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xStocks and Robinhood: A Comparative Analysis of Open Ecological and Closed-loop Compliance for Stock Tokenization
Two Models of Stock On-Chain: Open Ecology and Closed Loop Compliance
Recently, stock tokenization has become a hot topic, with Backed-supported xStocks and Robinhood's model being the most notable. The xStocks model demonstrates higher openness and composability, allowing ordinary users to trade freely on-chain. In contrast, Robinhood is only open to users of exchanges in the EU while strictly adhering to compliance requirements, and transfers to non-compliant addresses are not allowed. Let's delve into the characteristics of these two models through a series of data.
xStocks Mode Analysis
Trading Status
xStocks currently supports 61 stocks, 10 of which have already generated trading volume on-chain. Despite being launched for a short period, as of July 2, SPY, TSLA, CRCL, MSTR, and NVDA have accumulated over 1 million dollars in trading volume. In addition, AAPL, GOOGL, QQQ, META, and AMZN have also seen user trading.
After receiving support from certain trading platforms, the trading volume of xStocks' stock tokens has seen significant growth. On July 1, the trading volume reached 6.641 million USD, with over 6,500 trading users and more than 17,800 transactions. Among them, the daily trading volume of TSLA, SPY, and CRCL exceeded 1 million USD.
Token Minting Mechanism
xStocks uses a mechanism where 1 token corresponds to 1 share of stock. Professional investors or compliance investors can apply for an account to purchase stocks through Backed, which will assist these primary investors in buying through brokers and will hold the purchased stocks in a third-party institution. Subsequently, Backed will mint the number of purchased stocks into the corresponding number of tokens through xStocks and return them to the primary investors. Currently, among the 10 xStocks stock tokens that have existing trading, the total number of tokens for NVDIA, Circle, and Tesla is the highest, each exceeding 10,000 tokens.
Liquidity Source
The liquidity of xStocks mainly relies on the market makers of the exchange. Collaborating with the exchange not only provides a distribution channel for stock tokens but also makes the exchange an important part of the primary issuance, utilizing the resources of the exchange's market makers to provide better liquidity. Trading activity and the depth of the liquidity pool complement each other; the more active the trading, the more entities provide liquidity. For example, the SP500 (SPY), which has the highest trading volume, has reached a USDC-based liquidity of 1 million dollars on-chain, even exceeding the market value of the issued stock tokens.
Liquidity Incentives
xStocks is actively collaborating with DeFi protocols on Solana, including the DEX aggregator Jupiter and the lending protocol Kamino. In the future, it may refer to the bStocks model, which is also backed and issued on EVM networks, collaborating with public chains and mainstream DEXs, using third-party protocol tokens to incentivize and guide the liquidity of stock tokens.
Robinhood Mode Analysis
Token Deployment
Robinhood has chosen to issue its stock tokens on Arbitrum, and has currently deployed 213 types of tokens, with a total deployment cost of only $5.35, averaging just $0.03 per token. The low transaction fees are one of the important factors for Robinhood's choice of Arbitrum. In the future, Robinhood plans to develop its own proprietary chain, Robinhood Chain, based on Arbitrum.
non-listed company stock tokens
Robinhood EU has announced the launch of the world's first tokenized stocks for private companies, including OpenAI and SpaceX. This move may position the cryptocurrency market as a pre-market for high-potential private company stocks, allowing crypto users to access upcoming public offerings earlier than traditional stock market investors. Currently, Robinhood has minted 2,309 OpenAI (o) tokens.
Compliance requirements
Robinhood's stock token contracts embed strict Compliance requirements. Each transfer requires a check against the approved wallet registry (KYC/AML), and these tokens may not be able to interact with DeFi, but centralized exchanges with distribution capabilities may benefit. Even EU users who purchase stock tokens on-chain cannot transfer the stock tokens to other non-registered addresses; such transfers will be blocked.
upcoming token
In addition to OpenAI, Robinhood has set metadata for 79 deployed stock tokens, including stocks like Robinhood Markets, Trump Media & Technology Group, GameStop, as well as ETFs like Schwab US Dividend Equity ETF and Yieldmax MSTR Option Income Strategy. Some of the stock tokens with set metadata have undergone a small amount of minting.