Tokenised debt helped DeFi survive the 2021 to 2022 bear market, but a pivot to tokenised stocks could boost the $115 billion crypto sector’s next growth phase.
That’s according to a Monday report by Wintermute, a crypto market maker, that said market conditions necessary to incentivise the pivot are already emerging.
The report said central banks are likely to lower interest rates in the next 12 to 18 months, which could dampen bond yields and other debt instruments.
And Robinhood is positioning itself to capitalise on the market shift as the fintech app debuted tokenised stock trading for its users in June.
“Robinhood’s timing is significant,” Wintermute said. “As the yield trade loses momentum, tokenised equities, less dependent on interest rate dynamics, could emerge as the next major driver of onchain adoption.”
Tokenised equities don’t rely on interest rate gymnastics, the way bonds do. Instead, they offer volatility, growth, community, appeal, and retail excitement.
Retail excitement has been noticeably absent from DeFi since the height of its buzz in 2021.
Making a splash
But for now, tokenised stocks remain a tiny slice of DeFi’s real-world asset, or RWA, pie.
They account for only $424 million out of the $25 billion RWA market, which is mostly dominated by tokenised credit, Treasuries, and other low-velocity debt instruments.
And while Robinhood has made a splash, competition is brewing.
Crypto-native rivals like Kraken and Bybit are also ratcheting up their tokenised stock trading offerings, while Ondo Finance has sought regulatory approval to buy Oasis Pro, a regulated broker.
Coinbase has also applied to the Securities and Exchange Commission for approval to offer tokenised stock trading.
For Wall Street incumbents, tokenised stock trading could upend the status quo and push them to play second fiddle in their own arena, according to Galaxy Digital analysts.
Last week, the crypto firm warned that fintech disruptors like Robinhood and crypto-native players like Coinbase and Kraken moving into tokenised equities could reduce titans like the New York Stock Exchange to “mere custodians.”
And traditional firms like JPMorgan, Wells Fargo, and Citigroup are already scrambling to adapt by launching stablecoin and tokenisation platforms.
Still, Galaxy Digital analysts say the market edge will lie with participants that not only offer trading but also control the underlying blockchain infrastructure.
Crypto market movers
- Bitcoin is up slightly by 0.1% over the past 24 hours and is trading at $108,832.
- Ethereum is also up slightly by 0.5% in the same period to $2,575.
What we’re reading
- A digital euro will be a poor and crippled substitute to stablecoins — DL News
- Jack Dorsey Tests Decentralized Messaging App Bitchat — Unchained
- 3 factors impacting crypto this week — Milk Road
- Vitalik’s EIP-7983 Calls For 16.77M Gas Cap Per Transaction — Unchained
- Solana bot platform Axiom takes over AI coder Cursor with $150m revenue fuelled by airdrop hype — DL News
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com.