Two Models of Stock Tokenization: The Game Between Open DeFi and Walled Gardens

Stock tokenization has become a highly discussed topic in the blockchain field. Currently, there are mainly two different models in the market: the open DeFi model represented by xStocks, and the closed garden model represented by Robinhood. These two models have significant differences in compliance strategies, technical architecture, and business models.

1. The underlying logic of the two modes

xStocks Model: Opening the Road to Decentralized Finance

xStocks adopts a 1:1 asset-backed model, with each Token corresponding to a share of real stock. Its core features include:

• Build a compliance framework in Switzerland and Liechtenstein through a multi-layer legal entity design.
• Use special purpose vehicle ( SPV ) to hold real stocks, achieving risk isolation.
• Integrate with Chainlink to achieve proof of reserves, ensuring transparency.
• Achieve dual-track liquidity on CEX and DEX
• Can freely interact with Decentralized Finance protocols, with strong composability.

Robinhood Model: Compliance-First Walled Garden

Robinhood's stock tokens are essentially a type of financial derivative, characterized by:

• Registered in Lithuania, following the EU MiFID II regulatory framework
• Smart contract embedded with KYC whitelist, restricting token transfers
• Form a closed ecosystem, isolated from open Decentralized Finance protocols.
• Plan to develop a dedicated Layer 2 network Robinhood Chain

2. Differences in Technical Architecture

Selection of underlying public chain

• xStocks chooses Solana, pursuing extreme performance
• Robinhood chooses Arbitrum, inheriting Ethereum's security.

Core Technology Components

• Smart Contract: xStocks is an open SPL, Robinhood is a closed one
• Oracle: Price information and reserve proof are crucial.
• Cross-chain interoperability: xStocks plans to use Chainlink CCIP to achieve cross-chain.

SPV operation process

1. Asset Isolation
2. Token Minting
3. Token Distribution
4. Lifecycle Management
5. Redemption and Destruction

3. Business Model and Risk Assessment

Source of Profit

Robinhood:

• Foreign exchange conversion fee
• Potential order flow payment and value-added services
• Expand the private equity market

xStocks:

• Transaction Fee
• Minting/Redeeming Fee
• B2B Asset Tokenization Services

Main Risks

• Compliance Risk
• Technical Risk
• Liquidity Risk
• Counterparty Risk
• Information Asymmetry Risk

4. Market Landscape and Future Outlook

Major Player Comparison

The market is showing a three-way competitive situation:

1. Open DeFi model: xStocks, Synthetix, etc.
2. Compliance First Model: Robinhood, Securitize, etc.
3. Institutional Driven Model: BlackRock, Franklin Templeton, etc.

Future Trends

• From isolation to integration, connecting TradFi and Decentralized Finance
• Regulation drives innovation, compliance becomes the core competitiveness
• Institutional participation brings liquidity, and products are becoming increasingly diversified.
• Private Equity Tokenization Becomes a New Blue Ocean

Stock tokenization is reshaping the global financial market. Although it faces numerous challenges, its direction of development is irreversible. Market participants need to actively and prudently embrace this financial revolution based on a deep understanding of its underlying logic and potential risks.