Grayscale: Tokenized stocks will evolve through “three major phases”

Author | Grayscale Research Head Zach Pandl

Translation | Wu Shuo Blockchain

Original article link：

The tokenization of global stock markets is advancing. Tokenized stocks are expected to offer users multiple benefits, including 24/7 trading. The next major development will be DTCC [1] launching a tokenized pilot on Canton Network [2]. The pilot will enable tokenized stocks and other assets to be transferred within a regulated financial system via blockchain infrastructure.

We believe that stock market tokenization will progress in three stages, and each stage will create value for different types of blockchain infrastructure (see Chart 1).

The first stage is the third-party “wrapper model” [3]. In this model, issuers hold shares through a special purpose vehicle (SPV) [4], and the tokenized shares represent claims to the SPV’s equity. Currently, by market value, more than 70% of tokenized stocks use this model. Wrapped tokenized stocks do not represent true stock ownership, but they can be used in DeFi and may also be attractive to retail investors. These assets are currently traded on networks such as Ethereum, Solana, and BNB Chain.

The second stage is the “entitlement model” [5], and DTCC’s pilot is a representative example of this approach. Instead of creating new versions of securities, DTCC uses its regulated post-trade infrastructure to put existing eligible securities on-chain, while Canton Network will serve as the first blockchain network for this pilot.

The third stage is the issuer-led model, in which companies issue securities natively on-chain. Last week, Securitize [6] became the first listed company to tokenize its common stock at the same time it was listed on the New York Stock Exchange. We believe this model has the greatest long-term potential, but it still requires further regulatory clarity. In our view, the issuer-led model will be more favorable to open-architecture blockchains such as Ethereum and Solana, as well as hybrid networks such as Avalanche.

These three tokenization models are likely to coexist over the coming years.

Key takeaway: There are multiple models for tokenized stocks. We believe that blockchain networks most likely to benefit from tokenization growth include Ethereum, Solana, BNB Chain, Avalanche, and Canton Network.

Chart 1: Third-party platforms currently dominate the tokenized stocks market, while Ethereum, Solana, and BNB Chain account for most of the on-chain asset share.

Notes：

[1] DTCC: The Depository Trust & Clearing Corporation, one of the core U.S. post-trade securities infrastructure providers, mainly responsible for post-trade clearing, settlement, and custody services for securities.

[2] Canton Network: A blockchain network for institutional financial assets, mainly emphasizing privacy, compliance, and asset transfers among different financial institutions.

[3] Wrapper model: Can be understood as the “wrapper model,” where a third-party platform holds the underlying shares through an intermediary structure and issues on-chain tokens representing the related entitlements. Investors hold claims to the structure, not necessarily direct ownership of the shares themselves.

[4] SPV: Special Purpose Vehicle, i.e., a special purpose vehicle. In tokenized stocks, it usually refers to an entity set up by the issuer to hold the underlying stock assets, and the token investors hold represents a claim to the entity’s equity.

[5] Entitlement model: Can be understood as the “entitlement model.” It is not about reissuing a new security, but rather recording or mapping existing eligible securities onto the blockchain through a regulated post-trade system, enabling them to be transferred within blockchain infrastructure.

[6] Securitize: A digital securities and real-world asset tokenization platform. The article mentions that when it was listed on the NYSE, it simultaneously tokenized its own common stock.