Citibank is quietly considering issuing stablecoins, and Bank of America is also gearing up; on the other side, crypto projects like Injective and Backed Finance are "breaking down" stocks of Apple and Tesla into digital tokens on the blockchain.
The once clear divide between traditional finance and the crypto space has slowly opened up like two neighboring parties— you borrow some sugar from my house, and I go to your house for a cup of tea. Especially after the US "Crypto Week", the GENIUS Act has put a "tight leash" on stablecoins with federal regulation, and Wall Street and DeFi suddenly transitioned from "mutual disdain" to "pleasant cooperation".
It's not surprising that traditional institutions are embracing crypto: this industry is not only fresh but also quite profitable, and the "trust badge" in the hands of traditional financial institutions is precisely what the crypto space lacks. But conversely, why would crypto platforms want to engage in "stock tokenization"? This may seem a bit convoluted, so let's discuss it gradually.
Stock tokenization: turning stocks into "digital avatars".
In simple terms, stock tokenization is like creating a "digital avatar" for traditional stocks— turning Apple and Tesla stocks into tokens on the blockchain. These tokens closely follow the prices of real stocks, but most do not carry voting rights or other shareholder rights, resembling "stock derivatives" rather than direct holdings.
In fact, there was a wave of popularity in 2021, like with the Mirror Protocol, but the efficiency of that method was low, and systemic risks were hidden (later the Terra ecosystem collapsed, taking many projects down with it), which prevented it from gaining traction. Now, new players like Injective and xStocks are smarter: they tighten compliance while optimizing liquidity mechanisms, finally smoothing out the model.
In the past two years, "RWA (Real World Assets)" has become a buzzword in the crypto space, and stock tokenization has risen accordingly. Besides the basic skill of "putting stocks on the chain", it has another trump card: composability.
What does this mean? It means breaking free from the constraints of traditional finance. For example, your "Tesla token" can be used as collateral to borrow money and can also be placed in DeFi protocols to earn yields.
For example: An investor in Indonesia wants to buy Tesla stock. Previously, they had to open an account with an overseas brokerage, fill out a pile of forms, pay currency exchange fees, and watch the US stock market opening hours (midnight Beijing time). Now? They can buy "Tesla tokens" on their phone, even if it's just 1/10 of a share, and directly throw it into DeFi: either lend it out to earn interest or use it as liquidity to earn fees—no sleepless nights, and even small amounts can be played with.
Can this market grow 2680 times in the next decade?
The current stock tokenization market, to put it nicely, is a "potential stock", but honestly, it's still in the "kindergarten stage". According to data from rwa.xyz, the current scale is only $500 million. Compared to the global stock market of $134 trillion, this amount is like a grain of sand in the Sahara Desert, accounting for just 0.0004%.
But what if in the next decade, 1% of global stocks become tokenized? That would be $1.34 trillion—equivalent to 2680 times what it is now. This is not an illusion; the momentum is already quite strong:
2025: Is a turning point coming?
Just look at the Solana ecosystem: within a month, the trading volume of tokenized stocks surged from $15 million to $100 million, an increase of 566%. More crucially, "regular players" have entered. Robinhood has announced its entry into Europe with tokenized stock products; other fintech companies are also expanding globally.
Next, regulation will be the catalyst. For example, once the EU's MiCA framework gives the green light to stock tokenization, the European market may fast-forward.
Want to achieve something by 2030? You need to meet these four conditions.
To achieve the goal of 1%, investors must truly feel that "tokenization is more appealing than traditional stock trading". All four conditions are indispensable:
Saving money should be visible: theoretically, tokenization can cut 50%-70% in brokerage fees, settlement fees, and management fees. But investors need to feel the benefits for real—like buying stocks across borders; previously, the currency exchange and cross-border fees were painful, but now they can save more than half. Who wouldn't be happy?
All-day 24-hour trading is useful: traditional stock markets have closing hours, but tokenized stocks can operate continuously across Asian, European, and American markets. For instance, when the Federal Reserve announces policies at midnight, the US stock market hasn't opened yet, but tokenized stocks can react first, providing higher liquidity. Who wouldn't love this efficiency?
DeFi yield must become a "standard feature": tokenized stocks cannot be just a "tradable digital asset"; they must become the "building blocks" of DeFi. For example, holding an "Apple token" can allow you to borrow money without selling it, and you can engage in options and automated investment portfolios—earning extra yields while lying back. Is this attractive enough?
Who is building this "digital stock" stage?
The entire ecosystem is like building blocks; all four layers are indispensable:
The foundational layer: blockchain networks— the "venue" for all transactions, such as Solana (fast, low fees), Ethereum (complete ecosystem), Injective (good at derivatives).
Issuers— the "magicians" who turn real stocks into tokens. For example, Backed Finance deposits 1 share of Apple stock in a Swiss bank and issues 1 xAAPL token, strictly corresponding 1:1; Injective's iAAPL is more flexible, not directly holding stocks, but tracking stock prices through oracle data, suitable for leveraging.
Oracles— the "GPS" that provides "navigation" for tokens. For example, Chainlink pulls the real-time price of Apple stock from Nasdaq and informs all platforms on-chain of its value, also proving that "each token is backed by real stocks"; otherwise, how can people trust it?
Exchanges— the "marketplace" for everyone to buy and sell. For example, Helix (under Injective) can trade tokenized stocks with 25x leverage; Kraken allows buying Backed Finance's xAAPL spot; Robinhood offers zero fees in Europe and supports 24/5 trading of US stock tokens.
These players each have their own tricks:
Injective is a "leverage maniac", achieving a trading volume of $1 billion in half a year through the Helix exchange;
Backed Finance's xStocks are more stable, accounting for 80% of the top ten tokenized stocks by market capitalization;
Robinhood is bringing over 200 types of US stocks and private equity stock tokens to Europe, with zero fees + round-the-clock trading, showing considerable ambition;
Chainlink is the "unsung hero", providing price data for the entire market and proving reserve funds; without it, everyone would lack confidence.
Stock tokenization: the most promising "potential stock" in RWA.
Stock tokenization is just a branch of RWA (Real World Assets), but it may be the easiest to emerge.
Why? Because stocks themselves are "old acquaintances"—global investors trade them daily, and the demand is evident. Moreover, the pain points of traditional stock trading are too obvious: cross-border stock purchases are cumbersome, fees are high, trading hours are limited, and to earn extra yields, one has to go back and forth.
Tokenization precisely addresses these pain points: low costs, global purchasing, round-the-clock trading, and the ability to mix with DeFi to earn yields. Furthermore, with regulations slowly becoming clearer (like the EU's MiCA and the US's GENIUS Act), former "barriers" are turning into "stepping stones".
Ultimately, the integration of traditional finance and the crypto space is not about one eating the other, but rather about expanding the pie together. When stocks become "digital avatars", it may become as easy for ordinary people to buy US stocks as it is to buy bubble tea, making financial markets potentially fairer and more efficient.
This day may still be years away, but at least, the direction is already visible.
Disclaimer: The content of this article is for reference only and does not constitute any investment advice. Investors should rationally evaluate cryptocurrency investments based on their own risk tolerance and investment goals, and should not blindly follow trends.