Comparison of Stock On-Chain Models: Different Paths of xStocks and Robinhood

Recently, stock on-chain has become a hot topic in the community, with the models of xStocks and Robinhood being particularly noteworthy. xStocks demonstrates higher openness and composability, allowing ordinary users to trade freely on-chain; while Robinhood follows strict compliance requirements, only open to users of exchanges in the EU region, and restricts transfers to non-compliant addresses. This article will explore the characteristics of these two models in depth through multiple sets of data.

xStocks Mode Analysis

transaction status

xStocks currently supports 61 stocks, of which 10 have generated on-chain transactions. As of July 2, the cumulative trading volume of SPY, TSLA, CRCL, MSTR, and NVDA has exceeded $1 million. AAPL, GOOGL, QQQ, META, and AMZN also have user participation in trading.

After gaining support from certain trading platforms, the trading volume of xStocks stock tokens has significantly increased. It reached a peak on July 1, with a trading volume of 6.641 million USD, over 6,500 trading users, and more than 17,800 transactions. Among them, the daily trading volumes of TSLA, SPY, and CRCL all exceeded 1 million USD.

Issuance Mechanism

xStocks adopts a model where 1 token corresponds to 1 share of stock. Professional or compliant investors can apply to become primary investors, purchase stocks through specific institutions, and then mint the corresponding number of stock tokens to return to the investors. Primary investors can issue and redeem stock tokens at any time. Among the 10 existing xStocks stock tokens traded, NVIDIA, Circle, and Tesla have the highest total token amounts, each exceeding 10,000 tokens.

liquidity supply

The liquidity of xStocks mainly relies on the market makers of the trading platform. The trading platform not only provides a distribution channel for stock tokens but also utilizes its own market maker resources to provide liquidity. The trading activity and the depth of the liquidity pool mutually promote each other; the larger the trading volume, the stronger the willingness to provide liquidity. For example, the SP500 (SPY), which has the highest trading volume, has reached a USD 1 million liquidity based on USDC on-chain, surpassing the market value of the issued stock tokens.

Future Development Direction

xStocks may refer to similar projects on EVM networks in the future, collaborating with public chains and mainstream decentralized exchanges, using third-party protocol tokens to incentivize and guide the liquidity of stock tokens. It is currently known that xStocks is collaborating with decentralized exchange aggregators and lending protocols within the Solana ecosystem.

Robinhood Mode Analysis

token deployment

Robinhood has chosen to issue stock tokens on the Arbitrum network, having 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 a dedicated chain called Robinhood Chain based on Arbitrum.

non-listed company stock tokens

Robinhood announced that it will launch the world's first tokenized stocks of private companies, including OpenAI and SpaceX. This move could allow cryptocurrency users to access shares of upcoming public companies 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 an approved wallet registry (KYC/AML). These tokens may not be able to interact with decentralized finance protocols, but centralized finance platforms may benefit. Even EU users who purchase stocks on-chain cannot transfer stock tokens to non-registered addresses; such transfers will be blocked by the system.

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 stock tokens with set metadata have undergone small-scale minting.

By comparing the stock on-chain models of xStocks and Robinhood, we can see two distinctly different approaches. xStocks pursues openness and composability, while Robinhood focuses on compliance and control. These two models each have their advantages and disadvantages, reflecting different ideas in the current integration of blockchain and traditional finance. In the future, as technology develops and regulatory environments change, these two models may gradually merge, providing users with more diversified stock investment options.