Author: Cathy, Vernacular Blockchain
On September 17, the SEC issued a five-year pass to tokenized U.S. stocks, allowing the use of liquidity pools to trade tokenized U.S. stocks on the public chain.
Supporting actions are also moving forward. The cumulative transaction volume of the ten stock tokens issued by Coinbase on the Base chain in August has exceeded US$1 billion; on September 23, the New York Stock Exchange and Blockchain.com signed a memorandum to send tokenized U.S. stocks to 44 million crypto accounts.
Regulations have cleared it, the product is on the market, and the card table is set.
But TD Cowen analyst Reid Noch poured cold water on the two sets of samples given in a report on September 18. Figure's stock has two tracks: the traditional listed version and the tokenized version. During the 24-hour observation period, 99.9% of the transactions were traditional stocks, and the tokenized version only accounted for 0.1%. Among Binance’s NVIDIA products, perpetual contracts account for 96% of transactions, while spot tokens account for only 4%.
Out of a thousand yuan, only one yuan bought the stocks on the chain.
Noch’s conclusion is straightforward: American investors already have efficient channels to buy stocks, and tokenized platforms must provide clear benefits to be worth enduring the lack of liquidity. He talked to dozens of issuers, and almost no one was interested except for companies like Figure, which already do business in crypto.
The money did come. But from Binance’s trading volume to Aave’s borrowing pool, there are few people buying stocks.
So where did it go?
01Bulls would rather pay 18% annualized than buy stocks
The first place to go is the US stock perpetual contract.
Binance’s stock perpetual trading volume in August was $342.9 billion. During the same period, Token Terminal counted US$20.9 billion in 30-day transactions of tokenized stocks across the market on decentralized exchanges. Leveraged transactions are 16 times higher than spot. In January, Binance’s perpetual equity trading volume was only $410 million.
Open interest is also rising. According to statistics from Kairos Research on August 26, Binance’s perpetual unilateral open interest in U.S. stocks was US$2.14 billion; by September 25, this number had exceeded US$2.9 billion in Ethena’s announcement.
Why would you rather open a contract than buy spot? Just look at the funding rate to understand. The funding rate is the money that bulls pay to shorts on a regular basis in a perpetual contract. The more crowded the bulls are, the higher the rate. According to Ethena statistics, from May 20 to August 11, the average annualized funding rate of Binance’s US stock perpetual funding rate was 17.5%, and 97% of the days were positive. Bitcoin perpetuity has annualized just 2.2% over the same period.
In other words, those who are long Nvidia Sustainability are willing to pay nearly 18% more in costs every year in exchange for 24-hour trading, the ability to increase leverage, and the absence of actually holding stocks. By the end of August, the Binance qualified list rate tracked by Kairos fell back to around 7%, two targets turned negative, and enthusiasm was fading.
The road is still widening. On September 18, Coinbase also applied to the CFTC for individual stock sustainability for U.S. users, planning to cover 50 to 60 stocks and ETFs such as Apple and Nvidia.
02. Aave continued to lend as usual on weekends, but the stock price was frozen on Friday.
The second place to go is to stake your stock tokens to borrow money.
On September 25, Aave V4 opened a market on the Base chain: seven Coinbase stock tokens, including Nvidia, Apple, and Tesla, can be used as collateral, and only USDC can be borrowed, for qualified users outside the United States. USDC borrowing is capped at $21 million, with a maximum collateralization rate of 79% and liquidator rewards of up to 5.5%.
The problem is timing. U.S. stocks closed at 4 p.m. on Friday, and Chainlink’s quotation maintained the last price from 8 p.m. on Friday, Eastern United States, and did not resume updating until 8 p.m. on Sunday. During these 48 hours, deposits, borrowings, and liquidations continued as usual, except that everyone saw the old price from Friday.
Imagine a scenario. A stock was bearish after Friday's close and gapped 10% on Monday's open. A position that is fully borrowed at a mortgage rate of 79% will enter the liquidable state as soon as the quote is updated at 8pm on Sunday.
The liquidator wants to sell the tokens, but in the snapshot on September 17, the depth of the 2% price impact of these seven tokens is only $270,000 to $1.08 million. If the gap is 20%, the 5.5% reward cannot cover the gap plus slippage, and the gap falls on the USDC lender.
This is just a window at the moment, not a bad debt. On September 28, the Aave front-end showed that the market deposited 6.2352 million USDC, lent out 425,200 USDC, the utilization rate was 6.8%, and the total stock token mortgage was approximately US$1.91 million. It’s still small, and the floodgates are open.
03. USDe’s job has been replaced by the enthusiasm of U.S. retail investors for leverage
The third place is the revenue engine of stablecoins.
On the same day, September 25, Ethena announced the expansion of USDe’s basis strategy to Binance: holding Binance’s stock token bStocks for spot trading, while shorting the U.S. stock perpetual on the same exchange, earning the funding rate paid by the long position.
Changing jobs is forced. USDe’s past gains have come from crypto perpetual funding rates, with Bitcoin perpetual falling from an annualized 11% in 2024 to 2.2% in the first eight months of this year. The size of USDe has shrunk accordingly, from a high of approximately $14.8 billion in October 2025 to approximately $4.9 billion on September 25.
There isn't much to eat. Kairos Research, which provides the framework for the Ethena Risk Committee, set thresholds based on holdings and rate records. Only 17 of Binance’s 67 pairs passed the test, 3 for OKX, and none for Bybit and Kraken.
When the chain was dismantled, it was found to be loose in three places. The income of USDe holders now depends on the enthusiasm of U.S. retail investors to open long orders. The fee rate has dropped from about 18% at the end of July to about 7% at the end of August, and the two targets have turned negative.
The only counterparty is Binance. BTech, the issuer of bStocks, has the right to dispose of the underlying stocks, subject to a supplementary letter that is still under negotiation. Kairos suggested that it be approved before it is signed. Public reports did not say whether it was signed or not.
04. People who increase leverage don’t want stocks, and people who take advantage of the bottom line don’t buy stocks.
Looking at the three destinations together, the role of spot tokens becomes clear.
The total value of tokenized shares across major issuers across the market is just over $2.3 billion. The ten coins on Coinbase that have exceeded 1 billion in trading volume add up to $12.97 million in the USDC pool on Aerodrome. Their purpose is to hedge stocks in perpetuity, as collateral in Aave, and as spot in the Ethena strategy.
When it was their turn to be traded as stocks, something went wrong.
On the night of September 3, seven hours after the U.S. stock market closed, the AMC stock token issued by Robinhood rushed from $2.55 to $23.16 in the Uniswap pool in one hour, which was 9 times the closing price of the New York Stock Exchange. Within the same hour, it fell back to $3.26. The pool traded $10.5 million in this hour, and the issuer’s authorized participants did not mint or destroy it.
The premium lasted a weekend. According to statistics from IOSG researcher Mario Chow, in the three days after the closing, the issuing agent expanded the token supply from 152,100 to approximately 2,895,800, an expansion of 19 times.
Issuing agents bought an estimated $7.6 million of AMC stock to push the price back down. Tram Doman, who works for Bullish, wrote on CoinDesk: There is no borrowing mechanism during the market break, and only one authorized participant can apply for redemption. No matter how sufficient the mortgage is, the two markets will still go their own way.
AMC CEO Adam Aron asked Robinhood to stop trading on X on September 4, calling it a "quasi-fake market created in Jersey." Robinhood Chief Legal Officer Dan Gallagher responded: We know a thing or two about U.S. securities laws.
Look at the people on both sides. People who open US stocks permanently do not need stocks. Those who deposited USDC into Aave and those who received USDe and other earnings have never bought a single share. However, the gap caused by the short jump on Monday and the loss caused by the rate turning negative finally fell on them.
Regulation provides access to stocks, and the market uses it to pave a path of leverage.
On September 29, Robinhood will hold a summit in Houston. Vlad Tenev said that "it has been too long since the last product launch." Morgan Stanley predicts that this time it may release a perpetual contract for US users.
A year ago, the slogan for tokenized U.S. stocks was to allow the world to buy Apple and Nvidia at any time.
What is on the chain is not stocks, but leverage.