From the history of tokenized stocks to the present: opportunities and challenges coexist

The concept of tokenization of stocks can be traced back to 2017, when security-type Token issuance (STO) began to rise. STO aims to digitize the rights of traditional financial securities through blockchain technology, achieving asset tokenization. Compared to the previously popular ICO model, STO places greater emphasis on compliance.

In 2017, the U.S. Securities and Exchange Commission issued a statement regarding the DAO incident, indicating that certain tokens may be classified as securities and should be regulated by relevant laws. This marked the official emergence of the STO concept. In 2018, STO gradually gained attention as a "compliant ICO," but its development was relatively slow due to the lack of unified standards and poor liquidity in the secondary market.

After the rise of the DeFi craze in 2020, some projects began to attempt to create derivatives linked to stock prices through decentralized solutions. This synthetic asset model allows users to directly invest in the traditional stock market on-chain, without the need for complicated KYC processes. Projects like Synthetix and Mirror Protocol are quite representative. However, the actual trading volume of synthetic US stocks is not ideal, and most projects later shifted to other businesses due to regulatory or business model reasons.

Some well-known centralized exchanges have also attempted to provide tokenization stock trading services through a custody model. However, due to an unfriendly regulatory environment and direct competition with traditional stock trading platforms, this type of business was quickly forced to cease operations.

With the shift in regulatory attitudes, tokenized stocks have regained attention as a new form of RWA( real-world assets). This model emphasizes the issuance of tokens on-chain that are 1:1 backed by real assets, with all stages strictly adhering to regulatory requirements through compliant architectural design.

Currently, the stock RWA market is still in its early stages, primarily focused on the US stock market. According to data, the total issuance of stock RWAs is approximately $445 million, of which $430 million comes from the on-chain stock EXOD issued by Exodus. Exodus is the first US company approved by the SEC to tokenize common stock on-chain, which is of symbolic significance.

In addition to EXOD, the Swiss company Backed Finance has also made significant achievements in this field, with a total issuance of on-chain stock tokens amounting to approximately $16 million. Backed allows users who have gone through KYC to mint on-chain stock tokens using USDC in the primary market and trade them through DEX.

Another noteworthy mention is Ondo Finance, which has made tokenized stocks a core trading target in its latest strategy. With extensive traditional financial resources and technical background, Ondo is expected to drive the development of this sector.

The advantages of stock RWA are mainly reflected in three aspects: all-weather trading, reducing the cost for non-US users to acquire US assets, and the potential for financial innovation based on composability. However, there are still uncertainties regarding the pace of regulatory policy advancement and the adoption of stablecoins.

In the short term, there are two market opportunities for stock RWA: first, listed companies can refer to the EXOD case to issue on-chain stock tokens, enhancing their valuation; second, the tokenization of high-dividend US stocks may attract yield-focused DeFi protocols, satisfying their demand for real yield scenarios.

Overall, tokenization of stocks is an important component of RWA, with broad development prospects but existing challenges. The future direction of development will depend on the combined effects of regulatory policies, market demand, and technological innovation.