Financial Tokenization: The Rise of a New Era of Exchanges

In the current intersection of cryptocurrency and artificial intelligence, the truly important stories are often hidden beyond the noise. Recently, the wave of financial tokenization is quietly rising, attracting widespread attention in the market. Several well-known companies are competing for market dominance through tokenized stocks, and this trend could have a profound impact on global capital flow, trading efficiency, and market volatility.

Strategic Layout of Market Leaders

The ambitions of a certain exchange platform

A well-known exchange recently announced an ambitious plan to support tokenization of over 1,000 U.S. stocks by the end of the year. The core advantages of this initiative include:

• 24/7 Trading: Break the traditional market time constraints and achieve uninterrupted trading 24 hours a day.
• Lower investment barriers: By implementing a fractional ownership model, it makes it easier for ordinary investors to participate in the stock market.
• Global Investment: Providing global investors with a more convenient channel for investing in US stocks.

Currently, the service is limited to the EU market. The platform also plans to launch a blockchain based on a certain Layer 2 solution to further expand the Ethereum ecosystem.

However, this innovation has also sparked some controversy. Some argue that these tokenized stocks are not equivalent to real stocks, and what users are actually purchasing are tokenized contracts rather than actual stocks. This highlights the communication issues that companies need to be aware of when promoting such products.

unique strategy of another exchange

Unlike the former, another well-known exchange has chosen a different strategy. It has partnered with a certain company to launch tokenized US stock and ETF products on a certain public blockchain, open to non-US users. These products have the following features:

• Based on a high-performance public chain: supports withdrawal to self-custody wallets, compatible with DeFi protocols.
• Extremely low investment threshold: You can participate in the investment with just 1 dollar.
• Asset flexibility: Can be used to earn yields in the DeFi ecosystem or as collateral.

It is worth noting that, despite having its own Layer 2 network, the platform has chosen another ecosystem to develop its tokenization of stocks business. The long-term effects of this strategic choice are worth paying attention to.

Other participants' movements

In addition to the two main players mentioned above, other companies are also actively laying out their plans in the field of tokenization of stocks:

• A certain exchange has reached a cooperation with the aforementioned company to launch tokenized US stocks and ETF products on its spot platform. These assets are pegged 1:1 to actual stocks, support multiple mainstream public chains, and may enable on-chain dividend distribution in the future.

• Another exchange has launched the first tokenized stock product, open to EU users. This product allows for round-the-clock trading on weekdays and ensures complete on-chain compliance.

Market Landscape and Historical Experience

Potential Giants' Layout

As a leading company in the cryptocurrency field, a large exchange has not yet officially entered the tokenization stock market, but its movements are worth paying attention to. It is reported that the company is in discussions with regulatory agencies regarding compliance matters.

The company's advantages include:

• Powerful portfolio: investments in multiple top DeFi protocols.
• Advanced technological infrastructure: Its Layer 1 solutions are advancing towards high-performance goals.

Although the company is generally not a market pioneer, it tends to launch mature products after thorough testing. This cautious strategy may enable it to achieve success in the tokenization of stocks.

The Importance of Compliance

The current tokenization stock model is fundamentally different from the "mirror synthetic assets" launched by a certain protocol in 2020. Although the latter once ignited the market, it ultimately ended due to regulatory issues. In contrast, today's participants are adopting a more compliant and regulated approach, significantly reducing risks. With the involvement of traditional finance and cryptocurrency industry giants, the scale of tokenized stocks is expected to far exceed previous years.

The Transformation of On-Chain Capital

Industry experts predict that by the end of 2025, the market value of tokenization of on-chain traded stocks may exceed $20 billion, with a conservative estimate reaching $50 billion. If certain platforms fully launch their Layer 2 solutions and put all stock assets on-chain, the managed funds and users alone could exceed $100 billion.

This new type of financial infrastructure will usher in a new stage of deep integration between traditional finance and blockchain. The future financial system will feature both high efficiency and transparency, as well as global accessibility. The U.S. market is at the forefront of this trend, and tokenization of stocks will become an important component of the global capital markets.

Compared to traditional methods, on-chain stocks have the ability to trade around the clock, lower transaction costs, and no longer rely on intermediary channels. Especially in overseas markets, acquiring US stocks used to require paying a high premium, while on-chain assets can provide exposure to US stocks with almost "zero thresholds," creating a broad and inclusive capital channel.

In the short term, on-chain stocks are still difficult to completely replace traditional stock markets, existing 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 experience severe fluctuations during unexpected events due to the lack of traditional circuit breaker mechanisms.

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 trigger emotional sell-offs in certain situations. However, it also attracts users who are dissatisfied with the delayed mechanisms of traditional markets. Real-time trading on-chain and the uninterrupted nature are gradually becoming its main appeal.

Although the market share of tokenized stocks is still negligible in the overall financial market, with the deepening layout of major platforms, its share may significantly increase in the next two to three years. It is even possible that traditional securities exchanges will build their own on-chain platforms to offer product forms that better meet regulatory requirements.

All of this not only brings new investment opportunities but also comes with higher risks. The financial market is entering a multi-layered integration phase between on-chain and traditional mechanisms. Tokenized stocks are no longer a conceptual product but an indispensable part of the real financial system.

Currently, there are projects online, such as a tokenized stock on a certain platform, which, although still in the early stages, has shown the potential for "price pre-setting." This mechanism of "on-chain price discovery" may become an important way for the future collaboration between traditional and on-chain markets. As tokenized stocks continue to grow, the transformation of on-chain capital markets is just beginning.