The Rise of Tokenized Stocks May Reshape the Crypto Market Landscape

As several major platforms successively launch tokenized stock trading services, the crypto world is undergoing a profound transformation. This innovation is expected not only to expand the overall market capital but also to help the crypto ecosystem move from the margins to the mainstream. However, the introduction of quality assets may also pose severe challenges to narrative-driven altcoins. Currently, tokenized stocks are still in the early stages, facing multiple challenges such as insufficient liquidity and regulation that need to be overcome.

Are Altcoins Facing a Survival Crisis?

The gradual "on-chain" transition of traditional quality assets is quietly changing the flow of funds in the crypto market. Some viewpoints suggest that tokenized traditional quality assets, with their clear business models, compliant regulatory frameworks, and stable actual returns, are becoming the new favorites for on-chain funds, creating a siphoning effect on the altcoin market. In particular, those tokens that lack actual revenue models, have immature products, and rely solely on narratives to support their market value are facing liquidity depletion and survival pressure.

Analysts have pointed out that altcoins are not necessarily doomed to disappear, but their survival space will be significantly reduced. With each addition of a high-quality on-chain asset, the value of tokens that rely solely on consensus to maintain their price will be weakened. The only way out for altcoins in the future lies in generating actual application value, especially value that can bring in real income. All tokens that cannot be implemented and survive solely on narratives will gradually fall into difficulties. Although there may still be altcoin seasons in the short term, the phenomenon of widespread price increases across numerous coins is likely hard to replicate.

However, there is also the view that the real threat to altcoins is not the tokenization of stocks themselves, but rather perpetual contracts on stocks. Because they combine an ever-evolving narrative with adjusted high volatility, they may be more attractive.

Digital Transformation of Traditional Finance

Multiple industry insiders hold an optimistic view on the prospects of tokenization of stocks, believing that this is not only an innovation in trading tools but could also fundamentally change the ecology and pattern of securities trading, promoting the scale and depth of the crypto market.

Compared to early attempts, the current market environment, user base, and infrastructure for tokenized stocks have changed significantly. The shift in regulatory attitudes is particularly crucial, creating conditions for integration across multiple chains and ecosystems. A key feature of this technology is the reduction of trading thresholds, promoting trade liberalization. For example, users in regions that could not previously purchase securities now have new opportunities, and even shares of unlisted companies may circulate through tokenization.

From a technical perspective, directly purchasing US stocks within decentralized finance protocols is a significant breakthrough. This means that stocks can be priced through automated market-making mechanisms and participate in various financial derivatives operations. The core advantage of blockchain in the financial sector—"payment equals settlement"—is difficult to achieve in traditional financial systems. Once this is realized, even if US stocks cannot be traded around the clock, tokenized US stocks can, and the core of trading lies in the matching of liquidity.

From a more macro perspective, the tokenization of stocks marks the beginning of the integration between traditional finance and crypto assets, no longer being two distinct camps. This may spur more innovations, such as the tokenization of private equity, real estate, and even artworks. In the future, there may be more innovations regarding equity tokenization, such as perpetual contracts for equity, which could change the entire industry landscape.

Still Facing Multiple Challenges

Although the concept of tokenization of stocks is highly sought after, it is still in the early stages overall, and has yet to form sufficient market depth. Data shows that the current on-chain actual liquidity is still limited, with relatively small trading volumes and user numbers.

Industry insiders point out that the main challenges faced by tokenized stocks include insufficient liquidity, defects in product structure, and compliance risks. Currently, most platforms rely on special purpose vehicles to purchase equivalent real stocks as collateral, but operations can only be conducted during U.S. stock market hours, making it difficult to hedge price risks for after-hours and weekend trading. In addition, high redemption fees also increase the cost pressure on market makers.

At the same time, providing such Token trading services for US users may face higher compliance risks, which means that weekend and after-hours trading is not ideal for professional traders, as price fluctuations are highly correlated with the official opening price, making such products unfriendly to most users.

Despite facing numerous challenges currently, tokenized stocks still hold great potential in the long run. As the primary market truly moves on-chain, collateral shifts towards tokenized stocks, and traditional institutions upgrade their technological infrastructure, large-scale on-chain stock trading with liquidity may emerge in the future, enabling smooth transactions, accurate pricing, and active participation from institutions. The integration of infrastructure between encryption and traditional finance will also accelerate. When these conditions mature, tokenized stocks may usher in a true period of explosive growth.