Tokenization

This. And the SEC and CFTC had outright said they were prepared to slice the Clarity Act into individual rules and regulations when it failed. Certainty > Uncertainty = Risk Cleared

What happened here was a proper realization and subsequent absorption of a legislative risk that had already been widely anticipated. Weeks and even days before failure, the probability of enactment was already low. Market participants had therefore discounted the adverse outcome, which limited the subsequent decline in index prices. On the other hand, SEC and CFTC further involvement supplied a partial substitute for statutory market structure regulation, though with narrower scope and weaker impetus than passage of the Clarity Act would have conferred. Good graphics: @RasterlyRock

The race for tokenized stocks has no clear winner, yet. Stocks paired with memes are now 26.7% of onchain stock spot volume, and Robinhood, Solana and BNB are battling for the #1 spot in this narrative. Here's the current landscape between the chains 👇

.@Daybreakcircles is coming to iMessage Ask what’s happening with a tokenized stocks on @base and @xlayer prestocks on @solana Catch up on company news Find public conviction markets by ai agents See what people are backing Your tokenized stock world, inside one Messages thread powered by @PhotonHQ We’re opening the private beta in small batches Join the waitlist: daybreakcircles.lol/imessage

This is the first time BlackRock has designed portfolios meant to be tokenized by another firm. Basically, eligible onchain investors are opportuned to use a portfolio strategy made by the world largest asset manger. This is one of many interesting innovation tokenization comes with

A hypothetical DeFi flow for tokenized H100 compute: 1. Issue: A provider mints tokens where 1 token = 1 H100-hour delivered in December, and sells them now at $1.80 against a $2.00 index. It gets capital upfront without borrowing against its hardware. 2. Price: An oracle prices the token, adjusted for time to delivery. 3. Trade: AI labs buy to lock in capacity, traders take a view on rental rates, and agents buy exactly the hours they need. 4. Pledge: Token holders deposit the tokens on Morpho/Aave and borrow USDC against them. If H100 rates fall far enough, liquidators sell the tokens to repay the loan. 5. Settle: In December, holders redeem tokens for GPU time, and the tokens are burned. Unredeemed tokens expire. Who's going to be the next "Robinhood" for tokenized AI compute?

Product review at Spout Finance

For a protocol to become the endpoint, for yield from stablecoins, tokenized RWAs, and perp funding rates, they need to possess deep efficient liquidity at scale, cross chain and cross venue reach, a standardized instrument others can build on top, and distribution r/ship with issuers Against each Pendle sets the bar high: - on liquidity, a $50M swap into PT-sUSDS only moves price by 0.05%, and tradable liquidity is up 71% this year to around $600M while emissions are down 92% - on cross-chain reach, PTs already move as collateral across chains, with $170M of PT-USDe bridged from Ethereum to BNB Chain earlier this year to be used the same way. - on standardization, PT/YT splits are already accepted as collateral elsewhere; $210M of RWA-backed PTs sit on Morpho right now, which is the clearest sign an instrument has moved past being just an in-house product. - and on distribution, USDG going from $0 to $121M in two months, and Pendle ending up with 27.9% of its Ethereum supply, is the kind of pull that makes issuers want in. Once you have those 4 in place, liquidity transcends to a self feeding orb Figures cited are self-reported by Pendle, unaudited, and not independently verified. This is not financial advice.

excited to share that I'm joining @DinariGlobal as an advisor. being based in Asia, this one hits close to home for me. for millions across Asian markets, getting exposure to US stocks is either impossible or buried in friction and gatekeeping. Dinari changes that. dShares are live in 85+ countries and each one is backed 1:1 by the real underlying share. not a synthetic. not a wrapped derivative. when you hold a dShare, there's an actual share locked in custody, with dividends, voting rights, and corporate actions preserved. real equities. Onchain. 24/7. this is what opening up global access to US markets actually looks like. excited to be part of it.

Did anyone actually read the SEC Exemptive Relief letter for Tokenized Securities? I read the 60 pages today, and the carveout is incredibly limited. Considering the celebrations on X, I thought it would contain something useful, but imo there isn't demand for the model proposed / nor is any incumbant already meeting the requirements as written. I haven't seen anyone properly breakdown what it actually says, so here are the most important parts with my commentary: 1. Permissioned Participants Only. Tokenized Security Venues (TSVs) can "facilitate the permissioned trading of tokenized NMS stock using innovative automated market makers." The key word is "permissioned." It's mentioned multiple times throughout the letter. Permissioned means whitelists, whereby both the LPs and traders are known, KYC'ed and KYB'ed. Onchain stock AMM liquidity/execution is already terrible, and that's without limiting to permissioned entities. Who is actually going to provide liquidity into these permissioned venues? It's not market makers. Market makers prefer CLOBs because they are more capitally efficient. Market makers also prefer bilateral trading via single dealer platforms (or as the cryptonatives call them propAMMs). There is limited supply side liquidity for permissioned AMMs. It's either permisionless AMMs or permissioned structures other than AMMs. 2. What is a Tokenized Security Venues (TSV)? A TSV "brings together buyers and sellers of Tokenized NMS Stock by: (1) providing one or more AMM Liquidity Pool(s) for permissioned participants to interact and agree to terms of a trade and (2) setting standards for persons to access trading on such AMM Liquidity." By this definition, Hyperliquid's CLOB model would not count for exemptive relief. Hyperliquid Spot (not perps) does ~50% the daily volume of Uniswap. But, to put things in perspective, Hyperliquid only has 70 spot pairs(!!). It's obvious, there will be tighter execution and better discovery on CLOB models like that of Hyperliquid. We need permissioned CLOB or propAMM structures included in the definition. In fact, as I'll get to below, the SEC even calls out the fact that AMMs lack best execution protections... whcih could easily be implemeted in CLOB structures! 3. What counts as a Tokenized NMS Stock? First, a Tokenized NMS Stock must be registered with the SEC. Second, a Tokenized NMS Stock "does not include securities where a third party issues a crypto asset representing its own security that provides synthetic exposure to an underlying security, such as a tokenized linked security or a tokenized security-based swap." To be clear, none of the permissionless representations of stocks today are SEC-registered securities @RobinhoodCrypto @coinbase @binance @Ondo @xStocksFi etc. The fact that they are not, means nothing in this letter pertains to them. To be clear, it does NOT mean that these models are inferior (in fact I would argue the opposite, but that's outside this scope.) Lastly, a Tokenized NMS Stock can only trade against "another Tokenized NMS Stock, a non-security crypto asset (e.g., a payment stablecoin issued by a permitted payment stablecoin issuer), or a tokenized money market fund." The phrasing is vague here to me, does "non-security crypto asset" include memecoins??? 4. Lack of Consumer Protections and Risks with AMMs In the US, investors are given best execution protections. Without these protections, market makers can provider inferior execution and manipulate spreads at investors expense. These protections are part of Reg NMS. Alarmingly, the SEC says consumers will NOT have these protections in TSVs: "A TSV could not comply with the requirements of Regulation NMS without significant modifications to its trading model, which may adversely impact TSV Participants." Why are we going down the AMM path? Without these protections, who is going to participate on the demand side? As mentioned above, we have severely limited the supply side, now we are effectively saying to consumers, "Spreads will be wide, good luck." You know what can easily abide by Reg NMS? CLOBs like that of Hyperliquid. With both supply and demand sides hamstrung, we're setting ourselves up for failure. But on a positive note.... 5. The SEC recognizes the benefits of Blockchains! TSVs "offer the potential to benefit investors by enabling investor self-custody, around-the-clock trading, fractional ownership of shares, and near instantaneous settlement.... The use of such technology may also lower operating, recordkeeping, and transaction costs, and improve efficiencies." 6. Long list of Requirements to become a TSV Pages 36-46 are a long list of requirements TSVs must make publicly, including things like, "a TSV must consent to examinations of its books and records by the Commission staff at any time" and "at least 30 calendar days before operating, a TSV must publish a copy of a notice (“Notice”) prominently on its publicly available website." 7. Issuer Protections, Remember AMC / Robinhood?! We all remember the AMC debacle. The SEC is giving AMC exactly what they asked for: required issuer permission for the tokenized security to exist. "If [AMC] provides... written notice to the TSV that it objects to a Tokenized NMS Stock... the TSV cannot make such Tokenized NMS Stock available for trading on the TSV." This line reads almost directly from the AMC incident: "An issuer of the underlying NMS stock may be concerned about the risk of maintaining its shareholder register related to onchain transfers or the potential price dislocation or adverse effects on the price of the underlying NMS stock, particularly given that prices disseminated by an AMM Liquidity Pool are most likely based only on the ratio of the quantities of assets in that liquidity pool." Yet another reason to prefer CLOBs where the prices are not directly linked to a single pool which could be mispriced. 8. Tokenized Stocks must have the Same Benefits Tokenized stocks must have "a right to receive the same dividends... a right to exercise the same voting rights... and a right to receive the same share of the residual assets of the company upon liquidation." Great stuff! Investors in tokenized representations should get everything (and more!) than they would in the traditional form. 9. Extremely High Volume Limits and Other Controls The limits the SEC has set for volume are sky high. The "volume of Tokenized NMS Stock Traded... cannot exceed 0.25 percent of the average daily share volume during the prior month in the relevant NMS stock as reported by an effective transaction reporting plan". The TSV must pause trading" For reference, even the permissionless versions of these tokenized equities are doing less than 0.001% of the volume. Remember today, there are only $3 bn in tokenized equities. The market is $70 trillion. ---------------------------------------------------- Expect a formal comment letter submitted to the @SECGov from myself and @glider__ soon.

This is how long it took binance, ondo, xstocks, coinbase, robinhood chain to reach $1 billion volume in tokenized stocks

reality of a solo creator

one issue i've had using leveraged perps is this: › i enter a 5x long › price goes up, so my margin grows. › my effective leverage starts dropping the only way to maintain my leverage was to manually add to my position. and honestly, that's a hassle. @BounceTech on hyperliquid decided to remove this hassle for me. Bounce has leveraged tokens backed by hyperliquid perps which automatically rebalances my trade to stay around its target leverage. so instead of sitting with my position for hours, managing it manually, i can just hold the token. also, the fact that it's an erc-20 token, means the leveraged position can be moved around defi. basically, Bounce lets me set my leverage and let the position manage itself. get started on: bounce.tech/trade

Stock-backed loans are live on Morpho. Users can lend and borrow against @coinbase tokenized stocks at variable & fixed rates on @base.

I don't think the tokenization story is well understood - so let's break it down Basically - the US Government is in vast, unprecedented amount of debt. And its long term debt is selling off a lot (40%+ over 5 years) - while Gold is up 140%. Gold has crossed US treasuries as the #1 asset held by other Central Banks. The buyers for US debt - China, Japan and Europe are stepping away for different reasons. Geopolitical conflict. Currency related. Political difference. The government is afraid of running out of buyers for its debt. And it's worried about the liquidity of markets. Historically, this concern is much worse when the Fed is hiking and there's high inflation. As typically the response to unstable debt markets is easing (buying debt). Therefore, the US government is very incentivized to allow Stablecoins. Stablecoins hoover up US debt. Tether has different balance sheet behavior than banks and works closely with the US government. Stablecoins used to be assumed to be criminal operations and were prosecuted by the USG. Now they're welcomed to Washington DC. When you are worried about your reserve currency status, you also want to ensure the dollar is accepted in many places. So stablecoins not only serve as a buyer of US debt, but a promoter of the US dollar globally. Enter CBDCs. Europeans see the US government promoting US dollar stablecoins as a matter of foreign policy. Visa and Mastercard going heavy in the space. And see Tether freezing Balances along with the DOJ and say, "We cannot have this. We don't want Trump to be able to use the US dollar in negotiations with us. Therefore we have to digitize our currency" Europe and the UK also have fiscal and political problems. So the perverse incentive to digitize their currencies is not just to ensure 'monetary sovereignty' but also to potentially implement wealth taxes, or balance based transaction taxes. This is also the flip side of wide adoption of US dollar stables. We don't call it a CDBC, but its basically an extension of the government. Balances are frequently frozen. Other policies could be implemented under the left. So rising global debt -> US support of stables -> pressure on Europe to do CBDCs to respond. The US is then incentivized to grow the stablecoin market as fast as possible. Stablecoin's usage is primarily driven by speculation. Holding it as collateral for perpetual swaps. Keeping it on exchanges. The problem: crypto doesn't have lots of good assets to trade. Bitcoin has been very volatile. Most altcoins collapsed. This slowed the growth of the Stablecoin market, which has basically flatlined year to date. Scott Bessent wanted us to be going at 40-50% CAGR not 0. The question then, is how to create appealing speculative markets. The answer: on chain stocks, and prediction markets. Big picture, if you want a lot of stablecoin balances. You need to have good things to trade. Over the past 6 months the 2x leveraged Micron ETF traded more than Bitcoin in dollar terms. Trade XYZ launched commodities, and stocks and commands a large % of volume on hyperliquid. Prediction markets are growing fast. The losses incurred by retail investors in these markets are substantial. They are allowed for the same reason Casinos are allowed on Native American reservations. Necessary evil due to funding pressure and the geopolitical factors I described above. This is, at a high level, why we are talking about crypto in the middle of a war with Iran. And why its' consuming the executive department's attention. The US Dollar is ultimately a matter of national security. This is true regardless of whether Democrats or Republicans are in power. Both have debt and spending addictions. Both are reliant on the US Dollar. But now zoom out: what do you have? You have a bunch of governments adopting digital ledger technology in the middle of a war. Freezing peoples balances. People don't want their balances frozen. They don't want it to be subjected to a wealth tax. Enter Z Cash. Over the past 5 years, ZK technology has improved substantially allowing fast, private transactions. Orchard and Halo since 2022 evolved from something Niche to something usable. The EU tried to ban Monero. Exchanges delisted it. Its price increased. Z Cash is open source. Vitalik is also prioritizing adoption of ZK technology on ETH. You can move ETH relatively privately on Railgun already - but real private transactions are on the roadmap. ZK proofs can be accelerated by GPUs. Due to the AI boom, the number of people with access to GPUs and agents capable of accelerating proofs has skyrocketed. Not only can this technology facilitate private transactions but also proofs of reserves that allow trustless accounting for portfolios. This tech is commonly used at crypto exchanges to prove reserves, and algo stables such as Ethena. Thus - it's not just that we are set to own a bunch of shielded Z cash, as a base asset. It's that you can swap anything on ETH privately. Including stables. Relatively soon. And you can do so for provable reserves. Privacy is incredibly important for large institutions doing financial transactions. They're not concerned with the tax authorities, but rather front running. Slippage. And people hunting their positions or slow moving exits. Many big institutions own multiple days of volume in equities that could drop the price 30%+ if the market sniffed out they were selling. And intervene in FX markets, routinely interacting with banks fined billions of dollars for illicitly trading ahead of their flows. So a meaningful increase in tokenized trading volume inherently will require privacy. As real institutional counterparties require it. Retail is a great market and is less privacy sensitive, allowing initial growth. But for the big players to enter -- you need that. It's not just trading desks that care about privacy. You cannot run corporate treasury functions publicly. People could sniff out that you're doing M&A, or figure out what you're doing -- giving up competitive positioning unnecessarily. At the same time blockchains can offer corporations major cost savings for finance functions. It's estimated - for example, that a properly implemented CBDC could save companies in Germany billions of dollars a year in corporate finance banking fees. There are three basic approaches to Privacy. Z cash style. Private, permissionless neutral chain. Canton style: basically segregated databases that interact with each other on chain as little as possible with a permissioned validator set. And private blockchains - which simply deal with the issue by not having a public ledger or bolted on cryptocurrency people are tracking The argument for a permissionless neutral chain (aka a cryptocurrency) winning is that 1. there's no real reason to trust a banking consortium (i.e. what Canton does) 2. governments hate each other and are only doing CBDCs out of geopolitical pressure in a realpolitik environment. we wouldn't be here if Trump wasn't antagonizing Europe and Canada wasn't talking about joining the EU 3. the tech exists, so why would you want a counterparty in between things if you don't have to The world in which crypto loses would be that governments come to an accord about how to do this. China and the US maybe resolve differences. Nationalism subsides. And people say, "You know what, the externalities of all this gambling and absurd crypto shit are not really worth it - we should just have a consortium of nations and corporations for a global CBDC" There is another world where crypto loses. The debt problems go away bc we enter an age of productivity and abundance. In my opinion, the reason AI people hate crypto so much natively is that crypto is a bet AGI isn't the economic Hail Mary it's marketed as. regardless, we are in neither of those worlds right now. But crypto hasn't done great either. Why? The big problem with crypto, from a valuation standpoint, is that it has never been clear how you pay for all the validators or miners without a block subsidy. And the only coherent way that happens is that on-chain volume, swaps, and trading 5-10xes. The way that you get there is that high quality assets get tokenized and traded. But probably less understood is that an entire swathe of new assets hit the blockchain, and defi functions like borrowing and looping create carry trade and FX trading opportunities. So rather than pendle looping Ethena, you have looping with RWAs. This already exists to some extent in niche markets like Brazilian credit card debt (looped 28%+ APY) but is relatively tiny. Just on this example, you might immediately say "that has huge FX risk", and you'd be right. Which brings a natural demand for FX hedging. Which will hit after you get internationalized RWAs on chain. Which will occur naturally after corporate finance functions hit CBDCs. So you have a sort of promethean progression: 0. bitmex and native perp yield 1. weird crypto yield / credit risk [low quality pre FTX era] 2. ethena (systematized perp yield) 3. defi/aave/ pendle etc (levered yield) 4. on-chain stocks 5. on-chain perps 6. leveraged stock vs perp yield < we are here > 7. private stock trading 8. institutional lending 9. direct corporate bond or equity issuance (USD) 10. CBDC facilitated corporate finance (EUR, GBP, NOK) 11. permissionless private fx swaps <the promethean explosion> 12. looped international corporate fixed income Note that the entire time I've talked so far, AI hasn't really been mentioned. AI makes all of this easier. The most concrete example is that the Norgesbank is vibe coding their CBDC with Claude. But more profoundly - eventually agents will be able to trade assets directly on chain. investment management is becoming increasingly agentic already, with every major lab launching finance products. And banks rapidly adopting AI across workflows. By the time you get to step 9 on the table above, there will likely be investable AI agents. Perhaps in gated jurisdiction. But there will be a new primitive of an agent with a verified balance, and business model that you can buy. The same way you'd buy a stock or subscribe to a vault, or hedge fund. I think Step 9 (companies choosing to issue straight on chain) is therefore the most important thing to monitor given the sh1t show with Robinhood's CEO and AMC. Tokenized representations of stocks have major legal risk, and ADRs (American Depository Receipts) as an asset class have quite an ugly history of being banned or depegging (most recently YNDX just straight up went to 0 when Russia went into Ukraine). For you to get really clean on chain stocks, and fixed income that can be effectively looped for yield, you need the credit risk of the actual underlying legal structure to be very low. You'll also want to see a proliferation of privacy and ZK accounting products take hold that interact with OTC trades, portfolio swaps, and FX as CBDCs come online. That's the boring bridge to the eventual wild future everyone was envisioning in 2023 where we have a bunch of Accelerando esque corporations existing entirely on chain, compounding capital and investing in their own training The Track to Financial RSI is paved with Fomo, hyperliquid, gambling on Robinhood and seemingly irresponsible regulatory actions. At least, it seems mad until you consider the alternative. Illiquidity. And currency failure. You can complain about Trump's ethics. You can stop Clarity. But the crazy train has already left the station. All aboard! It's not like you have a choice.