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DeFi Reference

TradFi convergence and real-world assets

1. TL;DR

Section titled “1. TL;DR”

Traditional finance is no longer treating public blockchains as a curiosity: a 2025 Paradigm survey of 300 TradFi professionals found nine in ten are actively investing in or researching public blockchains, and most reject private, permissioned chains as an adequate substitute. The clearest evidence is the tokenized real-world asset (RWA) market — treasuries, money-market funds, equities, private credit, commodities, and collectibles represented as on-chain tokens — which excluding stablecoins passed $38.3B (as of 2025, Helius citing rwa.xyz) and is forecast by McKinsey to reach $2T by 2030. Regulatory posture is the swing factor: the SEC’s 2025 “Project Crypto” initiative and Paradigm’s own comment letter argue a tokenized stock is still a security but needs updated transfer-agent and settlement rules, while incumbent exchanges are lobbying regulators to slow the same tokens down.

2. Explain it simply

Section titled “2. Explain it simply”

Analogy

Section titled “Analogy”

Think of the current financial system as a city built entirely around a single, slow postal service: every trade is a letter that has to be notarized, physically carried between offices, and manually re-filed by clerks who only work Monday to Friday, nine to five. Tokenization is what happens when that city gets email — the letter (the claim on a stock, a bond, a bar of gold) still has to be honest and legally binding, but it can now move between any two people, at any hour, in seconds, and a smart contract can automatically re-file it the moment a dividend or stock split happens instead of waiting for a clerk on Monday.

ELI5

Section titled “ELI5”

Imagine your family owns a slice of a company, like grandma’s shares in a big grocery store chain. Normally, moving that ownership to someone else takes days of paperwork, and the store’s office is only open on weekdays. Tokenization means putting a digital sticker for that ownership on a public computer network that never closes, so people anywhere in the world can trade that sticker in seconds, day or night, without needing the office to be open. The sticker is supposed to always be backed by the real thing sitting safely in a vault or an account somewhere, and someone has to keep checking that the backing is actually there.

Step-by-step walkthrough

Section titled “Step-by-step walkthrough”

Scenario: Priya, who lives outside the U.S. and has no access to a U.S. brokerage account, wants price exposure to Apple stock. She uses Kraken’s xStocks tokenized-equity tokens, which trade on Solana and are collateralized 1:1 by real shares held with regulated custodians (Kraken/Backed, as of 2025-06 launch).

  1. Before. Priya’s self-custodied Solana wallet holds 5,000 USDC and zero AAPL exposure. AAPLx (the tokenized Apple tracker) is already circulating on a Solana DEX, where its price tracks Apple’s Nasdaq price — assume, for this illustration, $230.00 per token.
  2. She swaps on the secondary market. Priya trades 4,600 USDC for 20 AAPLx tokens directly on a DEX. No KYC step is required of her here, because xStocks “circulate permissionlessly on secondary markets” once minted (Kraken/Backed docs, as of 2026-08 fetch). New state: wallet holds 20 AAPLx + 400 USDC.
  3. What backs her tokens. Those 20 AAPLx were originally created when a KYC-verified authorized participant deposited 20 real AAPL shares (or the cash to buy them) with Backed Assets (JE) Limited, a Jersey-based bankruptcy-remote special-purpose vehicle that is the actual legal owner of the underlying stock (Kraken/Backed docs, 2026-08). Priya’s token is a claim on that SPV, not the share itself, and carries no shareholder voting rights.
  4. A corporate action happens. Apple pays a dividend. xStocks reflects this “onchain via a rebasing mechanism, allowing corporate actions to flow through to token holders automatically” (Kraken/Backed docs, 2026-08) — Priya’s position adjusts without any action on her part.
  5. She exits. Priya sells her 20 AAPLx back into the DEX for USDC, again on the permissionless secondary market. If she instead wanted the physical shares delivered into a real brokerage account, she would need to become a KYC-verified participant and use the issuer’s primary-market redemption process instead.

Common misconceptions

Section titled “Common misconceptions”
  • Myth: A tokenized stock is a share of the company. Reality: Most tokenized-equity products (xStocks, Ondo Global Markets) are tracker certificates on a custodied basket, not the share itself — Opening Bell by Superstate is a rarer model where the token is a real, transfer-agent-recorded share (Helius RWA report, 2026-08).
  • Myth: Tokenization is a regulatory loophole that turns a security into something else. Reality: SEC Commissioner Hester Peirce’s own words are “tokenized securities are still securities” (Peirce, 2025-07, quoted in Paradigm’s comment letter, 2025-09).
  • Myth: RWA tokenization is only for large institutions. Reality: Homebase let 76 investors buy fractional shares of two Texas rental homes starting at $100 (Helius RWA report, 2026-08, citing Solana’s case study).
  • Myth: TradFi wants private, permissioned blockchains for control and compliance. Reality: Paradigm’s 2025 survey found TradFi professionals “reject the notion that private blockchains are as valuable as public, permissionless blockchains” (Paradigm, 2025-03).
  • Myth: Tokenized money-market funds pass through the same yield as a bank-issued stablecoin. Reality: Ordinary fiat-backed stablecoins are “a digital form of cash” and generally do not pass through reserve yield to holders, while tokenized MMF shares like BUIDL or VBILL explicitly distribute yield to token holders (Helius RWA report, 2026-08).

If you only remember one thing

Section titled “If you only remember one thing”

Tokenization doesn’t change what an asset legally is — a stock is still a security and a treasury bill is still a treasury bill — it changes the settlement rail underneath it from a business-hours, intermediary-heavy ledger to a 24/7, programmable one.

3. How it works

Section titled “3. How it works”

The trading stack framework

Section titled “The trading stack framework”

Paradigm’s “Electronification, Trading, and Crypto” decomposes any market into four independent layers, useful for isolating exactly what tokenization changes: network (how counterparties communicate), custody and settlement (how the asset itself is recorded, held, and transferred), coordination and process (the rules that govern how a transaction is executed and enforced), and price discovery (the mechanism — RFQ, order book, or AMM — that sets the price) (Malone, Adams, Latif, 2023-09). Historically, big jumps in custody and settlement technology have followed crises rather than steady demand: the 1960s “Paperwork Crisis” of manually transferring paper stock certificates produced NASDAQ (1971) and the Depository Trust Company (1973); Hurricane Sandy’s 2012 flooding of a DTCC vault holding 1.7 million paper certificates accelerated full dematerialization (Paradigm, 2023-09). Tokenization is this same layer’s next jump: it moves custody and settlement onto a public, always-on ledger, while coordination and process — what determines a valid transfer — moves partly into smart-contract logic instead of purely off-chain legal agreements and back-office reconciliation.

Section titled “Legal wrapper models”

Reading across the products documented on Solana, tokenized RWAs fall into three structurally different models with different trust assumptions:

  1. Tracker certificate, custodied 1:1. An issuer (e.g., Backed Assets for Kraken’s xStocks, or the issuer behind Gold xStock) holds the real security or ETF share with a regulated custodian and mints a token representing proportional economic exposure. The token confers no voting rights; redemption for the underlying asset (not just cash) may or may not be offered (Helius RWA report, 2026-08).
  2. Bridge/convertible claim. Backpack Securities’ model lets a user convert a real, brokerage-held security into an on-chain token and back again — “a tokenized claim on an SPV holding the underlying assets,” redeemable through Backpack for the real security rather than only for cash (Helius RWA report, 2026-08).
  3. Native on-chain issuance. Superstate’s Opening Bell has an SEC-registered, blockchain-enabled transfer agent record share ownership directly on-chain — the token is not a wrapper around a separately-held share, it is the share of record (Helius RWA report, 2026-08).

For any 1:1-backed model, the accounting identity that must hold is simple: if NN is the token’s circulating supply and RR is the market value of the custodied reserve backing it, the design requires N⋅NAV≈RN \cdot \text{NAV} \approx R at all times, with the gap closed by whoever is allowed to create or redeem tokens against the reserve (an authorized-participant / KYC’d role in every model documented here). This is structurally identical to ETF creation/redemption arbitrage, not a new invention — see the worked example in §4.

Regulatory framing

Section titled “Regulatory framing”

Two mechanisms this cluster’s Ethereum-side context most directly conditions: (1) whether a tokenized security still counts as a security under existing law — Peirce’s answer is yes, “putting a share of Apple stock on the blockchain does not instantly transform that stock into a non-security” (Paradigm summarizing Peirce, 2025-09) — and (2) whether the transfer agent function (the entity of record for who owns what) can itself run on-chain. Paradigm’s SEC comment letter proposes the SEC “either allow issuers to be their own transfer agents, create a new class of registrations for transfer agents on the blockchain, or eliminate any superfluous regulatory requirements for transfer agents onchain” (Paradigm, 2025-09) — this is precisely the gap Opening Bell’s model is built to close today under existing rules, ahead of any change.

Categories of tokenized RWAs (Solana taxonomy)

Section titled “Categories of tokenized RWAs (Solana taxonomy)”

Helius groups the Solana RWA landscape into eight categories: equities, money-market funds, commodities, stablecoins, private credit, real estate, collectibles, and specialty finance (e.g. reinsurance) (Helius, 2026-08). Each has a different dominant wrapper model: MMFs and treasuries (BlackRock’s BUIDL, Franklin Templeton’s FOBXX, VanEck’s VBILL) are almost universally custodied 1:1 with daily NAV/dividend accrual; private credit (Apollo’s ACRED, Maple’s syrupUSD) tokenizes a claim on a fund’s cash flows rather than the underlying loans directly; collectibles (Collector Crypt, Phygitals) vault a specific physical item and mint a redeemable claim against it.

4. Worked numeric example

Section titled “4. Worked numeric example”

Continuing Priya’s AAPLx scenario from §2, with the creation/redemption arithmetic that keeps the token pegged to spot.

Suppose real AAPL trades at $230.00 on Nasdaq, but demand on the Solana DEX has pushed AAPLx to $232.00 — a $2.00, or 0.87%, premium. An authorized participant (AP) who has completed KYC with the issuer can act:

  1. Mint at NAV. The AP deposits cash to buy 1,000 real AAPL shares at $230.00 = $230,000, delivers them to the custodian, and the issuer mints 1,000 AAPLx tokens to the AP’s wallet.
  2. Sell at the DEX price. The AP sells the 1,000 AAPLx on the Solana DEX at the prevailing $232.00, receiving $232,000.
  3. Arbitrage profit. Gross profit is 1,000×($232.00−$230.00)=$2,0001{,}000 \times (\text{\textdollar}232.00 - \text{\textdollar}230.00) = \text{\textdollar}2{,}000, before minting/brokerage fees (comparable in structure to a 0.20–0.50% annual management fee on a fund like BUIDL, though these per-trade arbitrage economics are typically fee-light relative to fund-level charges; the exact spread an AP needs to act is set by execution costs, not modeled here) (Helius RWA report, 2026-08, for representative fee levels).
  4. Price convergence. Selling 1,000 AAPLx into the DEX pushes its price down toward $230.00 as new supply meets demand; if the AP kept repeating this until the premium closed, AAPLx supply would rise by however many tokens are needed to close the $2.00 gap, exactly mirroring how ETF authorized participants keep a fund’s market price near its NAV.

If AAPLx instead traded at a discount — say $228.00 — the same AP could run the trade in reverse: buy 1,000 AAPLx on the DEX for $228,000, redeem them through the issuer for 1,000 real AAPL shares (or cash at NAV) worth $230,000, and pocket the $2,000 spread, which pushes AAPLx demand up and the discount closed. Priya, holding through either scenario, sees her 20 AAPLx track $230.00 regardless of which side of the peg the market temporarily drifts to — she is exposed to Apple’s price, not to the arbitrage mechanics, as long as the redemption channel keeps functioning.

5. Where it’s used

Section titled “5. Where it’s used”

Ethereum

Section titled “Ethereum”
  • BlackRock BUIDL — the largest tokenized money-market fund, first launched on Ethereum in March 2024 by BlackRock and Securitize before later expanding to other chains; reached over $2.5B AUM by 2025-11 (Securitize/Nasdaq press release, 2024-03; secondary AUM figure, 2025-11). securitize.io
  • Robinhood tokenized stocks (Arbitrum) — Robinhood issues 200+ (later ~2,000) tokenized U.S. stock and ETF tokens on Arbitrum One for EU/EEA customers under MiFID II, custodied by a U.S. broker-dealer, launched 2025-06-30, with a dedicated “Robinhood Chain” L2 planned (CoinDesk; Cointelegraph, 2025-06, secondary). robinhood.com
  • Ondo Finance, Franklin Templeton, Superstate — tokenized treasury and money-market products with Ethereum-native issuance predating their later multichain expansions to Solana, documented in detail in the Solana section below since that is this page’s primary sourced RWA dataset (Helius RWA report, 2026-08).

Solana

Section titled “Solana”
  • Kraken xStocks / Backpack Securities / Ondo Global Markets / Opening Bell — four structurally different tokenized-equity models (tracker certificate, convertible bridge, KYC’d fund interface, and native on-chain shares respectively); xStocks alone reported ~$442M on Solana and >67% of Solana’s tokenized-equity value by 2026-07 (Helius RWA report, 2026-08). xstocks.fi
  • BlackRock BUIDL, VanEck VBILL, Ondo USDY, State Street Galaxy SWEEP — tokenized treasury/MMF products live on Solana with daily NAV, dividend, or rebasing yield distribution; BUIDL alone had ~$740M issued on Solana as of the Helius report (2026-08). helius.dev
  • Apollo ACRED, Maple syrupUSD, Hastra PRIME/AUTO — tokenized private-credit funds usable as DeFi collateral through Kamino and Loopscale, e.g. ACRED natively yielding ~9.5% APR (Helius RWA report, 2026-08).
  • Collector Crypt, Phygitals, Oro, BAXUS, Parcl, Homebase, MetaWealth — collectibles, commodities, and real-estate tokenization spanning trading cards (>$1.6B volume for Collector Crypt), vaulted gold, wine, and fractional property ownership (Helius RWA report, 2026-08).

6. Risks, attacks, and incidents

Section titled “6. Risks, attacks, and incidents”
  • Custodian and legal-wrapper risk, not smart-contract risk, is the dominant failure mode for RWAs. Every model in §3 ultimately depends on a custodian, an SPV, or a transfer agent actually holding what it claims to hold; none of this page’s sources document a case of an RWA token depegging due to a smart-contract bug, but the entire category imports traditional counterparty and custody risk (SPV insolvency, custodian fraud) back into a system marketed as trust-minimized.
  • Incumbent exchange pushback as a non-technical risk. A group representing the world’s largest stock exchanges “called on securities regulators to clamp down on so-called tokenised stocks, arguing that the blockchain-based tokens create new risks for investors and could harm market integrity” (Reuters, 2025-08, quoted in Paradigm, 2025-09) — Paradigm calls this fear “misplaced,” but it illustrates that RWA tokenization’s biggest near-term risk may be regulatory rollback rather than a technical exploit.
  • Regulatory ambiguity has historically been the binding constraint. Helius notes RWA projects “have existed onchain for years, [but] their growth was long constrained by regulatory ambiguity, particularly in the U.S.” (Helius, 2026-08) — a policy risk that can reverse quickly if a new SEC leadership reverses Project Crypto’s posture.
  • Cross-chain bridging of RWA tokens inherits ordinary bridge risk. BUIDL’s cross-chain transfers use Wormhole Native Token Transfers (Helius, 2026-08); any RWA token bridged this way inherits the guardian/validator trust model and historical bridge-hack surface documented in /cross-chain/bridge-designs/, on top of its own custodial risk.
  • Redemption-channel failure is the tail risk for tracker-certificate models. If an issuer’s KYC’d authorized-participant channel seizes up (regulatory action, insolvency, sanctions), the arbitrage mechanism in §4 that keeps a token pegged to NAV stops functioning and secondary-market prices can persistently diverge from the underlying asset — a risk structurally identical to an ETF’s authorized-participant concentration risk, not something unique to crypto.

7. Open problems

Section titled “7. Open problems”
  • Whether “technology neutral” regulation is achievable in practice. Paradigm’s own three principles for SEC rulemaking — targeted, technology-neutral on the asset, but accounting for crypto’s technical differences — are, in Paradigm’s own words, “difficult to juggle… but critical” (Paradigm, 2025-09); no resolved framework exists yet.
  • Who becomes the transfer agent of record. Whether the SEC lets issuers self-serve as transfer agents, creates a new registration class, or removes the requirement outright is unresolved as of this page’s sources (Paradigm, 2025-09) and materially changes which of the three models in §3 becomes dominant.
  • Whether tokenized MMF/treasury yield-pass-through becomes the default for stablecoins. Ordinary fiat-backed stablecoins do not pass reserve yield to holders today; whether regulatory or competitive pressure pushes issuers toward yield-bearing structures (as tokenized MMFs already do) is an open commercial and regulatory question this page’s sources do not settle (Helius, 2026-08).
  • How much of TradFi’s stated interest converts to actual on-chain volume. Paradigm’s survey captures intent — “almost nine out of every ten are actively investing in or researching” — not realized flows, and the same report flags regulation, not technology readiness, as the binding constraint on converting interest into volume (Paradigm, 2025-03).

8. Ethereum vs Solana

Section titled “8. Ethereum vs Solana”
AspectEthereumSolana
Largest tokenized MMF presenceBUIDL launched here first (2024-03); Ethereum remains a major share class alongside newer chainsBUIDL added later; ~$740M issued as of 2026-08 (Helius)
Tokenized-equity model breadthRobinhood tracker tokens under MiFID II on Arbitrum L2 for EU usersFour distinct models live simultaneously: xStocks (tracker), Backpack (convertible), Ondo GM (KYC’d interface), Opening Bell (native shares)
Dedicated RWA-focused L2/L1 infrastructureRobinhood Chain (Arbitrum Orbit L2) purpose-built for tokenized assets, still pre-launch as of the sources hereR3/Corda strategic integration bringing permissioned institutional DLT volume onto Solana settlement (2025 Accelerate announcement)
Depth of primary-source RWA data in this researchThinner — Ethereum-side facts here rely on secondary press coverage (CoinDesk, Cointelegraph) rather than a single comprehensive primary reportDeep — Helius’s dedicated 2026-08 RWA report covers eight categories with named protocols, dates, and dollar figures
Institutional custody/DLT bridgeNot documented as a comparable initiative in this page’s sourcesR3 Corda integration lets permissioned institutional ledgers settle directly on Solana without exposing sensitive transaction data on-chain

Both chains are converging on the same regulatory and product thesis — tokenize the claim, keep the custodian, make settlement continuous — but Solana is where this page’s sourced evidence shows the widest simultaneous experimentation across legal-wrapper models and asset categories, while Ethereum (and its L2s) currently leads in one high-visibility, regulator-facing product (Robinhood’s MiFID II-compliant EU stock tokens) and in first-mover tokenized-fund issuance (BUIDL). The difference in this page’s evidentiary depth (a single comprehensive Helius report for Solana vs. scattered press coverage for Ethereum) likely reflects research availability more than a true asymmetry in RWA activity between the two ecosystems.

9. Reference doc

Section titled “9. Reference doc”

The reference

Section titled “The reference”

Real World Assets on Solana: A Comprehensive Overview — Helius, fetched 2026-08-29. helius.dev/blog/solana-real-world-assets

Summary of the reference

Section titled “Summary of the reference”

The report opens by defining RWAs as “physical or traditional financial assets… that are brought onchain through tokenization,” and frames tokenization’s advantages as global accessibility (only ~15% of the world’s population has direct access to U.S. capital markets), 24/7 markets, programmability, composability, fractionalization, transparency, operational efficiency, and liquidity. It cites the tokenized RWA market (excluding stablecoins) at over $38.3B, up 204% year-over-year, with McKinsey projecting $2T by 2030 and Standard Chartered projecting $30.1T by 2034, and opens with BlackRock CEO Larry Fink’s line that “the next step going forward will be the tokenization of financial assets… every stock, every bond… will be on one general ledger.”

The report is structured around eight categories, each treated as a self-contained section. Equities covers four structurally distinct models (Backpack Securities’ convertible bridge, Kraken xStocks’ tracker certificates, Ondo Global Markets’ KYC’d interface, and Superstate’s Opening Bell native on-chain shares), noting the $10–30M average cost of a traditional U.S. IPO as the friction tokenization targets. Money Market Funds covers BlackRock’s BUIDL (~\text{\textdollar}2.7B AUM globally, ~\text{\textdollar}740M on Solana), Ondo’s USDY, VanEck’s VBILL, and State Street/Galaxy’s SWEEP, each with differing redemption and yield-distribution mechanics. Stablecoins are treated briefly as the largest category by value but distinguished from yield-bearing tokenized MMFs. Commodities covers tokenized gold (PAXG, XAUt0, GLDx, Oro) and niche markets like uranium (Uranium Digital) and agriculture (AgriDex). Private Credit — the fastest-growing segment in the report — covers Apollo’s ACRED, Maple’s syrupUSD, Hastra’s PRIME/AUTO, and commodity trade-finance products, quantifying a \text{\textdollar}1.7–3T global private-credit market largely inaccessible below \text{\textdollar}5M minimums today. Real Estate, Collectibles, and Speciality Finance (reinsurance via OnRe and Re Protocol) round out the taxonomy, each showing a specific vaulted or SPV-backed structure. The report closes noting regulatory ambiguity has been the binding historical constraint on RWA growth, more than technology readiness.

Key quotes

Section titled “Key quotes”

“We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond… will be on one general ledger.” (Larry Fink, quoted in Introduction)

“In effect, Backpack makes conventionally issued equities portable between brokerage and blockchain infrastructure without requiring the company itself to issue its shares onchain.” (§ Equities, Backpack Securities)

“Opening Bell tokens represent actual shares, fully compliant and issued onchain, without relying on synthetic exposure, wrapped assets, or offshore workarounds.” (§ Equities, Opening Bell by Superstate)

“Although RWA projects have existed onchain for years, their growth was long constrained by regulatory ambiguity, particularly in the U.S.” (§ Conclusion)

How to read the original

Section titled “How to read the original”

Background needed: a basic sense of what a special-purpose vehicle (SPV) is and how ETF creation/redemption works, since almost every product in the report reduces to a variant of “custodian holds asset, issuer mints claim.” What to skip on a first pass: the numerous dollar-figure and TVL citations for individual smaller projects (AgriDex, dVIN, Jurassic Fi) — useful for scale but not for understanding the mechanism. The hardest paragraph to parse is the Kraken xStocks section’s distinction between primary-market minting/redemption (KYC-gated, tied to real share purchases) and secondary-market trading (permissionless, 24/7) — read it twice, since conflating the two is the single most common misunderstanding about what a tokenized-equity token actually entitles its holder to.

What changed since

Section titled “What changed since”
  • Robinhood’s Arbitrum-based tokenized stock launch (2025-06) postdates most of the report’s Ethereum-side context and shows a MiFID II-compliant, EU-regulated approach distinct from any of the Solana models the report documents in depth.
  • Paradigm’s SEC comment letter (2025-09) and SEC Chair Atkins’ “Project Crypto” speech (2025-07) represent the regulatory-side response the report’s own conclusion flags as the binding constraint — the policy conversation has visibly accelerated since the report’s most-cited surveys were run.
  • State Street Galaxy’s SWEEP fund (2026-05) and several private-credit products (Hastra AUTO, Obligate oTFY, Kamino Institutional Commodity Yield, all 2026-06 to 2026-08) launched after the report’s earlier sections were drafted, reflected in its own later-dated sections — a sign of how fast this specific market moves even within one document’s writing window.

Secondary references

Section titled “Secondary references”
  1. Paradigm, “TradFi Tomorrow: DeFi and the Rise of Extensible Finance” (2025-03) — read if you want the demand-side survey evidence for why institutions are moving toward public chains.
  2. Paradigm, “Public Stocks on Public Blockchains: How Do We Get There?” (2025-09) — read if you want the specific regulatory asks (transfer-agent reform, onchain IPOs) behind U.S. equity tokenization.
  3. Paradigm, “Crypto Market Structure 3.0” (2020-10) — read for the earlier, CeFi/DeFi-convergence framing this page’s §3 trading-stack analysis builds on.
  4. Paradigm, “Electronification, Trading, and Crypto” (2023-09) — read for the historical crisis-driven pattern of financial electronification and the four-layer trading-stack framework used in §3.

10. Sources

Section titled “10. Sources”