Behind the Boom of Stock Tokenization: Who is Making Money and Who is Being Used?

Stock tokens are booming, but issuers are not making money: profits are hidden in applications and collateral.

Written by: @Decentralisedco

Compiled by: AididiaoJP, Foresight News

Who is Making Money from Stock Tokenization?

From 2017 to 2018, Ethereum proved that smart contracts could work, and we once thought about moving everything on-chain. However, the weak infrastructure educated the market harshly in the following months. The dream then changed: what if crypto assets could be traded and held in the same brokerage account as traditional assets? This is how crypto ETFs came about. Now, we find ourselves at a similar crossroads again: moving every type of financial asset on-chain to make it more usable and accessible than today.

Currently, traders and investors hold over $6 billion in on-chain stock exposure through two paths.

The first path is tokenization. A company buys stocks, hands them over to a custodian, and issues a corresponding token. The total value of all on-chain stock tokens is $3.21 billion, with a 10% increase over 30 days. The second path is synthetic: using perpetual contracts to pay for stock price changes, but no one actually buys the stocks. On trade[XYZ] alone, the open contracts for perpetual stocks, indices, and ETFs amount to $3.01 billion, which is 94% of the total value of all on-chain stock tokens.

So, starting from the scale of $3 billion, where do we go from here? Our view is that stock tokenization will go through four stages.

Today, most of what you buy is just packaging: an offshore claim issued by a certain entity. The next step is to turn tokens into collateral, allowing you to borrow against Nvidia even when the market is closed. The following step is for brokerages to allow you to convert your already held stocks into tokens without selling them. The trillion-dollar market is here—foreign investors alone hold nearly $20 trillion in U.S. stocks. Finally, companies will record their shares on-chain, eliminating the need for packaging. A small number of listed companies are already doing this.

What You Get is Just a Receipt

When you buy Nvidia through a brokerage, the shareholder register records Cede & Co., which is a synonym for the Depository Trust Company (DTC); your brokerage account shows you as the holder. Most stock tokens are essentially claims to this record.

Take Robinhood as an example. BBVI, which is Bitstamp Global (under Robinhood), buys stocks, and Alpaca acts as the brokerage and custodian. Then Robinhood Assets (Jersey) issues you a debt security. The actual meaning is that a token represents a debt equal to one share. Dividend reinvestments and stock splits will adjust how many shares each token represents. It does not confer voting rights or stock ownership. If the issuer goes bankrupt, the securities agent will sell the stocks and repay the holders.

Who is responsible for keeping the token price aligned with the stock price? Those who are allowed to mint. The minters arbitrage between stocks and tokens: buy where it’s cheaper, convert to the other side, and sell to bring the price back to parity. At Robinhood, only BBVI can do this, and only from 2 AM to 2 AM Central European Time from Monday to Saturday. At other times, no one can mint, and the token price depends on what other holders are willing to sell for.

Different issuers vary in who can mint, where they can sell, and what can be done after holding. They all buy stocks through Alpaca. Binance, Robinhood, and Coinbase own their exchanges, so they sell tokens to their own customers. xStocks is an exception. Kraken has agreed to acquire it in December, but you can also buy tokenized stocks issued by xStocks on OKX, Bybit, and Gate. If you want to borrow against stock tokens today, the most likely version you’ll get is xStock, as most lending markets support it.

Your Broker is Still the Same Old Faces

The top 100 tokenized stocks increased by $950 million over 90 days, rising from $2.09 billion to $3.03 billion. During the same period, the number of holding addresses grew from 417,000 to 4.21 million, a tenfold increase.

In the past three months, Binance and Robinhood accounted for 86% of new holders. BNB Chain added 1.72 million addresses, while Robinhood Chain added 1.55 million. BNB Chain also brought in $517 million in value, surpassing all other chains combined. Given its large non-U.S. customer base, this is not surprising. However, whether this pace can be maintained depends on whether people can find use cases. Solana and Ethereum combined added 518,000 holders. Clearly, the number of holders is driven by applications that control most of the value chain and have substantial existing distribution capabilities.

Of course, 4 million holders do not equal 4 million investors. Looking at the holding structure of stock tokens across four chains: among 2.5 million addresses, 97.5% hold less than $100; only about 18,000 wallets hold more than $1,000.

Where is the money? The minting wallets of xStocks hold $1.13 billion in unsold tokens on Solana and $552 million on Ethereum. Of the $2.6 billion held outside these two wallets, exchanges account for 40%. On BNB Chain, Binance’s own wallet holds 81% of all bStocks, so most bStocks have never left the exchange. Wallets worth over $100,000 also account for 40%; on Ethereum, this type of wallet accounts for 80%, with half of them likely belonging to trading firms in 32 Safe multi-signature wallets. Contracts account for 14%, including trading pools and lending markets. Wallets below $100,000 only account for 7%.

So the first stage is essentially a “brokerage account plus a blockchain receipt.” If the exchange holds tokens for you, it is not more useful than the stocks in your brokerage account.

Stocks Begin Their Second Job

Why put stocks on-chain? Two reasons: buying and selling are cheaper; and you can do other things with them.

Buying $1,000 worth of Nvidia xStock through the Jupiter router and immediately selling it incurs a spread and pool fee loss of about 20 cents. The Jupiter app adds another 0.1% on each side, totaling about $2.20. For a $100,000 scale, the round-trip cost through the router is about 0.6%. Off-chain, the most expensive step for overseas buyers is transferring money to U.S. brokerages. The Indian app INDmoney quotes currency conversion fees of 0.5% to 1.2%, plus other fees afterward. Revolut’s standard plan charges up to 1% for amounts over €1,000 per month. Conversely, if you already hold stablecoins, you won’t have to pay these fees.

But more interestingly, the composability of on-chain stocks makes financialization easier, and credit becomes cheap and accessible. Kamino accepts xStocks as collateral, lending out USDC at 5.75%, allowing borrowing up to 73% of the value of S&P 500 tokens. Jupiter Lend is at 4.88%. Ether.fi can borrow at about 4% through Aave, with collateral combinations including stock tokens, and you can use its card to spend the loan. U.S. clients borrowing less than $25,000 pay 12.075% at Schwab and 5.38% at Interactive Brokers. However, if you are the foreign retail investors these tokens are aimed at, you often can’t borrow at all. On-chain infrastructure is opening new doors for those who can hardly access U.S. stocks.

How big can this get? There are two references.

One is the wrapping of Bitcoin WBTC. In 2019, no mainstream lending market accepted WBTC as collateral, with a supply of less than 600 BTC. In January 2020, Aave launched WBTC, in May Maker opened a WBTC vault, and in July Compound accepted it as collateral. By the end of 2021, the supply reached 258,000 BTC, 415 times that of January 2020.

One is the wrapping of Bitcoin WBTC. In 2019, no mainstream lending market accepted WBTC as collateral, with a supply of less than 600 BTC. In January 2020, Aave launched WBTC, in May Maker opened a WBTC vault, and in July Compound accepted it as collateral. By the end of 2021, the supply reached 258,000 BTC, 415 times that of January 2020.

The second is stablecoins. In January 2020, the total value of stablecoins was about $5 billion, similar to today’s stock tokens. By May 2021, they surpassed $100 billion, as they became the underlying asset for borrowing, lending, and trading in every DeFi application. Lending markets and exchanges first accepted them, and then the supply exploded. Stock tokens are at the starting point of this path. Kamino and Jupiter Lend hold $37 million in xStock collateral, corresponding to $9.7 million in loans, accounting for only 6% of stock tokens outside the Solana minting wallets.

Stablecoins have also found work beyond trading: payments, remittances, and proxy finance, all wanting to use them due to cheap transfers and near-instant settlements. What are the corresponding scenarios for stock tokens?

The first is access. If you live in Lagos or Jakarta, you can't open a U.S. brokerage account, but you can buy $50 worth of Nvidia with USDT in your wallet. This is "stock version of holding USD," and it aligns with the data: 97% of holdings are under $100. The second is consumption; the Ether.fi card has already allowed you to spend loans borrowed against stock tokens. The third is credit; the money is here.

But there is a ceiling on credit. Kamino offers a maximum loan of 73% on S&P 500 tokens, 55% on Nvidia and Tesla, 40% on Apple, and 30% on Strategy, Circle, and Robinhood. Borrowers have not yet hit the ceiling, but the ceiling determines how far this phase can go. Lenders must be able to sell your collateral at any time, including Sundays—when the stock market is closed and token trading is thin. This is where stock tokens become a bit problematic.

Wall Street Closes for the Weekend, On-Chain Stocks Do Not

Unlike regular stocks, on-chain stock tokens trade on weekends, and the deepest and most active market on Sundays is perpetual contracts. If the perpetual can track the stock's opening position on Monday, lenders are willing to let you borrow more; if it diverges significantly, lenders can only lower the limit. Thus, weekend prices may determine how much you can borrow against stock tokens.

How accurate is it? We took 19 stocks and indices, covering 30 weekends since March, comparing the changes in trade[XYZ] perpetual from Friday's close to 8 PM New York time on Sunday with the stock's Monday opening gap.

When the gap exceeds 1%, the probability that the perpetual direction is correct is 69%. However, by Sunday night, it only priced about a quarter of the gap, with a median of 26%. By Monday morning at 9 AM, after overnight and pre-market trading, the pricing ratio rises to 91%. On Monday, June 15, Strategy opened up 7.5%, while the perpetual had already risen 6.4% by Sunday night. On Monday, September 21, Circle opened up 6.9%, while the perpetual only moved 0.1%.

So, while perpetuals are useful directional signals, they are poor weekend prices. Accurate and continuous price feeds are the constraint here. The better the perpetual can set weekend prices, the more stock tokens can serve as collateral; the more collateral needs hedging, the larger the perpetual trading volume will be.

Bring Your Stocks On-Chain

By the end of June 2025, foreign investors held $19.86 trillion in U.S. stocks, accounting for 18.3% of the total value of U.S. stocks. Currently, stock tokens only equal 0.016% of the foreign ownership. $500 billion is 2.5%, and $1 trillion is 5%.

Relying on crypto funds won't get there. If one-tenth of all stablecoins were to flow into stock tokens, it would only increase by about $31 billion, and would create more due to the gap. The remaining increment must come from stocks already held in brokerage accounts.

This will only happen when mature companies find it profitable to tokenize stocks. Once a company makes money, the floodgates will open.

In 2021, Franklin Templeton put a U.S. government money market fund on-chain, becoming the first U.S. registered fund to record share ownership on a public chain. For the next three years, it essentially fought alone. In March 2024, BlackRock launched BUIDL, at that time there were only 17 tokenized treasury products worth $1.1 billion. Subsequently, WisdomTree, Fidelity, Invesco, and JPMorgan followed suit, and now there are 109 tokenized treasury products worth $15 billion. Franklin proved the pipeline could work, and BlackRock's entry got everyone moving.

On the stock side, who will move first? Look at Robinhood. It is the only large traditional brokerage that has already issued stock tokens, now covering over 120 countries. In September, its token trading volume reached $6.6 billion, accounting for 42% of all on-chain stock token transactions. Robinhood Chain's fees exceeded $30 million in September. Fees are indeed decreasing, but at least we know how big the potential is.

The most conversion potential lies with Interactive Brokers. It has 5.19 million accounts and $930 billion in client equity, with most accounts outside the U.S. by the end of 2024. If clients convert 5% of that into tokens, the market would expand about 15 times.

Its CEO said in July 2025 that stock tokens "look like a great opportunity, much worse than buying regular stocks." The reason is that stock token prices are different, and liquidity is thin, making price differences inevitable. Its clients can already trade 24/5, with a borrowing rate of 5.38%, and a year ago there was indeed no incentive to provide tokens. But the situation is changing. The company's overnight trading volume has risen from 3.8 million a year ago to 10.9 million in the second quarter. Clients clearly want more trading time, and tokens are one of the easier ways to achieve that.

Stablecoins have already shown that the cost of waiting is too high. Circle launched USDC in September 2018, when stablecoins were only worth a few billion dollars; now it accounts for 24% of the supply. PayPal launched PYUSD in August 2023, with a supply of $124 billion, now only accounting for 0.9%. Stripe spent $1.1 billion in October 2024 to acquire Bridge instead of building infrastructure itself. When traditional players see evidence that tokenized stocks find product-market fit, they will not sit still.

Crypto exchanges have already recognized the potential. Binance, Robinhood, Kraken, Coinbase, OKX, Bybit, and Bitget are all selling stock tokens. We believe Robinhood's approach to tokenized stocks is similar to Circle's approach to stablecoins in 2018.

Real Shares Finally On-Chain

In the fourth phase, the masks come off. The company's transfer agent records the shares themselves on-chain, with no offshore issuers, no independent custodians, and no claims on others' accounts. The tokens are the shares.

What does this bring? You get the rights attached to shares, including voting and dividends. There is no arbitrage gap between tokens and shares because they are the same thing. As long as the transfer agent approves two wallets, shares can move at any time, settling in seconds. Companies can also see who really holds them, rather than just a line saying "Cede & Co."

Has anyone done this? Yes, a small batch. Galaxy and Forward Industries record shares on Solana through Superstate. Superstate is a transfer agent that updates the register with token movements; Exodus also connects to Solana through it. Securitize is also a transfer agent and has done this for Currenc Group and itself: its shares have been tokenized on Avalanche and Solana since they were listed on the NYSE on July 2; on October 8, fewer than 100 wallets held $329 million SECZ. Figure has also issued shares on its own chain.

Native shares are already useful on-chain. Forward Industries' shares are the largest single stock collateral on Kamino, totaling $23 million, exceeding the total of all ten types of xStocks in the Kamino xStocks market.

The onshore market is also moving. DTC's tokenization service is scheduled for full launch in October; Nasdaq plans to launch equity tokens in the second quarter of 2027; the SEC exempted U.S. exchanges in September to trade tokenized stocks in a licensed pool, with a limit of 0.25%-2.5% of daily stock trading volume. But none of these allow you to put shares into the open lending market. Once someone does this, the main reason for offshore packaging will disappear, and the custodial layer rented by Alpaca to all issuers will be the same.

Money Flows to Front-End Applications

Before on-chain stocks reach users, there can be up to ten companies in between.

Among the companies listed in the image, except for Backpack, each one places stocks with Alpaca. Alpaca is a U.S. brokerage that sells brokerage pipelines to applications through APIs: executing trades, clearing, and holding stocks itself. Backpack uses RQD Clearing, another U.S. clearing company, providing similar services through intermediary broker Atomic Vaults Securities.

Financial companies make money either by safeguarding client assets or by helping assets move. Launchpad has become a stock distribution mechanism, making money from trading fees. On Robinhood Chain, Pons and Long allow anyone to issue memecoins priced in stock tokens, so every time you buy a memecoin, you are also buying stock tokens. StonkFun does the same on Solana with xStocks, and pump.fun joined the stock token pairs in early September.

Launchpad charges a fee for every transaction. Pons earned $23 million in September, while StonkFun earned $27 million. They can also drive the stock tokens themselves. In early September, a memecoin pool held 53% of all tokenized HIMS on Robinhood Chain, and a buy order of about $39,000 pushed the token to $132.64, while the New York closing price was only $28.84, until BBVI minted more tokens. Pons' daily fees subsequently dropped by about 90% from the peak.

Now look at the issuers. They hardly make any money. Robinhood mints for free, and after 90 days, redemption costs 0.05%. xStocks set their main fees to zero, Binance conversion is free, and Ondo does not charge minting or burning fees but earns the spread between the bid and ask prices. Stablecoin issuers can earn interest on the underlying treasuries; in September, issuers collectively earned $740.7 million. Stock token issuers hold the stocks, but the dividends belong to you. It is like stablecoin issuers but without interest income, so every major issuer is dependent on exchanges or applications.

Backpack illustrates how unprofitable token issuance can be. It launched Backpack Securities in June, issuing its first token on the day SpaceX went public. Its token traded $1.12 billion on Solana DEX in June and $1.04 billion in July. For a while, it dominated most of the trading for tokenized SpaceX and Micron on Solana DEX. However, these trades occurred on a DEX it does not own. On its own exchange, it trades about $1 million in spot stocks monthly, with perpetual stocks and indices totaling $165 million in September. At standard rates, these perpetuals earn about $120,000 at most. Backpack does not disclose its revenue. Its token is valued at about $30 million, accounting for roughly 1% of all stock tokens, with on-chain stock token trading volume not exceeding 5% in September. Winning trades for several names did not translate into asset or fee gains.

Money is in the applications.

The Kraken app charges a 1% spread on xStocks, while Kraken Pro charges 0.08% for the same token. Robinhood Wallet charges 0.8% for exchanges, plus an additional 0.05% for routers. Issuers do not earn money on any route. Depending on which application you open, the same exchange might earn you $10 or $0.80. Advanced users bring in much larger trading volumes, hence the much lower rates. The application forgoes fee differences to attract high-value customers.

Ondo shows another side: it "rents" customers from partners. This summer, Bitget paid customers to swap Ondo tokens for their own tokens. Bitget claims it handled 89% of the trading volume for Ondo's tokenized stocks in December 2025.

Nineteen Nvidia Stock Tokens

The second revenue source is the default token for each stock. Nvidia exists in the form of 19 contracts, 8 issuers, and 11 chains. The lending market and perpetual venues only accept a few, concentrating liquidity on accepted standards.

Lenders hold 40% of the xStocks Nvidia tokens on Solana, 10% of the Robinhood version, and less than 1% of the Binance version. On Solana, xStocks are accepted as collateral by Kamino, Jupiter Lend, and Bybit, also controlling DEX liquidity. Stablecoins are integrated similarly, with USDT and USDC now accounting for 82% of the supply. Ultimately, we expect each stock to have two or three tokens. Currently, xStocks is most qualified to be the USDC among stock tokens.

Everyone Wants to Be a Broker Until No One Needs One

The least advantageous position is on the chain and custodians.

Chains have been commoditized. Over the 30 days ending October 5, Robinhood Chain's gas fees dropped by 98%, yet the stock token balances remained unchanged. Will chains become equivalent to brokers, earning a few basis points per transaction? We don’t think so.

Custodians appear to be making no money at all. None of Alpaca's clients disclosed paying custody fees. It profits from order flow and stock lending, sharing part of it downstream. Binance receives half of Alpaca's order flow revenue for clients and 65% of stock lending profits. Its weakness is its ease of replacement, as clients are starting to own their brokers. Binance has Nest Trading but still routes orders to Alpaca; Ondo has acquired the brokerage Oasis Pro. Transfer agents can completely replace custodians.

If You Want to Bet, First Ask Who Is Making Money and What You Own

If you want to participate in this trend, the most direct starting point is to see who is making money when you use stock tokens. Robinhood and Binance already have customers. xStocks is making tokens accepted by lenders and competing exchanges. Hyperliquid is trying to tell you how much stocks are worth during Bloomberg terminal breaks.

But every advantage comes with conditions. You might borrow against Nvidia at any time, but once the loan is liquidated, someone has to buy it. Your token is only as good as the underlying claim. We also know that issuers can fail. Traditional brokers may ultimately offer the same benefits without needing offshore packaging.

Even if you choose the right business, you still have to ask: what exactly do you own? Does the asset you buy give you a share of the success? Owning a token related to a growing business does not automatically grant you profit sharing. Putting billions of dollars of stocks on-chain does not guarantee how much gas revenue you will earn.

Next, we must observe how investor behavior changes. Will they collateralize loans? Will they trade on-chain more often? You can certainly buy a token that tracks Nvidia's price. But the real big money will wait until someone gives it enough utility.