Author|Zach Pandl, Head of Research at Grayscale
Translation| WuBlockchain
The global tokenization of stock markets is advancing. Tokenized stocks promise various benefits for users, including 24/7 trading. The next significant development will be the launch of a tokenization pilot by DTCC [1] on the Canton Network [2]. This pilot will enable tokenized stocks and other assets to flow within the regulated financial system via blockchain infrastructure.
We believe the tokenization of equity markets will progress through three stages, each generating value for different types of blockchain infrastructure (see Chart 1).
The first stage is the third-party "wrapper" model [3]. In this model, the issuer holds the underlying stocks through a Special Purpose Vehicle (SPV) [4], and the tokenized stock represents a claim on that SPV. Currently, this model accounts for over 70% of tokenized stocks by market value. Wrapped tokenized stocks do not represent direct ownership of the underlying shares but can be used in DeFi and may be attractive to retail investors. These assets currently trade on networks such as Ethereum, Solana, and BNB Chain.
The second stage is the "entitlement" model [5], exemplified by DTCC's pilot. Instead of creating new versions of securities, DTCC will put existing eligible securities on-chain via its regulated post-trade infrastructure, with the Canton Network serving as the first blockchain network for this pilot.
The third stage is the issuer-led model, where companies issue securities natively on-chain. Last week, Securitize [6] became the first public company to tokenize its common stock upon listing on the New York Stock Exchange. We believe this model holds the greatest long-term potential, although it requires further regulatory clarity. In our view, the issuer-led model will favor open-architecture blockchains like Ethereum and Solana, as well as hybrid networks like Avalanche.
These three tokenization models are likely to coexist for many years.
Key takeaway: Multiple models exist for tokenized stocks. We believe blockchain networks most likely to benefit from tokenization growth include Ethereum, Solana, BNB Chain, Avalanche, and Canton Network.
Chart 1: Third-party platforms currently dominate the tokenized stock market, while Ethereum, Solana, and BNB Chain host the majority of on-chain assets.
Notes:
[1] DTCC: The Depository Trust & Clearing Corporation, a core part of the U.S. post-trade securities infrastructure, responsible for clearing, settlement, and custody services for securities transactions.
[2] Canton Network: A blockchain network for institutional financial assets, emphasizing privacy, compliance, and interoperability among financial institutions.
[3] Wrapper model: An approach where a third-party platform holds the underlying stocks through an intermediary structure and issues on-chain tokens representing claims on that structure. Investors hold a claim on the structure, not necessarily direct ownership of the underlying shares.
[4] SPV: Special Purpose Vehicle. In tokenized stocks, it typically refers to an entity set up by the issuer to hold the underlying stock assets, with the tokens representing claims on that entity.
[5] Entitlement model: An approach that does not involve issuing a new security but rather records or maps existing eligible securities onto a blockchain through a regulated post-trade system, enabling them to flow on blockchain infrastructure.
[6] Securitize: A platform for digital securities and real-world asset tokenization. The article mentions its tokenization of its own common stock concurrent with its NYSE listing.
