gemini: Gemini is not far behind. They launched the first tokenized stock, MicroStrategy, and opened it to EU users in cooperation with Dinari. The product enables 24/5 (Monday to Friday) trading and is fully on-chain, ensuring compliance while also broadening the boundaries of tradable assets.
Market structure and historical echoes
Coinbase’s potential layout
As a blue chip company in the crypto space, Coinbase has not officially entered the market, but its layout is also worth paying attention to. It is reported that Coinbase is negotiating with the U.S. Securities and Exchange Commission (SEC) to seek compliance opportunities for tokenized stocks.
Coinbase’s advantages include:
Strong portfolio: Coinbase Ventures has invested in several top DeFi protocols such as Uniswap, Compound, Synthetix, and Aave. If these protocols can be integrated into the tokenized stock business, their influence will be greatly enhanced.
Advanced technical infrastructure: Coinbase’s Base chain is moving towards the goal of one million TPS (transactions per second), and the transaction speed is fast enough to compete with Solana.
Although Coinbase is not usually the first mover, it tends to launch the most polished products after fully testing the market. This cautious strategy may make it successful in the tokenized stock space.
Compliance is key
All this is reminiscent of Mirror Protocol, launched by Do Kwon in 2020. It once set the market on fire with "mirror synthetic assets", attracting $2 billion in total locked value (TVL) in just six months. But it ended due to regulatory issues and the collapse of Terra/Luna. In contrast, today's model is fundamentally different. Both Robinhood and Kraken have adopted a more compliant and regulated approach, avoiding the risk of repeating the same mistakes. With the entry of traditional players and crypto blue chips, the scale of tokenized stocks is expected to be far greater than before.
The transformation of on-chain capital
John Scianna predicts that by the end of 2025, the market value of tokenized stocks traded on the chain may exceed $20 billion, and even reach $50 billion under conservative estimates. If Robinhood fully launches its Layer 2 chain and puts all its stock assets on the chain, its users and managed funds alone may exceed $100 billion.
This financial infrastructure of "hyper-tokenized stocks" will usher in a new stage of deep integration between traditional and blockchain. The future financial system will be both efficient, transparent and globally accessible. The US market is in a leading position in this trend, and tokenized stocks will become an important part of the global capital market.
Compared with traditional methods, stocks on the chain have all-weather trading capabilities, lower transaction costs, and no longer rely on intermediary channels. Especially in overseas markets, it used to be necessary to pay a high premium to obtain US stocks, but assets on the chain can obtain US stock exposure with almost "zero threshold", forming a broad and inclusive capital channel.
In the short term, it is still difficult for on-chain stocks to completely replace traditional stock markets, and they exist more as a complementary mechanism. In terms of market volatility, on-chain markets may be more stable due to deeper liquidity, but they may also fluctuate violently in emergencies due to the lack of traditional circuit breakers.
In traditional stock markets, weekends and circuit breakers provide a buffer for market sentiment. In contrast, the "24/7 open" structure of the crypto market may induce emotional selling in some cases. But this also attracts users who are dissatisfied with the delay mechanism of the traditional market. The real-time transactions and uninterruptibility of the on-chain market are gradually becoming its attraction.
Although tokenized stocks still account for a very small proportion of the entire financial market, their proportion may increase significantly in the next two to three years as platforms such as Robinhood, Coinbase, and Kraken deepen their layout. It may even prompt Nasdaq or the New York Stock Exchange to build their own on-chain platforms to provide product forms that are more in line with regulatory requirements.
All of this not only brings new investment opportunities, but also comes with higher risks. The financial market is entering a multi-level integration stage between on-chain and traditional mechanisms. Tokenized stocks are no longer conceptual products, but an indispensable part of the real financial system.
There are already projects online, such as Coinx on the Jupiter platform, which has a market value of $2 million, although there are only 103 on-chain holders and a trading volume of about $3,600, which is still in the early stages. But it is worth noting that since the traditional market has not yet opened, Coinx's on-chain transaction price is higher than its real stock price, which may suggest that the on-chain market has the potential for "pre-pricing".
This mechanism of "priority price discovery on the chain" may become an important way for traditional and on-chain markets to collaborate in the future. With the continuous growth of tokenized stocks, the transformation of the on-chain capital market has just begun.
