Stock tokens have become popular, but the issuers are not making money: profits are hidden in applications and collateral.

Written by: @Decentralisedco

Translated by: AididiaoJP, Foresight News

Stocks on the chain, who is making money?

From 2017 to 2018, Ethereum proved that smart contracts could run effectively, and for a time we wanted to move everything onto the chain. But in the following months, the weak infrastructure severely educated the market. The dream then changed: What if crypto assets could be traded and held in the same brokerage account as traditional assets? This is how crypto ETFs came about. Now, we once again stand at a similar crossroads: moving every type of financial asset onto the chain, making it easier to use and more accessible than today.

Currently, traders and investors hold over 6 billion dollars of exposure to on-chain stocks through two paths.

The first path is tokenization. A company buys stocks, hands them over to a custodian for safekeeping, and then issues a corresponding token. The total value of all on-chain stock tokens amounts to 3.21 billion dollars, having risen 10% in 30 days. The second path is synthetic: using perpetual contracts to pay for stock price changes, but no one really buys the stocks. On trade[XYZ] alone, the total open contracts for perpetual stocks, indices, and ETFs is 3.01 billion dollars, which accounts for 94% of the total value of all on-chain stock tokens.

So, starting from this scale of 3 billion dollars, where do we go from here? Our view is that stocks on the chain go through four stages.

Today, what you mostly buy is just a wrapper: an offshore claim issued by a certain entity. The next step is that the tokens become collateral, allowing you to take out loans against Nvidia even when the market is closed. Then, brokers will allow you to convert stocks you've already held into tokens without selling. The trillion-dollar market is here—foreign investors alone hold nearly 20 trillion dollars in U.S. stocks. Finally, companies will record the shares themselves on the chain, eliminating the need for wrappers. There is already a small batch of listed companies doing this.

What you receive is just an IOU

When you buy Nvidia through a broker, the shareholder register records Cede & Co, which is a synonym for the Depository Trust Company (DTC); your broker’s ledger shows you as the holder. Most stock tokens are essentially a claim on such records.

Take Robinhood as an example. BBVI, which is Bitstamp Global (owned by Robinhood), buys stocks, with Alpaca acting as the broker and custodian. Then Robinhood Assets (Jersey) issues a debt security to you. The real meaning here is: one token equals one share's worth of debt. Dividends reinvestment and stock splits will adjust how many shares each token represents. It does not carry voting rights and does not grant you ownership of the stock. If the issuer goes bankrupt, the securities agent will sell the stocks and pay back the holders.

Who is responsible for keeping the token price aligned with the stock price? The one authorized to mint. The minter arbitrages between the stock and the token: buy the cheaper side, convert it to the other side, and sell to bring the price back to par. At Robinhood, only BBVI can do this, and only during Central European Time from 2 AM Monday to 2 AM Saturday. No one can mint at other times, so token prices depend on what other holders are willing to sell for.

Different issuers vary in who can mint, where to sell, and what holders can do afterward. They all buy stocks through Alpaca. Binance, Robinhood, and Coinbase own their own exchanges, so they sell tokens to their own customers. xStocks is the exception. Kraken has agreed to acquire it next December, but you can also buy xStocks issued tokenized stocks on OKX, Bybit, and Gate. If you want to borrow using stock tokens today, the most likely version you'll get is xStock, as most lending markets support it.

Your broker, still the old faces

The top 100 tokenized stocks increased by 950 million dollars over 90 days, rising from 2.09 billion to 3.03 billion. Meanwhile, the number of holding addresses increased from 417,000 to 4.21 million, a tenfold increase.

In the past three months, the two exchanges, Binance and Robinhood, brought in 86% of new holders. BNB Chain added 1.72 million addresses while Robinhood Chain added 1.55 million. BNB Chain also contributed 517 million dollars in value, more than all other chains combined. Considering its large non-U.S. customer base, this is not surprising. But whether this speed can be maintained depends on whether people can find use cases. Solana and Ethereum combined added 518,000 holders. Clearly, the number of holders is driven by applications that control most of the value chain and have substantial distribution capabilities.

Of course, 4 million holders do not equal 4 million investors. Looking at the holding structure of stock tokens across four chains: of the 2.5 million addresses, 97.5% hold less than 100 dollars; only about 18,000 wallets hold more than 1,000 dollars.

Where's the money? The minting wallets of xStocks hold 1.13 billion dollars in unsold tokens on Solana, and 552 million dollars on Ethereum. Among the 2.6 billion dollars held outside these two wallets, exchanges account for 40%. On BNB Chain, Binance's own wallets hold 81% of all bStocks, meaning most bStocks have never left the exchange. Wallets with more than 100,000 dollars account for 40%; on Ethereum, this type of wallet accounts for 80%, half of which is in 32 Safe multi-sign wallets, likely belonging to trading companies. Contracts occupy 14%, including trading pools and lending markets. Wallets below 100,000 dollars only account for 7%.

Therefore, the first stage is essentially "a brokerage account plus a blockchain receipt." If an exchange holds the tokens for you, they are not more useful than the stocks in your brokerage account.

Stocks start working a second job

Why move stocks onto the chain? Two reasons: trading and holding become cheaper; and you can do other things with them.

Buying 1,000 dollars of Nvidia xStock through the Jupiter router and selling it immediately entails a loss of about 20 cents in spread and pool fees. The Jupiter app adds another 0.1% on each side, totaling about 2.20 dollars. For 100,000 dollars, the roundtrip cost through the router is about 0.6%. Off-chain, the most expensive step for overseas buyers is transferring money to a U.S. brokerage. The Indian app INDmoney quotes currency conversion fees at 0.5%-1.2%, followed by additional charges. Revolut’s standard plan charges up to 1% for amounts over 1,000 euros monthly. In contrast, if you already hold stablecoins, you don’t incur these fees.

However, more interestingly, the combinability of on-chain stocks facilitates financialization, making credit cheaper and easier to obtain. Kamino accepts xStocks as collateral, offering loans in USDC at 5.75%, allowing borrowing up to 73% of the value of the S&P 500 token. Jupiter Lend is at 4.88%. Ether.fi can borrow through Aave at about 4%, and the collateral composition can include stock tokens, even allowing for spending loaned money on its card. U.S. customers borrowing less than $25,000 have to pay 12.075% at Schwab and 5.38% at Interactive Brokers. If you are exactly the foreign retail investors targeted by these tokens, you typically cannot borrow at all. The on-chain infrastructure is opening new avenues for those who can hardly access U.S. stocks.

How big can this get? There are two references.

One is wrapped Bitcoin, WBTC. In 2019, no mainstream lending market accepted WBTC as collateral, and the supply was less than 600 BTC. In January 2020, Aave launched WBTC, Maker opened a WBTC vault in May, and Compound accepted it as collateral in July. By the end of 2021, the supply reached 258,000 BTC, 415 times that of January 2020.

The other is stablecoins. In January 2020, the total value of stablecoins was around 5 billion dollars, similar to today’s stock tokens. By May 2021, they exceeded 100 billion dollars, becoming the underlying asset for borrowing, lending, and trading in every DeFi application. Lending markets and exchanges first accepted them, and the supply then exploded. Stock tokens are at the starting point of this road. Kamino and Jupiter Lend hold 37 million dollars of xStock collateral, corresponding to 9.7 million dollars in loans, only accounting for 6% of stock tokens minted outside the Solana minting wallet.

Stablecoins have also found applications outside of trading: payments, remittances, and financial agency, all wanting to use them due to cheap transfers and near-instant settlement. What are the corresponding use cases for stock tokens?

The first is access. If you live in Lagos or Jakarta, unable to open a U.S. brokerage account, you can buy 50 dollars of Nvidia with USDT in your wallet. This is "dollar-saving in stock form," reflecting holding data: 97% of holdings are less than 100 dollars. The second is consumption; Ether.fi's card has already allowed you to spend loans borrowed using stock tokens. The third is credit, with money residing here.

But there is a ceiling on credit. Kamino offers the highest loan-to-value ratio of 73% on S&P 500 tokens, 55% on Nvidia and Tesla, 40% on Apple, and 30% on Strategy, Circle, and Robinhood. Borrowers have yet to hit the limits, but those limits will determine how far this phase can go. Lenders must be able to sell your collateral at any time, including on Sundays—when the stock market is closed and token trading is thin. Here, stock tokens encounter some trouble.

Wall Street is closed on weekends, on-chain stocks are not

Unlike ordinary stocks, on-chain stock tokens trade on weekends, and the deepest and most active market on Sundays is perpetual contracts. If the perpetual can track the stock's opening position on Monday, lenders may allow you to borrow more; if it diverges significantly, lenders will have to lower the limits. Thus, weekend prices may determine how much you can borrow against stock tokens.

How accurate is it? We analyzed 19 stocks and indices, covering 30 weekends since March, comparing the changes in trade[XYZ] perpetual from Friday’s close to New York time 8 PM on Sunday with the gaps at Monday's open.

When the gap exceeds 1%, the probability that the perpetual direction is correct is 69%. However, by Sunday night, it only priced about a quarter of the extent, with a median of 26%. By Monday morning at 9 AM, after overnight and pre-market trading, the pricing ratio rises to 91%. On June 15, a Monday, Strategy opened up 7.5%, while the perpetual already rose 6.4% by Sunday night. On September 21, a Monday, Circle opened up 6.9%, while the perpetual only moved 0.1%.

Therefore, perpetual contracts provide useful directional signals but are poor at weekend pricing. Accurate and continuous price feeds are the constraints here. The better the perpetual can set weekend prices, the more the stock tokens can serve as collateral; the more collateral needs hedging, the larger the perpetual trading volumes will be.

Bring your stocks on the chain

By the end of June 2025, foreign investors will hold 19.86 trillion dollars of U.S. stocks, accounting for 18.3% of the total value of U.S. stocks. Currently, stock tokens only equal 0.016% of the amount held by foreigners. 500 billion dollars is 2.5%, and 1 trillion dollars is 5%.

Arriving there cannot rely solely on crypto funds. If one-tenth of all stablecoins flowed into stock tokens, it would only increase by about 31 billion dollars, and even then, more would be created due to the gaps. The remaining increase must come from stocks already held in brokerage accounts.

This will only happen if mature companies find it profitable to tokenize stocks. Once a company makes money, the floodgates will open.

In 2021, Franklin Templeton moved a U.S. government money market fund onto the chain, becoming the first U.S.-registered fund to record share ownership on a public blockchain. For the next three years, it basically stood alone. In March 2024, BlackRock launched BUIDL. At that time, there were only 17 products with tokenized government bonds, worth 1.1 billion dollars. Following that, WisdomTree, Fidelity, Invesco, and JPMorgan followed suit, and now there are 109 products with tokenized government bonds worth 15 billion dollars. Franklin proved the pipeline could work; BlackRock's entry prompted everyone else to move.

On the stock side, who will act first? Look at Robinhood. It is the only large traditional brokerage already issuing stock tokens, now covering over 120 countries. In September, its token trading volume reached 6.6 billion dollars, accounting for 42% of the total trading volume of all on-chain stock tokens. Robinhood Chain's September fees exceeded 30 million dollars. Fees are indeed declining, but at least we understand how big the opportunity is.

The most potential for conversion lies with Interactive Brokers. It has 5.19 million accounts and 930 billion dollars in client equity, and by the end of 2024, most accounts will be outside the U.S. If clients convert 5% of that into tokens, the market could expand approximately 15 times.

Its CEO stated in July 2025 that stock tokens "seem to be a fantastic opportunity, capable of performing much worse than buying regular stocks." The reason is the price disparity of stock tokens, while liquidity is thin, making price discrepancies inevitable. Its customers can already trade 24/5 with borrowing rates at 5.38%, and a year ago, there was indeed no incentive to provide tokens. But the situation is changing. The company's overnight trading volume has risen from 3.8 million a year ago to 10.9 million in the second quarter. Customers clearly want more trading time, and tokens are one of the easier ways.

Stablecoins have demonstrated that the cost of waiting is too high. Circle launched USDC in September 2018, when stablecoins were only worth a few billion dollars, and today it is 24% of the supply. PayPal launched PYUSD in August 2023, when the supply stood at 124 billion dollars, now it only represents 0.9%. Stripe spent 1.1 billion dollars to acquire Bridge in October 2024 rather than building its own infrastructure. When traditional players see evidence of tokenized stocks finding product-market fit, they won't be able to sit still.

Crypto exchanges have already recognized the potential. Binance, Robinhood, Kraken, Coinbase, OKX, Bybit, and Bitget are all selling stock tokens. We believe Robinhood's approach to tokenized stocks is akin to Circle’s approach to stablecoins in 2018.

Real shares have finally hit the chain

In the fourth stage, the masks come off. The share transfer agent records the shares themselves on the chain, with no offshore issuers, no independent custodians, and no claims on others’ accounts. Tokens are shares.

What does this bring? You gain the rights that come with shares, including voting and dividends. There is no arbitrage gap between tokens and shares since they are the same thing. As long as the transfer agent approves two wallets, shares can move at any time with settlement in seconds. Companies can also see who truly holds the shares, rather than just "Cede & Co."

Has anyone done this? Yes, a small number. Galaxy and Forward Industries have recorded shares on Solana via Superstate. Superstate acts as a transfer agent, updating the registry as tokens move; Exodus has also integrated with Solana through it. Securitize is also a transfer agent and has done so for Currenc Group and itself: Its stock has been tokenized on Avalanche and Solana since its NYSE listing on July 2; as of October 8, fewer than 100 wallets held 329 million dollars SECZ. Figure has issued shares on its own chain.

Native shares are already useful on the chain. Forward Industries' shares are the largest single stock collateral on Kamino, at 23 million dollars, exceeding the total of all ten types of Kamino xStocks.

The onshore market is also moving. DTC's tokenization services are set for a full launch in October; Nasdaq plans to introduce equity tokens in Q2 2027; and the SEC exempted U.S. venues to trade tokenized stocks in September, with limits set at 0.25%-2.5% of trading volume per day. However, these do not yet allow you to place shares into open lending markets. Once someone achieves this, offshore wrappers will lose their main reason for existence, and the custodial layer rented by Alpaca will too.

Money flows toward front-end applications

Before on-chain stocks reach users, there could be up to ten businesses in between.

Among the companies listed in the figure, every company except Backpack places stock at Alpaca. Alpaca is a U.S. brokerage that sells brokerage pipes to applications through APIs: executing trades, clearing, and holding stocks themselves. Backpack uses RQD Clearing, another clearing company in the U.S., providing similar services through the intermediary broker Atomic Vaults Securities.

Financial companies profit either by safeguarding client assets or by helping move assets. Launchpad has become the stock distribution mechanism and profits from trading fees. On Robinhood Chain, Pons and Long allow anyone to issue memecoins priced in stock tokens, so every time you buy a memecoin, it equals buying a stock token. StonkFun does the same on Solana with xStocks, and pump.fun joined the stock token pairs in early September.

Launchpad charges a fee for each transaction. Pons had September earnings of 23 million dollars, while StonkFun earned 27 million dollars. They can also drive the stock tokens themselves. At the beginning of September, a memecoin pool held 53% of all tokenized HIMS on Robinhood Chain, and a buying volume of about 39,000 dollars pushed the token price to 132.64 dollars, while the closing price in New York was only 28.84 dollars, until BBVI minted more tokens. Pons's daily fees subsequently dropped about 90% from their peak.

Looking at issuers, they hardly make money. Robinhood mints for free, and redemption charges after the first 90 days are just 0.05%. xStocks sets most fees to zero, Binance has free conversions, and Ondo does not charge minting or burning fees but profits from the spread between quoted and transaction prices. Stablecoin issuers can earn interest from the underlying government bonds; in September, issuers together earned 740.7 million dollars. Stock token issuers hold stocks, but dividends go to you. It resembles a stablecoin issuer but has no interest revenue, so every major issuer depends on exchanges or applications.

Backpack illustrates how unprofitable issuance is. It launched Backpack Securities in June and issued the first token on the day of the SpaceX listing. Its tokens traded 1.12 billion dollars on Solana DEX in June, dropping to 1.04 billion dollars in July. There was a period when it accounted for most of the trading of tokenized SpaceX and Micron on Solana DEX. But those trades occurred on DEXs it does not own. On its own exchange, it trades about 1 million dollars in spot stocks monthly, with perpetual stocks and indices reaching 165 million dollars in September. At standard rates, these perpetuals could earn a maximum of about 120,000 dollars. Backpack does not disclose revenue. Its token is valued at about 30 million dollars, around 1% of all stock tokens, and the trading share of on-chain stock tokens in September did not exceed 5%. Winning trades for several names did not equate to winning assets or fees.

Money is in the applications.

Kraken’s application charges a 1% spread on xStocks, while Kraken Pro charges 0.08% on the same tokens. Robinhood Wallet charges 0.8% for swaps, plus another 0.05% for the router. Issuers cannot make money on any route. Depending on which application you open on the same exchange, you could earn 10 dollars or 80 cents. Premium users generate much larger trading volumes, thus much lower rates. Applications forgo fee differentials to have high-value clients.

Ondo shows another side: it "rents" customers from partners. This summer, Bitget paid customers to swap Ondo tokens for their own tokens. Bitget claims it handled 89% of Ondo’s tokenized stock trading volume in December 2025.

Nineteen types of Nvidia stock tokens

The second place where money is collected is the default token of each stock. Nvidia exists in the form of 19 contracts, 8 issuers, and 11 chains. Lending markets and perpetual venues only accept a few, and liquidity will concentrate on accepted standards.

Lenders hold 40% of the xStocks Nvidia token on Solana, 10% of the Robinhood version, and less than 1% of the Binance version. On Solana, xStocks are accepted collateral by Kamino, Jupiter Lend, and Bybit, also possessing DEX liquidity. Stablecoins have integrated in this way, with USDT and USDC now accounting for 82% of the supply. Ultimately, we expect that there will be two or three tokens for each stock. Currently, xStocks is most qualified to become the USDC of stock tokens.

Everyone wants to be a broker, until no one needs brokers

The least advantageous position is the chain and custodians.

The chain has already been commoditized. In the 30 days to October 5, Robinhood Chain's gas fees dropped 98%, yet the balance of stock tokens did not change. Will chains become equivalent to brokerages, making a few basis points on each trade? We do not think so.

Custodians seem to be making no money at all. No Alpaca clients have disclosed payment of custody fees. It makes money through order flow and stock lending, then shares a portion downstream. Binance receives half of Alpaca's order flow revenue and 65% of stock lending profits. Its weakness is being easily replaceable, and customers are starting to have their own brokerages. Binance has Nest Trading but still routes orders to Alpaca; Ondo bought the brokerage Oasis Pro. Transfer agents can fully replace custodians.

If you want to bet, first ask who is making money and what you own

If you want to participate in this trend, the most direct starting point is to see who is making money when you use stock tokens. Robinhood and Binance already have customers. xStocks are making tokens accepted by lenders and competing exchanges. Hyperliquid is trying to tell you how much a stock is worth when Bloomberg terminals are down.

But every advantage comes with conditions. You may be able to borrow against Nvidia at any time, but once the loan is liquidated, someone must buy it off. Your token is only as good as the underlying claim. We also know issuers may fail. Traditional brokers may ultimately provide the same benefits without offshore wrappers.

Even if you pick the right business, you still need to ask: what exactly do you own? Does the asset you purchased entitle you to successful revenue sharing? Owning a token related to a growing business does not automatically grant you profit-sharing rights. Moving billions of dollars worth of stock onto the chain does not guarantee how much gas revenue will be generated.

Next, we must watch how investor behavior changes. Will they collateralize loans? Will they trade more frequently on-chain? You can certainly buy a token tracking Nvidia's price. But to see the real big money, we need to wait for it to find sufficient utility.