Thinking about the liquidity of US stock tokenization: How to rebuild the on-chain transaction logic?

Since the end of June, the Crypto industry has set off a U.S. stock chain craze. Robinhood, Kraken and others have successively launched tokenized versions of U.S. stock and ETF trading services, and even launched high-leverage contract products for these tokens.

From MyStonks, Backed Finance (xStocks) to Robinhood Europe, they all allow users to trade U.S. stock assets on-chain through the real stock custody + token mapping method – in theory, users only need a 암호화폐 wallet to trade Tesla and Apple stocks at 3 a.m., without having to open an account with a brokerage or meet capital thresholds.

However, with the rollout of related products, news about plug-ins, premiums, and de-anchoring has frequently appeared in the media, and the liquidity problems behind them have quickly surfaced: although users can buy these tokens, they are almost unable to short sell or hedge risks efficiently, let alone build complex trading strategies.

The tokenization of U.S. stocks is essentially still in the initial stage of only buying high.

1. Liquidity dilemma of U.S. stocks ≠ trading assets

To understand the liquidity dilemma of this wave of U.S. stock tokenization craze, we first need to penetrate the underlying design logic of the current real stock custody + mapping issuance model.

This model is currently divided into two main paths, the core difference is only whether it has the issuance compliance qualifications:

• One is the third-party compliance issuance + multi-platform access model represented by Backed Finance (xStocks) and MyStonks. MyStonks cooperates with Fidelity to achieve 1:1 anchoring of real stocks, and xStocks purchases stocks and holds them through Alpaca Securities LLC and other institutions.

• The other type is the self-operated closed loop of licensed brokerage firms like Robinhood, which relies on its own brokerage license to complete the entire process from stock purchase to on-chain token issuance;

The common point of the two paths is that they both regard U.S. stock tokens as pure spot holding assets. All users can do is buy and hold them for appreciation, making them sleeping assets. They lack a scalable financial function layer and are difficult to support an active on-chain trading ecosystem.

And because each token requires the actual custody of a stock, on-chain transactions are only the transfer of token ownership and cannot affect the spot price of US stocks. This naturally leads to the two skins problem between the on-chain and off-chain. Small-scale buying and selling funds can cause drastic deviations in on-chain prices.

For example, on July 3, the on-chain AMZNX (Amazon stock token) was pushed up to $23,781 by a $500 buy order, which was more than 100 times the premium of the actual stock price. In non-extreme scenarios, most tokens (such as AAPLX) also often experience quote deviations and frequent plug-in phenomena, making it an ideal scenario for arbitrageurs and liquidity market-making teams to set up scams.

Secondly, the asset functions of U.S. stock assets are currently severely castrated. Even though some platforms (such as MyStonks) have tried to distribute dividends in the form of airdrops, most platforms have not opened up voting rights and re-pledge channels. In essence, they are just on-chain holding certificates rather than real trading assets and do not have margin properties.

For example, after users buy AAPLX, AMZNX, TSLA.M, and CRCL.M, they cannot use them for mortgage lending, nor can they use them as margin to trade other assets. It is even more difficult to access other DeFi protocols (such as using U.S. stock tokens as mortgage lending) to further obtain liquidity, resulting in almost zero asset utilization.

Objectively speaking, the failure of projects such as Mirror and Synthetix in the last cycle has proved that price mapping alone is far from enough. When U.S. stock tokens cannot be used as margin to activate liquidity scenarios and cannot be integrated into the trading network of the crypto ecosystem, no matter how compliant the issuance or how perfect the custody is, it only provides a token shell, which has extremely limited practical value in the context of lack of liquidity.

From this perspective, the current tokenization of U.S. stocks has only achieved the goal of moving prices onto the chain and is still in the initial stage of digital certificates. It has not yet become a truly tradable financial asset to release liquidity, so it is difficult to attract a wider range of professional traders and high-frequency funds.

2. Subsidy incentives, or patching the arbitrage channel

Therefore, for tokenized U.S. stocks, there is an urgent need to deepen their on-chain liquidity, provide holders with more practical application scenarios and holding value, and attract more professional funds to enter the market.

The various mainstream solutions currently being discussed in the market, in addition to the common incentive to attract liquidity model of Web3, are trying to open up the on-chain-off-chain arbitrage channel and improve liquidity depth by optimizing the efficiency of the arbitrage path.

1. Incentivized liquidity pools (such as Mirror)

The incentive pool model represented by Mirror Protocol was the mainstream attempt at tokenizing U.S. stocks in the last round. Its logic was to issue platform tokens (such as MIR) to reward users who provided liquidity for trading pairs, attempting to attract funds with subsidies.

However, this model has a fatal flaw, namely that the incentive relies on token inflation and cannot form a sustainable trading ecosystem. After all, the core motivation for users to participate in liquidity mining is to obtain subsidized tokens rather than real trading needs. Once the incentive weakens, funds will quickly withdraw, causing a cliff-like drop in liquidity.

More importantly, this model has never thought about allowing US stock tokens to generate liquidity themselves – the US stock tokens deposited by users are only part of the trading pair and cannot be used in other scenarios, and the assets remain dormant.

2. 시장 makers dominate liquidity (such as Backed/xStocks)

Backed Finance (xStocks), MyStonks and others use the market maker-led model to try to open up on-chain-off-chain arbitrage through compliant channels. Taking xStocks as an example, it purchases the corresponding stocks through Interactive Brokers. When the on-chain token price deviates from the spot price, the market maker can smooth out the price difference by redeem tokens → sell stocks or buy stocks → mint tokens.

However, the implementation cost of this logic is extremely high. The complexity of compliance processes, cross-market settlement, and asset custody means that the arbitrage window is often swallowed up by time costs. For example, Interactive Brokers redemption process requires T+N settlement, and the asset transfer of the custodian is often delayed. When the on-chain price appears to be at a premium, market makers often give up intervening because they cannot hedge in time.

In this model, U.S. stock tokens are always “targets of arbitrage” rather than assets that can actively participate in transactions. As a result, the average daily trading volume of most trading pairs of xStocks is low, and price decoupling becomes the norm.

This is also the core reason why AMZNX had a 100-fold premium in July but no one was making arbitrage.

3. High-speed off-chain matching + on-chain mapping

The off-chain matching + on-chain mapping model explored by Ondo Finance and others is actually similar to the PFOF (order flow payment model) adopted by Mystonks. It completes the core links of the transaction on a centralized engine and only records the results on the chain. In theory, it can connect to the spot depth of US stocks.

However, this model has high technical and process thresholds, and the traditional US stock trading hours also need to match the 7 × 24-hour trading attributes on the chain.

These three liquidity solutions have their own advantages. However, whether it is an incentive pool, a market maker or an off-chain matching, they all default to using external forces to inject liquidity rather than allowing the US stock tokens themselves to generate liquidity. But to be honest, it is difficult to fill the growing liquidity gap by relying solely on on-chain-off-chain arbitrage or incentive subsidies.

Is it possible to break out of the traditional on-chain-off-chain arbitrage framework and directly build a closed transaction loop in the on-chain native environment?

3. Make US stock tokens a “live asset”

In the traditional U.S. stock market, the reason for abundant liquidity does not lie in the spot itself, but in the trading depth constructed by derivative systems such as options and futures – these tools support the three core mechanisms of price discovery, risk management and capital leverage.

They not only improve capital efficiency, but also create long-short games, nonlinear pricing and diversified strategies, attracting market makers, high-frequency funds and institutions to continue to enter the market, ultimately forming a positive cycle of active trading → deeper market → more users.

However, the current U.S. stock tokenization market lacks this layer of structure. After all, tokens such as TSLA.M and AMZNX can be held but cannot be used. They cannot be used as collateral for loans or as margin for trading other assets, let alone building cross-market strategies.

This is very similar to ETH before the DeFi Summer. At that time, it could not be lent, used as collateral, or participate in DeFi. It was not until protocols such as Aave gave it functions such as mortgage lending that it released hundreds of billions of liquidity. If U.S. stock tokens want to break through the dilemma, they must replicate this logic and make the deposited tokens live assets that can be mortgaged, traded, and combined.

If users can use TSLA.M to short BTC and use AMZNX to bet on the trend of ETH, then these deposited assets will no longer be just token shells, but used margin assets. Liquidity will naturally grow from these real trading needs.

U.S. stock tokenization product service providers are indeed exploring this path. This month, MyStonks jointly launched the Tesla stock token TSLA.M/BTC index trading pair on the Base chain with Fufuture. The core mechanism is to use coin-based perpetual options to make U.S. stock tokens truly margin assets that can be used for trading.

For example, users are allowed to use TSLA.M as margin to participate in BTC/ETH perpetual options trading. It is reported that Future plans to expand support for more than 200 tokenized U.S. stocks as margin assets. Users holding small-cap U.S. stock tokens can use them as margin to bet on the rise and fall of BTC/ETH in the future (such as using CRCL.M as collateral to make BTC long orders), thereby injecting real trading demand into it.

Compared with the centralized contract restrictions of CEX, on-chain options can more freely combine asset pair strategies such as TSLA × BTC and NVDA × ETH.

When users can use TSLA.M and NVDA.M as margin to participate in BTC and ETH perpetual options strategies, trading demand will naturally attract market makers, high-frequency traders, and arbitrageurs to enter the market, forming a positive cycle of active trading → increased depth → more users.

Interestingly, Fufuture’s “coin-based perpetual option” mechanism is not only a trading structure, but also has the natural market-making capability to activate the value of U.S. stock tokens. Especially in the early stages when a deep market has not yet been formed, it can be used directly as an over-the-counter market-making and liquidity guidance tool.

The project party can inject tokenized U.S. stocks such as TSLA.M and NVDA.M as initial seed assets into the liquidity pool to build a main pool + insurance pool. On this basis, holders can also deposit their U.S. stock tokens into the liquidity pool, assume part of the sellers risk and earn premiums paid by trading users, which is equivalent to building a new currency-based value-added path.

For example, suppose a user is optimistic about Teslas stock in the long term and has bought TSLA.M on the chain. In the traditional path, his options are only:

• Continue to hold and wait for the rise;

• Or trade out on CEX/DEX;

But now he can have more gameplay:

• Be a seller and earn premiums: deposit TSLA.M into the liquidity pool and earn premium income while waiting for the price to rise;

• Release liquidity as a buyer: Use TSLA.M as margin to participate in cross-asset option transactions of BTC and ETH, and bet on the volatility of the crypto market;

• Combination strategy: one part holds positions for market making, and the other part participates in trading, achieving a two-way profit path and improving asset utilization efficiency;

Under this mechanism, U.S. stock tokens are no longer isolated assets, but are truly integrated into the on-chain trading ecosystem and are reused, opening up the complete path of asset issuance → liquidity construction → derivative trading closed loop.

Of course, different paths are still in the exploration stage, and this article only discusses one possibility.

마지막 말

This round of real stock custody models from MyStonks, Backed Finance (xStocks) to Robinhood Europe means that the tokenization of U.S. stocks has completely solved the initial problem of whether it can be issued.

But it also shows that the competition in the new cycle has actually come to the stage of whether it can be used – how to form real trading demand? How to attract strategy construction and capital reuse? How to make US stock assets truly active on the chain?

This no longer depends on more brokerage firms entering the market, but rather on the improvement of the on-chain product structure. Only when users can freely go long or short, build risk portfolios, and combine cross-asset positions, tokenized U.S. stocks will have complete financial vitality.

Objectively speaking, the essence of liquidity is not the accumulation of funds, but demand matching. When the chain can freely realize hedging BTC volatility with TSLA options, the liquidity dilemma of tokenized U.S. stocks may be solved.

This article is sourced from the internet: Thinking about the liquidity of US stock tokenization: How to rebuild the on-chain transaction logic?

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