Author: @BlazingKevin_, the Researcher at Movemaker

Under the expectation of "deregulation" that Trump may bring, the long-silent tokenized stock sector is reigniting in 2025 with a new face of RWA. Introducing the most liquid assets globally—U.S. stocks—into the crypto industry, allowing crypto users worldwide to trade anytime and anywhere, is undoubtedly a grand and enticing narrative.

However, this path is not smooth. From the early STO concept to the synthetic asset experiments of DeFi Summer, and the brief attempts by FTX and Binance, the history of tokenized stocks is fraught with twists and turns. Now, with subtle changes in the regulatory environment, a new round of competition has begun.

In this competition, three forces are emerging, representing three distinctly different paths: the "dimensionality reduction strike" of internet brokerage giant Robinhood, the "open Lego" of DeFi-native xStocks (issued by Backed Finance and distributed by Kraken, among others), and the "hybrid model" of the mysterious newcomer StableStocks, supported by firms like Matrix Partners.

This article will delve into these three players, detailing their legal core, business models, and core differences, and exploring who is most likely to come out on top in this high-stakes game.

1. Four Waves of Tokenized Stocks

To understand today's competitive landscape, we must look back at history. The development of tokenized stocks has roughly gone through four stages:

1. STO Emergence (2017-2018): The concept of STO (Security Token Offering) emerged, aiming to bring traditional securities onto the blockchain in a compliant manner. However, due to the lack of unified standards, high compliance costs, and a lack of liquidity in the secondary market, this attempt quickly came to a halt.
2. Synthetic Asset Experimentation (2020 DeFi Summer): Projects represented by Synthetix and Mirror Protocol attempted to create "synthetic assets" pegged to U.S. stock prices through over-collateralized crypto assets. This model circumvented the regulatory challenges of directly holding stocks but ultimately failed due to an inability to find product-market fit. Insufficient on-chain trading demand led to a lack of incentives for market makers, resulting in liquidity drying up, and most projects were delisted under "regulatory considerations."
3. CEX Trial Period (2020-2021): Centralized exchanges like FTX and Binance launched tokenized stocks through partnerships with licensed financial institutions, offering centralized custody. This model initially attracted significant trading volume (FTX's monthly trading volume reached $94 million in October 2021), but soon faced immense regulatory pressure due to direct competition with traditional exchanges like Nasdaq. Binance's service was halted just three months after launch, and FTX's business ended with the collapse of its empire.
4. RWA Renaissance (Present): With new regulatory expectations, the sector has restarted. This time, the core narrative has shifted to RWA, emphasizing the issuance of tokens backed 1:1 by real stocks through compliant legal frameworks, prioritizing asset security and transparency.

2. Overview of the Current Market Landscape

According to data from RWA.xyz, the current total issuance of stock RWA in the market is approximately $374 million, but growth is slow. The market landscape is characterized by fragmentation:

• Exodus (EXOD): The largest by market cap (approximately $258 million), but its model is more symbolic. Users can migrate NYSE-listed EXOD stocks to the Algorand chain, but this is merely a "digital twin," lacking any on-chain rights and cannot be traded on-chain.
• Dinari: A model of compliance exploration. The company is registered in the U.S. and has obtained a valuable broker-dealer license. However, to meet strict regulations, its issued dShares cannot be freely traded on-chain; all buying and selling must occur through its website during U.S. stock trading hours. This makes its product experience no better than traditional brokerages like Futu, resembling a traditional brokerage using cryptocurrency as a deposit channel, thus limiting its market size.
• Montis Group: A digital asset issuer based in the UK, with a market cap of about $55 million, focusing on "tokenizing" real assets like European stocks and bonds. However, similar to Exodus, Montis has only achieved tokenization of its own stocks, and these tokens cannot be freely traded on-chain. For Web3 investors seeking liquidity and composability, this model has little practical significance at this stage.

It is against this backdrop that the entry of Robinhood, xStocks, and StableStocks brings three more imaginative paradigms to the market.

3. Three Players—Deep Deconstruction of Three Models

We will analyze these three major players from three dimensions: legal core, business model, and composability.

1. Robinhood: Derivative Contracts + B2C + Controlled Ecosystem

• Legal Core and Compliance Path: There are many companies exploring the "crypto + stocks" combination globally, but Robinhood's approach is distinct. It does not choose to directly issue tokens representing stock ownership but instead enters the market in a more flexible way: mapping the underlying assets through derivatives. The products launched in Europe are essentially not securities trading but over-the-counter financial contracts issued under the EU MiFID II framework. In other words, what users purchase is not a "stock token," but a digital certificate that tracks specific stock price fluctuations. This legal design allows Robinhood to bypass complex securities compliance barriers and open overseas markets with minimal resistance.

• Technical Architecture and "Walled Garden":

• Choice of Underlying Chain: Technically, Robinhood uses Arbitrum as its landing network. Compared to the Ethereum mainnet, it offers higher performance, lower transaction costs, and inherits the mature security of Ethereum. It has deployed hundreds of tokens at a gas cost of just a few dollars, showcasing clear efficiency advantages.

• Permission Control: However, this system is not an open DeFi paradise. The smart contracts contain strict whitelist rules, requiring all transactions to verify whether the recipient has passed Robinhood's compliance certification. In other words, this is a typical "controlled zone," where users must complete KYC to enter, and the ecosystem is tightly controlled by Robinhood, sacrificing interoperability with the external DeFi world.

• Future Ambitions: More intriguingly, Robinhood's next move is brewing. The company is planning to launch its own Layer 2 network—Robinhood Chain based on the Arbitrum tech stack. This move is not just about reducing costs but sends a stronger signal: Robinhood wants to take control of the underlying technology to provide a tailored environment for its future large-scale RWA strategy.

• Strategic Depth and Vision: If this model is simply understood as a "closed garden," it underestimates Robinhood's ambitions. CEO Vlad Tenev has repeatedly mentioned that the company's vision is "Capital as a Service." Tokenization is not just a gimmick but an important tool for Robinhood to advance financial democratization, especially for those long-locked illiquid assets held by high-net-worth individuals. Imagine if ordinary users could indirectly gain exposure to the equity of unlisted giants like SpaceX or OpenAI through derivative tokens; the power structure of capital markets would be reshuffled.

  Of course, the reality is not entirely optimistic. Top private equity firms often have ample funds, making it nearly impossible to actively "invite retail investors in." This means that tokenization schemes must bypass traditional issuance logic to reach ordinary investors. But this model also harbors risks: after Robinhood launched OpenAI-related tokens, the company immediately issued a statement clarifying that it was unrelated, exposing a problem—there may be a significant gap in information transparency and investor understanding in the derivatives model.

  Compared to other platforms, Robinhood's approach differs from traditional on-chain securities attempts (like Synthetix's synthetic assets or Polymarket's prediction markets). It does not emphasize the complete openness of DeFi but aims to capture the market through a combination of "strong compliance + high user experience." Its logic resembles an extension of a fintech platform rather than a thorough on-chain fundamentalism.

  If regulators allow or even gradually accept it, Robinhood will be the first to establish a super entrance covering retail investors, compliance, and RWA, potentially becoming the first stop for retail investors in Europe and the U.S. to enter tokenized finance.

One-sentence Comment: Robinhood's attempt is not merely about "moving stocks onto the blockchain," but an experiment in reshaping the traditional derivatives distribution model using crypto technology. It uses blockchain to enhance product delivery and compliance efficiency, aiming far beyond the crypto circle itself, truly targeting a redefinition of the entire global financial system.

2. xStocks: Asset-Backed Tokens + B2B2C + Complete Composability

• Legal Core and Compliance Path: In the tokenized stock sector, xStocks has a unique positioning. Unlike some platforms that only provide price mapping, it follows the path of complete mapping of physical assets. The entire structure is built by the Swiss compliance team Backed Finance, adhering to Switzerland's DLT legal framework, and uses a special purpose vehicle (SPV) established in Liechtenstein to hold real stocks. This SPV is responsible for one thing—holding the underlying assets themselves, legally isolating it from the issuer and trading platform. In other words, even if the operator encounters issues, investor rights can be independently protected. Investors receive not a "contract paper," but a priority secured debt certificate corresponding to the real assets.
• Technical Architecture and Transparency:
• Choice of Underlying Chain: Technically, xStocks issues tokens on Solana. The reasons are clear: high throughput, low cost, and extremely low confirmation delays make these features naturally suitable for frequent trading and DeFi composability.
• Transparency Foundation: To ensure that investors trust their tokens are indeed backed by real reserves, xStocks introduces Chainlink's proof of reserves, allowing anyone to verify the reserve status on-chain at any time, adding a layer of transparency endorsement to its "asset tokens."
• Open Contracts: On the other hand, as a standard SPL token, xStocks tokens can circulate freely on Solana, easily integrating with native DeFi protocols like Jupiter and Kamino, possessing complete composability.
• Strategic Depth and Vision: From a business perspective, xStocks does not directly target the C-end in a closed loop but adopts a B2B2C distribution logic. The primary market token redemption is completed by Backed Finance targeting institutions, while secondary market trading relies on exchanges like Kraken and Bybit. This way, it can attract professional institutions while reaching a large number of retail investors through established exchanges, ultimately releasing liquidity in an open ecosystem. Data has already proven the potential of this model: after gaining support from mainstream platforms, its daily trading volume once exceeded $6 million. The long-term vision is to develop this model into "tokenization as a service," providing standardized asset on-chain tools for financial institutions.

xStocks' approach sharply contrasts with Robinhood. Robinhood's model resembles "digitalization of financial derivatives," locking users in with a controlled whitelist mechanism; while xStocks tokenizes real assets and maintains complete interoperability with DeFi. This means it naturally aligns more with the Web3 "open Lego" narrative, but also needs to bear the regulatory gray areas and risk spillover issues in an open environment.

Whether this model can succeed depends on two points:

1. **Can it truly establish deep liquidity?** If tokenized assets are only issued unidirectionally, lacking sufficient counterparties and arbitrage mechanisms, their market significance will be very limited.
2. **Can it win long-term regulatory tolerance?** The current SPV structure has achieved legal isolation, but future countries' recognition of "tokenized securities" has yet to be unified. Once regulatory conflicts arise, the ecosystem may face significant fluctuations.

It is worth noting that xStocks' model may inspire broader application scenarios. For example, it provides a replicable paradigm for "asset-backed tokens" beyond stablecoins, especially suitable for the tokenization of bonds, ETFs, or even art funds. Unlike "controlled tokens" launched by a single exchange, it emphasizes the free composability with DeFi modules, injecting new sources of liquidity into the entire crypto ecosystem.

One-sentence Comment: xStocks is not reshaping exchanges but providing new asset underpinnings for DeFi. It attempts to authentically and transparently bring the value of traditional finance onto the blockchain and shape a new market ecosystem through open composability. If Robinhood's direction is "business on-chain," then xStocks' logic is more like "assets on-chain."

3. StableStocks: Proxy Holding + B2C + Internal Composability Mechanism

• Legal Core: StableStocks adopts a unique "proxy holding + beneficiary" model. The platform establishes a dedicated SPV and collaborates with licensed brokers (such as Australia's HABIT TRADE) to open institutional accounts, actually purchasing and holding stocks. Ultimately, investors do not directly hold stocks but enjoy corresponding rights as beneficiaries. This arrangement allows StableStocks to operate without directly holding a complete brokerage license, relying on the compliance system of its partners to balance compliance and flexibility.
• Business Model: StableStocks is positioned as a typical B2C model, packaging deposits, trading, custody, and derivative plays all within its own platform. Unlike some B2B2C solutions, StableStocks prefers to directly serve end users. In terms of ecosystem, it is closely tied to Binance and BNB Chain.
• Composability: The core difference of StableStocks is that it does not pursue complete external composability but builds an internally composable closed-loop system. The stock equity tokens held by users can be further deposited into the platform's "StableVault," minting yield-bearing stStocks. This is a "walled financial playground" logic—play is limited, but the experience is more controllable.

From a more systematic perspective, StableStocks' model can be broken down into five key links:

1. Stock Acquisition and Sources

• Real stocks from licensed brokers:
  • Australia's Habit Trade (holding 70%) is responsible for U.S. stock channels.
• Traditional banks (like ANZ and DBS) provide fiat settlement and funding channel support.
• The source of stocks is real, not synthetic assets.

1. Settlement and Custody Mechanism

• Stocks are uniformly held by the SPV, isolating risks;
• Collaborating with Nasdaq's clearinghouse to ensure compliance and stability in the circulation of underlying assets.
• Ensuring a 1:1 correspondence to reduce counterparty default risk.

1. Tokenization and On-Chain Issuance

• StableStocks maps the held stocks into stock tokens;
• Token issuance runs on BNB Chain, gaining support from Binance's wallet and trading ecosystem;
• Each token is backed by actual assets, belonging to standard asset-backed tokens.

1. Stablecoins and Crypto Entry

• Integrating with Coinbase's stablecoin channel, users can directly exchange USDC for stock tokens;
• This solves the funding conversion barrier between fiat and crypto users.

1. User Usage and Expansion

• Stock tokens can be held and traded in the Binance wallet;
• Besides investment itself, they can also be embedded in StableStocks' self-built DeFi modules (staking, yield enhancement).
• User experience is closer to a combination of "Robinhood + DeFi-lite."

StableStocks takes a "middle path"—not as closed as Robinhood, which only allows trading, nor as open as xStocks, which fully integrates with the entire DeFi Lego, but builds a semi-open system. For traditional financial investors, it provides a new way to enter the on-chain market; for crypto users, it offers convenient access to blue-chip stocks like Tesla, Apple, and McDonald's. Its core selling points are:

• Compliance: Leveraging the licensed broker system;
• Stability: Clearinghouse + SPV custody;
• Ease of Use: B2C closed loop;
• Innovation: Internally composable DeFi-lite.

One-sentence Comment: StableStocks is a middle route, attempting to find a balance between Robinhood's closed usability and xStocks' open complexity. It bets that users want a "DeFi-lite" experience—able to enjoy the yield enhancement brought by DeFi without bearing the full risks and complexities of open DeFi.

Triangular Comparison: StableStocks vs xStocks vs Robinhood

4. Insurmountable Structural Barriers

Despite the different models, all current stock tokenization schemes face several common structural barriers that are difficult to resolve in the short term:

• The contradiction between value proposition and actual liquidity: All platforms currently face a classic "which came first, the chicken or the egg" dilemma. On one hand, for users who can easily trade U.S. stocks, the value proposition of tokenized stocks is unclear. On-chain trading not only fails to provide better rates but also leads to higher trading slippage due to a lack of liquidity, resulting in a far inferior experience compared to mature internet brokerages. On the other hand, it is precisely because of the lack of a sufficiently strong value proposition to attract large-scale users and capital that on-chain liquidity has been slow to deepen, forming a self-reinforcing negative feedback loop: no users means no liquidity, and no liquidity means fewer users. Unless it can provide irreplaceable new utility for existing users, it is difficult to break this deadlock.
• Structural flaws: Current tokenized stocks are essentially just "digital twins" of real stocks, but this replication has fundamental flaws. First, the promise of 24/7 trading is largely illusory. When the underlying stock market (like Nasdaq) is closed, on-chain market makers cannot hedge their risk exposure and can only avoid risk by drastically widening spreads or withdrawing liquidity, significantly undermining the effectiveness of weekend and after-hours trading. Second, these tokens strip away complete shareholder rights. Users receive a claim to the economic value of the stock, rather than full ownership, including voting rights.
• Centralization risks hidden under the guise of "decentralization": Although operating on decentralized blockchains, the trust foundation of these RWA models is highly concentrated in a series of off-chain entities. Whether it is the SPV issuing tokens, third-party banks responsible for asset custody, cooperating brokers executing trades, or the bridges connecting fiat and crypto worlds, each link is a potential point of centralization failure. If these centralized entities encounter operational failures, legal disputes, or even bankruptcy, the on-chain tokens may instantly lose their value support.
• Potential paradox of DeFi composability: For open models like xStocks, the ultimate vision is to become the "money Lego" of the DeFi world. However, this composability faces a severe paradox. A DeFi lending protocol considering whether to accept TSLAx as collateral must not only assess the price volatility risk of Tesla stock itself but also evaluate the platform risk brought by its tokenization structure—the risk of default by the issuer Backed Finance or its custodian. This dual risk exposure of "asset risk + platform risk" makes DeFi protocols extremely cautious when integrating these RWA assets. Additionally, the ambiguous legal status of these tokens also deters DeFi protocols, fearing regulatory crackdowns for "illegally operating securities businesses." This explains why no mainstream DeFi protocols have yet adopted them as core collateral, and the path to true composability remains long.

Conclusion: Which Model Will Win the Future?

The outcome of this competition may not depend on whose legal framework is more ingenious, but rather on who can first create irreplaceable value for users.

• Robinhood's path to victory lies in scalability. If its goal is merely to provide a familiar asset class in a novel form to tens of millions of existing users, it is likely to win in user numbers.
• xStocks' path to victory lies in ecosystem building. If the narrative of "financial Lego" holds, and numerous DeFi protocols can use it as core collateral or underlying assets to build on-chain options, lending, and structured products, it will win the future of Web3.
• StableStocks' path to victory lies in user experience. If it can prove that "DeFi-lite" is a real market by providing a one-stop, low-threshold "trading + yield" experience, it may carve out a blue ocean between mainstream users and hardcore DeFi users.

At its core, the so-called "on-chain U.S. stocks" are still in the experimental stage, currently more like a financial packaging under regulatory gaps rather than a mature market tool. The real game-changer will not be who first runs a proof of concept but who can deliver a complete trading system that integrates spot trading, short selling, leverage, and risk management on-chain. Only when the financial playability and functionality of on-chain stocks truly match or even surpass those of traditional Wall Street brokerages can this transformation be considered to have entered a substantive phase. As of now, those pioneers have just begun to put the wheels on the track; the real race has yet to start.

Disclaimer:

This article/blog is for reference only, representing the author's personal views and does not represent the position of ChainCatcher. This article does not intend to provide: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets, including stablecoins and NFTs, carries high risks, significant price volatility, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. If you have specific questions, please consult your legal, tax, or investment advisor. The information provided in this article (including market data and statistics, if any) is for general reference only. Reasonable care has been taken in compiling this data and charts, but no responsibility is accepted for any factual errors or omissions expressed therein.