The Tokenization Storm in US Stocks: Emerging Platforms Facing Crisis of Confidence and Operational Challenges

Recently, the concept of tokenization of US stocks has rapidly gained traction in the cryptocurrency circle. Several well-known exchanges have announced support for tokenized stock trading of companies like Apple, Tesla, and NVIDIA, attracting widespread attention in the market. However, behind this wave of enthusiasm lie potential risks and controversies.

A market news has raised questions about the background of a certain stock tokenization platform. It is reported that the three co-founders of the Israeli company behind the platform previously worked at a bankrupt blockchain project. This bankrupt project raised approximately $30 million through multiple rounds of financing between 2017 and 2018, but shut down at the end of 2022 due to depleted funds. More concerning is that the project was accused of a "soft exit," with its issued Tokens significantly depreciating after the bull market in 2021.

Nevertheless, this emerging stock tokenization platform still offers a set of actionable operational mechanisms. The platform purchases actual stocks in the U.S. stock market and stores them in designated custodial accounts. Subsequently, the platform will mint the corresponding number of Tokens on the Solana blockchain to achieve a 1:1 mapping relationship. Investors can buy and sell these Tokens on major trading platforms and can even apply to convert the Tokens into actual stocks.

However, this operational model still has many problems. First, the platform's liquidity is severely insufficient, with only 6000 tokens provided for each stock, leading to price fluctuations far exceeding those of the actual stock market. Second, the high transaction fees and management fees make holding on-chain stocks more expensive than real shares. In addition, the collateralized stocks are held by off-chain institutions, lacking public audits and posing potential risks. More importantly, these tokenized stocks do not grant actual shareholders voting rights.

Some market observers have pointed out that these types of projects seem to combine the "Buddhist" characteristics of European projects with the capital operation capabilities of American projects, but the protection of user rights appears to be insufficiently emphasized.

With the continued development of the tokenization concept in the US stock market, market participants need to assess the related risks more cautiously, while regulatory agencies may also need to intervene to ensure that investors' interests are fully protected. In the future, finding a balance between innovation and risk control will be an important issue faced in this field.