Author: ABC Alpha Researcher CG｜Yijian Cyrus_g3

Perhaps because we have been in the Crypto industry for too long, we often think about problems from a Crypto perspective.

The so-called Crypto standard means that no matter what, we will first ask, what is the benefit for Cryptopot? Does Crypto need this? Can it be speculated?

For example, the tokenization of stocks, from the perspective of Crypto, seems to be really useless. How can a stock token with a daily fluctuation of only 1-3% be as exciting as a meme with a daily fluctuation of 300%? Moreover, stock tokens are useless. What is the difference between speculating in the stock market and speculating in the cryptocurrency circle? The narrative is not sexy at all. This stock token comes to the cryptocurrency circle just to compete for liquidity, which is useless. Therefore, Crypto does not need stock tokens at all. This is typical Crypto-centric thinking.

However, the tokenization of stocks may require us to abandon the Crypto standard and try to think in reverse:

Maybe it’s not that Crypto needs stocks, but that stocks need Crypto?

Why?

Consider this:

If you are the CEO of a company that is about to go public, you are now facing two markets:

A market is one that trades 7-8 hours a day, is closed on weekends and holidays, and has strict geographical restrictions (e.g. only European and American investors are allowed).

The other is a 24/7 market that never stops, and any user with Internet access around the world can participate in your stock trading.

Which market will you choose to list in?

Imagine again: What if your stock tokens can not only be used for trading, but can also be used as collateral in lending agreements to borrow USDT very smoothly and conveniently? If you are a dividend stock, it will be even better. Your stock tokens will be combined with more on-chain protocols like stETH, and then packaged into benchmark income products, principal and interest separation products, and various yield products? These products will firmly lock in your stock liquidity, and make your stocks more useful and more hype-worthy.

So, what choice will you make?

I think that the 7*24h+ global borderless trading market alone is attractive enough for the bosses of listed companies who are well versed in trading. Obviously, the second market is that stocks are tokenized and enter the on-chain market in the form of Crypto.

Therefore, the Crypto market may not necessarily need stocks, but stocks may need Crypto, especially stock companies after 2025. Because if you don’t engage in 7*24+ borderless transactions, you will lose a lot of trading time, a lot of users, and a lot of combinable gameplay. Further, you will lose huge liquidity and market. Over time, stocks on the chain with more trading time and more trading users will have more liquidity, and thus ultimately have pricing power.

This is the impact that stock tokenization is having on the traditional stock market.

At this point, many people will surely say: Stock tokenization has been going on for so many years, but it never got off the ground, so why is it suddenly happening now? Is it just another rehash?

Indeed, since 2017, there have been a large number of projects exploring stock tokenization, such as STO issuance platform Polymath, stock token exchange tZERO, and even FTX's stock token experiment, but they have all failed. One of the most obvious reasons is the restrictions of compliance policies, and another important reason is the timing of promotion and the identity of the promoter.

The previous promoters of stock tokenization (before 2024) were mostly native Crypto forces that had not yet become mainstream. Before the Bitcoin ETF was officially passed, before traditional institutions flocked to Crypto, and before the introduction of crypto-friendly policies in the United States, Crypto was still a small, non-mainstream market dominated by retail investors.

However, since 2024, the Crypto market has gradually become government-led, policy-driven, and institutional-led. ETFs have been approved, traditional giants such as BlackRock have entered, and the US government has led crypto-friendly policies one after another. The time and place have changed, and it depends on who will step in to promote it.

So, what are the differences between this time’s promoters of stock tokenization and previous ones?

Let’s take a look at a partial list of two groups of institutions that are currently pushing for stock tokenization:

Group 1: Robinhood, Coinbase, Kraken

Group 2: BlackRock, Goldman Sachs, JP Morgan

The first group is easier to understand. As a new stock brokerage platform for retail investors, Robinhood has been diverting users from traditional stock markets such as Nasdaq, NYSE, and Euronext (Europe's largest stock exchange). Robinhood's vigorous promotion of stock tokenization is a continuation of its original strategy to continue to erode the market share of traditional stock trading through stock tokenization. Crypto exchanges such as Coinbase and Kraken are expanding the traditional stock market through stock tokenization in addition to Crypto.

The institutions in the first list are all obvious competitors of the traditional stock market. However, their scale is still very small compared to traditional stock trading markets such as Nasdaq, NYSE, and Euronext, and they do not even pose a threat.

However, the second set of lists is not so simple.

Let's take a look. BlackRock is the world's largest asset management giant, managing more than 11.5 trillion US dollars in assets; JP Morgan manages 3.5 trillion US dollars in assets, and Goldman Sachs manages 2 trillion US dollars in assets. The three companies together control more than 17 trillion US dollars in assets. What does 17 trillion mean? The total market value of the world's top 10 stocks is about 20 trillion, and the assets managed by the three companies are close to 85% of that.

They hold huge amounts of money (huge liquidity) and are the largest institutional users of traditional stock markets such as Nasdaq and NYSE. Among them, ETFs managed by BlackRock alone account for 35% of the total size of the US ETF market.

Not only that, they are also the largest investment bank and stock broker.

It can be said that these asset management giants not only have money (control liquidity), but also have the stock issuance rights of a number of quasi-listed companies and a large number of institutional trading users. The only thing they don’t have is the stock trading market. (Although BlackRock is also a shareholder of the New York Stock Exchange, it is not their own after all).

As we all know, the asset trading market is the liquidity center and the fattest piece of meat in the financial market (mainly because of its extremely high net profit margin), and it is absolutely at the top of the food chain.

In the traditional financial market, no matter how rich and powerful these asset management giants and investment banks are, they have no chance to take over the fat piece of meat in the stock trading market. However, now that blockchain and Crypto have emerged, a new 7*24h+ borderless global trading market has emerged, and since 2024, US policies have begun to give the green light to this market. So, will these giants give up this opportunity to overtake on the curve?

Of course not.

Stock tokenization is the first step for these asset management giants to transfer traditional stock assets to the chain. To this end, they will also build their own blockchain (JP Morgan is building a dedicated chain Quorum, but in the end it will most likely have to return to mainstream blockchains such as Ethereum and Solana), launch a series of stock-based on-chain financial products, build an on-chain liquidity market, and even build their own stock token exchanges.

If Robinhood, Coinbase, Kraken and other exchanges are directly competing with the traditional stock market for food by tokenizing stocks, then BlackRock, Goldman Sachs, JP Morgan and other asset management giants, top investment banks and top brokers are directly taking away liquidity, stock issuers and even trading users, and then starting a new business on the chain. It can be said that this is a gradual removal of the source of funds for the traditional stock market.

In the face of huge interests, nothing can stop the giants as long as policies do not hinder them.

This is the real reason why giants such as BlackRock, Goldman Sachs, and JP Morgan have stepped in to promote stock tokenization. Although it is just getting started, once it really starts, it will develop in an irreversible direction.

So, what’s the difference between this wave of stock tokenization and previous ones?

The timing has changed (institutions have entered the market), the geographical advantages have changed (policy support has been provided), and the people driving the trend have also changed (the giants who could compete with the stock market for a piece of the pie have personally entered the market).

Therefore, this wave of stock tokenization is indeed different from previous ones.

So, are on-chain stocks really more attractive than traditional stocks?

In other words, does on-chain finance really have more advantages than traditional finance?

Of course, the chain is more attractive and has more advantages.

In addition to the 7*24h+ borderless global trading market that we have repeatedly mentioned above, on-chain finance has another very important advantage. On-chain is more cost-effective and efficient than off-chain, and it creates maximum capital efficiency.

You should know that the biggest operating cost in the traditional financial market is the cost of bookkeeping and settlement. Bookkeeping alone involves accounts for regulators, tax authorities, internal management, and users. According to statistics, the annual bookkeeping costs of Nasdaq and NYSE account for about 15%-20% of their operating costs, or about 300-400 million US dollars per year.

The settlement and clearing process requires payment of fees to intermediaries such as DTCC. It is estimated that the annual settlement and clearing costs of Nasdaq and NYSE account for about 20%-45% of the operating costs, about 400-600 million US dollars per year. In addition, the settlement time of US stock intermediaries is T+2, and it is impossible to achieve T+0 real-time settlement, which can be said to be high cost and low efficiency.

After the stock tokenization, everything is too simple. All the ledgers are completely open and reliable on the chain. Whether it is external accounts or internal accounts, everything is on the chain, and the bookkeeping cost is almost zero, and the credibility is very high; settlement and liquidation are also carried out in real time on the chain, and users only need to pay Gas. The bookkeeping cost, settlement and liquidation cost and settlement time are greatly reduced. This is the cost reduction and efficiency improvement brought by Crppto technology.

In addition to reducing costs and increasing efficiency, on-chain finance not only provides a 24/7 global borderless trading environment, but also brings about a financial market that maximizes capital efficiency.

Since on-chain finance completely breaks the limitations of traditional financial markets in terms of transaction time (time), geographical access (space), and settlement efficiency (speed), it completely releases capital energy in the three dimensions of time, space, and speed.

Let's make a rough estimation model: assuming that the average transaction time was 8 hours before, and now it is 24 hours, the time dimension is *3; the regional access is changed from the local market to the borderless market on the chain, we roughly calculate it as 3 times larger, the space dimension is *3, and the settlement efficiency is changed from the previous T+2 to the current T+0, we roughly calculate it as 3 times higher, the speed is *3. Then, the capital efficiency of on-chain finance is roughly 3*3*3=27 times that of traditional finance.

In addition, on-chain finance has extremely flexible composability, and various nested on-chain financial protocols can further unleash the efficiency of capital.

Therefore, faced with such an on-chain financial market that can both reduce costs and increase efficiency and maximize capital efficiency, traditional giants have of course withdrawn. No wonder BlackRock CEO Larry Fink personally said, "In the future, stocks and bonds will run on a single universal ledger (Blockchain)."

Promoting the tokenization of stocks is only the first step. To realize a complete on-chain financial market, a complete and thorough new financial movement is needed, which we will tentatively call the "trans-temporal and spatial asset movement."

What is "super-temporal and spatial asset movement"?

Because on-chain finance completely surpasses traditional finance in the three dimensions of time, space, and speed. The chain is building a parallel financial universe that transcends time and space and is open to global users and never stops.

Therefore, we call the process of transferring off-chain assets to the chain the movement of assets beyond time and space, or "trans-time and space asset movement" for short.

The tokenization of stocks is one part of this movement. This movement also includes fiat stablecoins, bond tokenization, and a large number of alternative assets such as people's attention (memes and meme-like assets). Due to space limitations, we will not go into details. In early 2025, I wrote an article that roughly described the process and scale of various types of assets on the chain after Trump took office. You can click to read: https://x.com/Cyrus_G3/status/1881245034361815154

Of course, this hyper-temporal asset movement is currently facing a series of challenges:

For example, current stock tokens are more like on-chain stock derivatives and lack rights such as voting rights and dividend rights; the current liquidity of stock tokens is still very low compared to traditional stock markets; laws and regulations on stock tokenization are still being improved, etc. These are some of the challenges this movement is facing.

Of course, where there are challenges there are opportunities.

For example, Swarm Markets' s-Tokens have been recognized by the traditional financial system through ISIN coding, which can allow future stock tokens to have more complete stock-equivalent rights; and Dinari 's dShares has obtained a US transfer agent license, which can allow stock tokens to have direct liquidity on traditional stock exchanges. These are all very valuable explorations.

With the continuous influx and promotion of giants such as BlackRock, Goldman Sachs, JP Morgan, etc. with high-quality assets, liquidity and even institutional users, I believe these problems will be solved one by one.

Every technological revolution is a revolution of reducing costs and increasing efficiency. On-chain finance built on the blockchain completely crushes off-chain finance in terms of reducing costs and increasing efficiency. Once this advantage and trend is established, stakeholders will naturally spare no effort to promote it.

In short, this trans-temporal asset movement has begun, and 2025 is just the first year.

Finally, let’s return to the original Crypto.

What opportunities does this wave of hyper-temporal asset movement bring to Crypto practitioners? Which tokens are worth paying attention to?

First of all, the hyper-temporal asset movement requires a decentralized asset issuance and trading environment that is widely adopted, that is, a mainstream public chain that supports smart contract functions. Then, looking at the entire Crypto field, only Ethereum and Solana can take on this task. Ethereum has a more complete on-chain financial infrastructure and a larger scale of asset accumulation. As a representative of high-performance on-chain finance, Solana has also captured a large number of users and funds. Although there are also some new public chains eager to try, in terms of consensus strength and scale of adoption, only $ETH and $SOL are currently the most worthy of attention.

Then, there are some of the existing leading on-chain financial protocols, such as the largest on-chain lending protocol AAVE, the largest principal and interest separation protocol Pendle, and the largest on-chain contract protocol Hyperliquid. These protocols can now support mainstream Crypto assets and will support stock tokens in the future. Imagine that you can borrow USDT on AAVE by staking Tesla stock tokens; you can also separate the principal and interest of dividend stock tokens on Pendle; and open a 50x long/short order on Nvidia on Hyperliquid.

If you are starting a business, it may be an opportunity to develop an on-chain financial protocol that specifically supports stock tokens, such as on-chain contract protocols, lending agreements, and other infrastructure specifically for stock tokens.

So, do altcoins still have a future?

I can almost say with certainty that all altcoins that have not become on-chain financial infrastructure or core components will officially enter the endless darkness when the hyper-temporal asset movement ushers in the dawn.

Finally, what happens to Bitcoin?

Bitcoin has always been an existence above this system. The logic of Bitcoin has not changed. It is the value anchor of the on-chain financial world, digital gold, and the only currency in the on-chain world.

The continuous printing of legal currency by countries around the world and the ever-expanding scale of M2 are the biggest driving forces for the rise of Bitcoin.

If there is no upper limit to the size of M2, then there is no upper limit to the price of Bitcoin.

Finally, ask yourself:

How will you participate in this vigorous trans-temporal and trans-spatial asset movement?