šA big win for tokenization
valuable weekly insights
Apyx is the first dividend-backed stablecoin protocol. Check it out here!
GM friends.
Hereās what Iāll cover today:
šTokenized Stocks are getting regulatory clarity
š Crypto chart of the week
šļø The latest DeFi news
šTokenized Stocks finally get regulatory clarity
One of the most bullish regulatory announcements in a while dropped this week.
According to Bloomberg, the SEC is reportedly planning to introduce an āinnovation exemptionā that would officially allow US users to access tokenized stocks.
I think this could have a major positive impact on DeFi and attract significant capital to the industry in the long run, which is why I wanted to cover it today.
Why legalizing tokenized stocks is a big deal
On-chain stocks already exist. Several platforms, including Ondo Finance and xStocks, offer tokenized equities with deep liquidity.
But thereās one major issue:
They mostly operate in a regulatory grey area and are restricted to non-US residents.
This is one of the reasons why I think they havenāt gained significant traction yet.
For now, holding stocks in a TradFi brokerage account simply makes more sense for most investors. It comes with lower regulatory risk and clearer investor protections.
But the SECās proposed innovation exemption could change that.
Once regulatory clarity arrives, the value proposition of tokenized stocks becomes much clearer in my opinion, as tokenization can offer major advantages.
For example, DeFiās composability enables an unparalleled level of capital efficiency.
In DeFi, you could use your stocks and ETFs to borrow stablecoins against them, provide them as liquidity to generate a yield, trade them 24/7, not only during the stock market operating hours, and do all of this while paying lower fees.
Meanwhile, most of these use cases are still either unavailable, limited, or impractical on traditional brokerage exchanges. TradFi is simply much less capital efficient.
Thatās why I think the demand for tokenized stocks and ETFs could be massive once the regulatory uncertainty is removed.
Which DeFi projects could benefit from the SECās innovation exemption for on-chain stocks?
I already made a short X post about this, but I think itās worth diving deeper.
The most obvious beneficiaries would be the issuers of tokenized stocks. Right now, the most popular ones are Ondo Finance and xStocks.
Ondo has 60% market share in the tokenized stocks sector, and xStocks has 28%.
That said, thereās an important caveat. Ondo is currently the only major issuer with a live token, but ONDO is a governance token with limited utility for holders today.
There have been proposals around revenue sharing/buybacks, but thereās no timeline for their implementation. So while Ondoās TVL could grow significantly if tokenized stocks take off, that growth may not necessarily translate into ONDO token pumping.
Another project that could benefit in the long run is Hyperliquid. Hyperliquid doesnāt offer spot trading for tokenized stocks, but it does offer RWA perps, from which it has generated significant revenue.
The only drawback is that Hyperliquid isnāt officially available to users in the US for now, so it may not immediately capture the upside of the SECās innovation exemption.
But the Hyperliquid team is working on making it accessible in the US.
Lastly, I think money markets could also see significant growth in TVL, driven by friendly regulations for tokenized stocks and ETFs.
I believe many people would love the idea of borrowing against their equity portfolios for day-to-day purchases, yield farming, or other investments. Right now, Kamino on Solana is the most popular place for borrowing against tokenized stocks & ETFs.
But I expect that projects like Aave will eventually allow that as well.
Overall, Iām excited about the direction crypto is heading.
Weāve been waiting for regulatory clarity and pro-crypto regulation for years.
Now those are finally coming, and they are going to attract more money into the industry than ever before.
Together with Apyx
The fastest-growing STRC-backed DeFi protocol
One of the fastest-growing new DeFi protocols has been Apyx.
In less than 3 months, it surpassed $476M in TVL.
Apyx is the first stablecoin protocol backed by Digital Asset Treasury (DAT) preferred equity, such as Strategyās STRC and Striveās SATA.
As STRC has a very high base yield, Apyx can offer 10.73% APY to the holders of its apyUSD yield-bearing asset.
And in addition to this, APYX Airdrop is also coming:
5% of its total token supply will be distributed as part of its Season 1 points program that ends on May 22
4% of its total token supply is allocated for Season 2 of its points program, which starts right after Season 1 ends
The exact date when the APYX token launches has not been announced yet.
But what we know is this:
The APYX token will have a staking mechanism, enabling stakers to either earn additional APYX tokens or receive apxUSD dividends from the protocolās revenue.
APYX will provide a way to bet directly on the STRC narrative for the first time.
As Apyx is the largest STRC-backed protocol, it benefits from STRCās success, and APYX token holders will get more revenue as the dApp grows.
You can farm Apyx by holding apyUSD, apxUSD, or by using them in DeFi across various protocols like Pendle and Morpho.
Chart of the week
EtherFi Cash is one of the fastest-growing crypto neobanks
Crypto meme of the weekš
The latest developments in DeFi
Variational raised $50M in funding and launched RWA perps
Polymarket launched pre-IPO markets for trading private companies
SkyMoney increased the SKY Staking Rate from 1.31% to 5.71% (fueled by buybacks)
Pendle released the Pendle Trading Alert Bot, enabling users to set alerts for limit order fills, new market launches, and more
Chainlink SVR was integrated into Aave V4, adding a new revenue stream for Aave from liquidation MEV
Lighter announced Lighter RFQ, bringing institutional-grade liquidity for RWA pairs
CME and NYSE are pushing the US to force Hyperliquid to integrate KYC
ProjectX announced an airdrop (likely in stablecoins) for May 22
Bitwise committed to use 10% of the revenue from its Hyperliquid ETF to buy HYPE
SEC is allegedly preparing to allow on-chain tokenized stock trading
Lombard and Kraken are migrating from LayerZero to Chainlink CCIP for their cross-chain infrastructure
Japan officially recognized stablecoins as legal payment methods
Solstice postponed its TGE to May 25
Aaveās proposal to expand to Monad is live
Strategy acquired $2 billion worth of BTC
Thorchain suffered a $10M exploit
Thatās all for this week!
Until next time,
The DeFi Investor
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