The New Trend of Stock Tokenization: Opportunities and Challenges Coexist

Recently, the tokenization of stocks has become a market hotspot, attracting increasing interest from investors. This article will systematically outline the principles of stock tokenization, explore arbitrage and investment opportunities in the current market, and detail different types of arbitrage logic, operational processes, and potential limitations to help investors better seize market opportunities. At the same time, we will also focus on the opportunities for individual investors in this trend, such as fragmented trading and diversified asset allocation as new pathways. While stock tokenization holds numerous opportunities, challenges remain in technical implementation, price anchoring, and other areas, requiring investors to maintain rational judgment.

The Implementation Mechanism of Stock Tokenization

definition

Stock tokenization refers to the process of converting traditional company stocks into tokens on the blockchain through blockchain technology, allowing them to be held, traded, and combined on-chain. This is essentially a derivative of traditional stocks and does not represent direct ownership of the stocks; therefore, the value and risks of stock tokens are closely related to the underlying stocks.

mainstream implementation path

Currently, there are three main structures for stock tokenization:

1. Third-party custody + exchange integration: Real stocks are held by a third-party institution and tokens are issued, with the exchange responsible for front-end display and trade matching. This structure has high transparency and can better anchor stock prices.

2. Licensed Brokers + Proprietary Blockchain: Licensed institutions provide a complete issuance, settlement, and self-custody cycle on their own blockchain, which has high compliance but also high technical and legal complexity.

3. Contract for Difference (CFD) structure (: Users are trading contract products linked to stock prices, rather than actually holding the stocks. These products do not have underlying asset support and face significant decoupling risks.

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Arbitrage Opportunities in Stock Tokenization

Currently, the market mainly consists of stock tokens issued by third-party custodians. These types of tokens are priced based on underlying real stocks, have strong anchoring attributes, and relatively lower investment risks.

According to data platforms, as of July 9, 2025, the total market value of stock tokens is $422 million, while the market value of just Nvidia's stock reaches $39 trillion. This indicates that compared to the traditional stock market, the liquidity of stock tokens is severely lacking.

Insufficient liquidity combined with time differences in trading leads to a certain divergence between the token prices and their corresponding stock prices on different platforms and during different periods, thus creating arbitrage opportunities. The following introduces three classic arbitrage strategies applied to stock tokens.

) Hedging arbitrage between the spot market and the token market

Arbitrage Principle

When the token exchange and stock market open simultaneously, if the token price is significantly higher than the spot stock price, arbitrageurs can buy the spot stock while shorting the corresponding stock token in the token market. If the price later returns to normal, arbitrageurs can profit from the price difference by selling the spot and buying back the token to close the position. The reverse is also true.

Arbitrage Operation Process

For example, at a certain point in time on July 9, 2025: the spot stock price of Nvidia ### NVDA ( is $160.00, while on a certain trading platform, the stock token corresponding to NVDA, NVDAX, is quoted at $160.40.

There is a positive price difference of $0.40 between the two, meaning the Token price is higher than the spot price. Arbitrageurs can execute the following operations based on this:

1. Buy NVDA spot stocks to lock in low-priced assets;
2. At the same time, short-sell NVDAX stock tokens on the token platform to short overvalued assets at a high price.
3. Continuously monitor the price trends and order book depth of both markets;
4. When the prices of the two markets revert and approach $158.00:
   • Spot stocks bought before selling in the traditional market;
   • Open a spot order in the token market to replenish short positions and complete the hedging liquidation;
5. Each share achieves risk-free arbitrage, with profits derived from the initial price difference, resulting in a profit of $0.22 after deducting fees.

)# Arbitrage Conditions

Hedge arbitrage is highly sensitive to slippage and transaction fees, and requires quick identification of buy and sell signals for execution. It is suitable for quantitative institutions with high-frequency trading capabilities to achieve lower transaction fees.

arbitrage on price differences of the same stock Token between different exchanges

Arbitrage Principle

Arbitrage across exchanges is one of the most classic types of crypto arbitrage. Its principle is to buy tokens on a trading platform where the price is low, withdraw them, and sell them on a trading platform where the price is high. If the price difference between different exchanges is large enough that, after deducting fees, there is still profit, the operation can be executed.

Arbitrage Operation Process

Assuming the price of a certain Token on exchange A is 100 USDT, and the price on exchange B is 103 USDT.

Arbitrageurs can buy tokens on exchange A, then transfer them to exchange B and sell them for around 103 USDT to complete the arbitrage. After deducting the buying fees, withdrawal fees, and selling fees, there is still a profit.

Arbitrage Conditions

Arbitrage of this type is limited by factors such as on-chain transfer speed, withdrawal restrictions, exchange deposit times, and trading pair depth. If on-chain transfers are involved, network congestion and delays must be considered. Arbitrageurs often need to use pre-stored liquidity, quantitative trading, and multi-account collaboration to achieve "risk-free arbitrage."

time difference arbitrage

Arbitrage Principle

Traditional stock settlements typically have a delay of T+2 or longer, while the trading and settlement of tokenized stocks are based on blockchain, theoretically enabling settlement in minutes or even seconds. Arbitrageurs can take advantage of the settlement time difference to engage in arbitrage using the immediate price adjustments in the token market before the traditional stock settlement is completed.

For example, the opening hours of traditional markets are from Monday to Friday 09:30-16:00, while the cryptocurrency market operates 24/7 without interruption. This means that during non-trading hours, such as weekends and pre-market or after-hours, the prices of stock Tokens may experience significant fluctuations driven by news events, while the actual stock prices have not yet adjusted, providing a brief arbitrage window. Pre-market information arbitrage is one of the main forms of time difference arbitrage, for instance, news such as earnings releases, geopolitical events, and favorable macro policies can cause Tokens to rise or fall before spot prices.

Arbitrage Operation Process

1. Arbitrageurs deploy monitoring systems or rely on news sources to capture significant news during non-trading hours, such as a company releasing strong quarterly earnings, a country's central bank raising interest rates, or escalating international geopolitical conflicts.

2. Analyze the direction and magnitude of the impact of the news on related stocks, which can usually be estimated by backtracking historical events. If the news is judged to be positive, immediately buy the related stock tokens on the token platform; if judged to be negative, you can short the related stock tokens.

3. Wait for the spot market to open before closing the position: If the actual stock price moves towards the arbitrage direction, choose the right time to close the position after the spot market opens; or wait for the Token price to return and close the position in the token market when it is in line with the spot price to capture the price difference.

Arbitrage Conditions

Arbitrage opportunities of this kind often last only a few minutes or even seconds, requiring a high-performance news push system and automated trading response. Additionally, attention must be paid to the accuracy of the news source to avoid misjudging investment direction due to false news.

In addition, stock tokens can also be applied in some classic arbitrage strategies, such as triangular arbitrage, funding rate arbitrage, etc.

Opportunities for Individual Investors

Arbitrage often requires very high demands on investors' skills, capital, and speed of information acquisition, making it more suitable for professional investors. However, there are also opportunities for individual investors amid the wave of stock tokenization.

purchase fractional shares

In traditional securities, some markets have a minimum purchase of 1 share, while others have a minimum of 100 shares. Investors who want to buy stocks from leading companies like Google, Amazon, and Tesla often have to pay a high price per share, which can be a significant burden, especially for beginner investors. However, after stock tokenization, a share can be divided into smaller units, such as 0.1 shares or even 0.001 shares.

For example, the current price of NVIDIA stock NVDA is $162.88, and a minimum purchase of one share is required. On a certain token trading platform, the minimum purchase is 0.001 shares, which means that only 0.16 USDT is needed to hold the NVIDIA stock Token.

( Diversified Asset Allocation

The 24/7 trading system allows users to trade anytime without worrying about opening hours, enabling diversified asset allocation and the configuration of various assets to resist regional financial risks.

) lower transaction costs

In traditional stock market trading, intermediaries often charge various fees. However, trading tokenized stocks through the decentralized trading platform ###DEX### can significantly reduce transaction costs, minimizing wear and tear for investors. For example, stock brokerage trading fees range from 0.1% to 0.5%, while on certain trading platforms, the fees are only 0.025% to 0.1%.

Risks and Challenges

While stock tokenization arbitrage offers investors unprecedented cross-market and high-efficiency trading opportunities, different arbitrage paths themselves also contain various risks.

The core basis of the above arbitrage is that the prices of different financial products based on the same underlying asset tend to revert. If the price difference does not converge and instead continues to widen, investors will face losses. Therefore, investors need to manage their positions and control risks effectively. Additionally, there are common risks in arbitrage such as slippage risk, delay risk, and transaction fees eroding profits.

There are still unique systemic risks associated with trading stock tokens:

• Oracle and Price Decoupling Risk: Most stock Tokens rely on oracles or centralized matching systems to update prices. If a malfunction, delay, or attack occurs, it could lead to severe fluctuations in token prices or permanent decoupling.

• Legal and Challenges: In most jurisdictions, stock tokens have not been clearly defined, and arbitrageurs may unknowingly encounter risks such as unregistered securities trading and cross-border flow of foreign assets.

Conclusion

Stock tokenization is not only a technology-driven practice of asset on-chain but also a typical path for the crypto market to penetrate "real world assets" ### RWA (. The emergence of this new type of asset offers opportunities for both professional and retail investors. Investors can choose different investment strategies based on their own characteristics. It is important to note that stock tokens also face systemic risks such as price decoupling and legal challenges, and investors need to closely monitor the security of the underlying assets.

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