🔎On-chain stocks are taking off
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In today’s newsletter:
🔎On-chain stocks are taking off
📊 On-chain alpha
😂 Crypto meme of the week
🗞️ The latest DeFi news
🔎On-chain stocks are taking off
It’s been another historic week for crypto.
Robinhood, one of the most popular trading platforms, announced the launch of tokenized US stocks on Arbitrum One.
But this is not even the biggest announcement that dropped this week. On the same day, xStocks went live on Solana through Jupiter Exchange.
At the beginning, Robinhood’s on-chain stocks will come with several limitations:
They will be available for trading only 24/5
According to a researcher who decompiled Robinhood's tokenized stock contracts, these stock tokens are unlikely to be compatible with DeFi
KYC seems to be required to buy these on-chain stocks
An interesting thing, though, about Robinhood’s on-chain stocks is that they also enable investing in private companies like OpenAI and SpaceX - something that I don’t think was possible before for retail investors.
But don’t get me wrong - While Robinhood’s announcement is exciting, the real breakthrough would be enabling tokenized assets to be used permissionlessly in DeFi.
And this is where xStocks come in.
Earlier this week, Backed Finance released xStocks on Solana, which are tokenized versions of real U.S. stocks and ETFs that are actually “DeFi-ready”.
“DeFi-ready” means they are already integrated in several DeFi protocols, and anyone can trade them on-chain permissionlessly with just a Solana wallet.
For now, there are several on-chain activities that you can do with them:
Swap any Solana token to xStocks using Jupiter Exchange
Provide xStocks as liquidity on Raydium to earn trading fees
Borrow stablecoins using xStocks as collateral on Loopscale (currently, Circle, Tesla, and Nvidia stocks are available as collateral)
Soon, they’ll also be available as collateral on Kamino Lend
Personally, I’ve been waiting for a “DeFi-ready” version of stocks for a long time.
Even though Ethereum is leading in institutional adoption, it’s interesting to see though that Backed chose to launch xStocks only on Solana.
Yet I wouldn’t be surprised if Backed decides to expand its product to other chains too.
You can also buy xStocks directly from centralized exchanges such as Bybit, Kraken, and Gate, although this is not something I’m very interested in.
The future of tokenization
Imagine being able to speculate on the future dividends of a certain US company using a yield trading protocol like Pendle.
Or being able to borrow against on-chain stocks with AAVE. Or trading stocks on-chain on the weekend when traditional markets are closed.
In my opinion, tokenized assets, such as on-chain stocks, have huge potential as they could enable some very interesting new use cases.
That’s how DeFi can onboard the next billion users on-chain:
By offering the same financial products that TradFi offers, but with lower fees, a better UX, and new use cases that enable a higher capital efficiency.
Right now, RWA is still a very nascent sector.
The total value of tokenized stocks is only $392.8M, while the global stock market's total capitalization surpasses one hundred trillion dollars.
I wouldn’t be surprised if the real-world asset sector becomes a multi-trillion-dollar sector by 2030.
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On-chain Alpha🔎
Fluid and EulerSwap are now both top 5 DEXes by trading volume on Ethereum
Crypto Meme😂
The latest developments in DeFi
First U.S. Solana staking ETF went live
Robinhood announced the launch of on-chain stocks on Arbitrum One and the development of its own Ethereum L2
Jupiter Exchange enabled users to trade on-chain stocks on Solana
INFINIT launched a Yapper Leaderboard on Kaito, with Season One ending on 7 August. 0.5% of its token total supply is reserved for active yappers
Velodrome launched Superswaps, enabling cross-chain swaps across the Optimism Superchain within a single app
Mass enabled trading on Hyperliquid directly from its mobile app
Huma Finance released a major upgrade to its HUMA staking mechanism
Virtuals Protocol launched on-chain governance for veVIRTUAL holders
Katana, a DeFi-first L2 incubated by Polygon, launched its mainnet
Dolomite, an advanced money market, expanded to Ethereum L1
Infinex released Infinex Connect, enabling its users to interact with other DeFi apps through a user-friendly interface
Jupiter Exchange released Jupiter Studio, a token creation platform similar to Pump Fun
Injective released the testnet for Injective EVM
Centrifuge announced the launch of a tokenized version of the S&P 500 index fund
That’s all for this week!
Until next time,
The DeFi Investor
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