Stocks Can Become 'Tokens'? A Guide to the New Trend of US Stock & ETF Tokenization and RWA

Recently, news about fintech company Ondo Finance launching over a hundred tokenized U.S. stocks and ETFs on the blockchain has garnered widespread attention in the tech and financial circles. You might be wondering, what does this all mean? Why put familiar assets like stocks and funds onto the seemingly complex blockchain?

Don't worry, this article is the beginner's guide you need. We'll use the simplest analogies and examples to help you easily understand the new concept of "asset tokenization" and how it's quietly changing the way we interact with real-world assets.

A First Look at Asset Tokenization: Ondo's 'Digital Magic'

Imagine you hold a physical stock certificate, representing your partial ownership of a company. In the traditional model, trading it involves multiple intermediaries, cumbersome procedures, and strict time constraints.

Now, "asset tokenization" is like casting a "digital spell" on this physical certificate. It uses blockchain technology to convert the stock's value, ownership, and other information into a "digital certificate," or "token," that can flow freely on the blockchain. This process is similar to depositing cash into a bank; the numbers in your account represent your money and can be transferred or used for payments at any time.

Ondo Finance's initiative involves tokenizing over 100 major U.S. stocks and ETFs on blockchains like Ethereum, with plans to expand the asset range to thousands within the year. This large-scale application means that users in more parts of the world may have easier access to these previously high-barrier assets.

Breaking Down Barriers: Why Bring US Stocks and ETFs to the Blockchain?

You might ask, we already have a mature securities trading system, so why go through this extra trouble? The answer lies in "breaking down barriers."

For a long time, global users wanting to participate in the over $60 trillion U.S. securities market have often faced high fees, complex account opening processes, and trading time restrictions. For instance, if you're in Asia, it can be inconvenient to trade when the U.S. market opens late at night.

After these assets are "tokenized," the situation changes dramatically:

• 24/7 Trading: Blockchains never close, theoretically enabling round-the-clock trading (though asset price updates may still be influenced by traditional market hours), allowing global users to participate at their convenience.

• Lowering Barriers to Entry: In traditional trading, some high-priced stocks are prohibitive for ordinary people. After tokenization, stocks can be "sliced" into very small fractions for trading, for example, buying just 0.01 of a share, significantly lowering the entry threshold.

• Increased Efficiency: Transactions on the blockchain can bypass many traditional intermediaries, leading to faster settlement times and lower transaction costs.

Simply put, this move aims to make the flow of high-quality assets as seamless as sending an email, transcending time zones and geographical limitations.

Tech Deep Dive: How is the Security and Compliance of On-Chain Assets Ensured?

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