In less than two years, the market for tokenized equities has experienced massive growth, climbing from $32M to $3B+. These digital assets provide investors with continuous 24/7 trading, direct 1:1 custody, and a highly accessible entry point starting at just $5. We are now even seeing on-chain stocks such as AGPU available on Binance.
The underlying structure is quite simple. Every backed token is mapped on a strict one-to-one basis to a physical share safely managed by a regulated custodian. Major trading venues utilize a specific sequence to operate this system. The process begins by buying the traditional share and holding it securely in custody. A digital token is then minted to represent that equity, which allows it to be traded freely on the market. Finally, when a user requests a redemption, the corresponding token is permanently burned.
Continue reading to explore exactly how this innovative process works and to find out who is leading the industry.
The underlying structure is quite simple. Every backed token is mapped on a strict one-to-one basis to a physical share safely managed by a regulated custodian. Major trading venues utilize a specific sequence to operate this system. The process begins by buying the traditional share and holding it securely in custody. A digital token is then minted to represent that equity, which allows it to be traded freely on the market. Finally, when a user requests a redemption, the corresponding token is permanently burned.
Continue reading to explore exactly how this innovative process works and to find out who is leading the industry.