PodcastBanklessIan De Bode

The Stock Market Is Moving Onchain

The conversation lays out the practical mechanics of tokenizing IPOs: issuers pre‑deploy tokens, integrate market makers, and mint quickly so buyers can trade the moment a share lists. Offshore distribution dominates today — roughly 80–90% of flow — driven by DeFi wallet integrations and looser leverage limits, while US regulation and custodial gaps create a segmented market. Perpetuals offer 24/7 exposure but are capital‑inefficient when hedges sit off‑chain; posting tokenized shares as on‑chain collateral could restore near‑100% efficiency and broaden market‑making. The guest expects meaningful product and liquidity innovation over the next 12–18 months and targets roughly $1.5–2.0 billion in tokenized stocks by end‑2026.

TokenizationMarket StructureMarket Liquidity

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Key Takeaways

They pre‑deploy tokens and integrate market‑makers so tokens can be minted on‑chain in seconds and made tradable at IPO; market‑makers hedge the underlying within hundreds of milliseconds, the platform adds a ~5 bps pad and RFQ flow to market‑makers produces live trading—SpaceX's Ethereum token went live about five minutes after NASDAQ open and early crypto buyers saw sharp gains.

Their distribution strategy tokenizes equities at tradability and distributes wrapped versions via DeFi wallet integrations (MetaMask, Phantom, Binance), which—together with lower US retail leverage caps—has produced an offshore‑dominant market where roughly 80–90% of current flow/TVL comes through integrations rather than the issuer's own front end.

Perpetuals give crypto traders popular 24/7 synthetic exposure but are capital‑inefficient (~50% drag) when hedges live off‑chain; allowing market‑makers to post tokenized underlying shares on‑chain can restore nearly 100% capital efficiency, unlocking deeper liquidity and institutional features like portfolio margin, pair trades and ETF‑style wrappers.

There is a structural on‑chain/off‑chain mismatch: perps trade 24/7 but minting/redemptions and hedging tied to NYSE/NASDAQ remain constrained to 24/5, creating practical limits on liquidity, hedging and the seamless 24/7 experience perps promise.

TECHNOLOGY

Pre-deploy model — The issuer pre-deploys tokens and integrates market makers and liquidity venues ahead of an IPO. That allows them to 'flip the switch' and make the token tradable the moment the underlying lists on a national exchange.

“You deploy the token ahead of time. We really make sure that all the market makers etc already have it integrated into their systems.”—

Wrapped distribution — They tokenize equities at tradability and distribute wrapped versions to offshore investors via DeFi integrations and common wallets (MetaMask, Phantom, Binance wallet). They treat distribution rails and DeFi integrations as distinct but complementary infrastructure.

“But right now our main focus is always the moment the IPO happens…”—

Fast minting — Tokens are minted on-chain quickly — seconds on some chains, longer on Ethereum — via a minting smart contract. The market-maker hedges by buying the underlying almost immediately (within a few hundred milliseconds), and the issuer adds a five‑basis‑point volatility pad.

“They mint them the tokens and that market maker sends it over to the end investor. This entire process can take about a second, right?”—

ECONOMY

Regulatory segmentation — US retail leverage caps are materially lower than offshore limits, so an offshore perpetual/spot‑wrapper market will coexist with a more protected onshore market. Spot 'wrapper' issuance is currently dominated offshore and the US lacks an established third‑party custodial wrapper framework.

“The benefit of the onshore market is that it's fully regulated and that comes with different types of protections…”—

MARKETS

SpaceX tokenized — SpaceX's IPO was tokenized on Ethereum the same day it listed on NASDAQ. Trading on the token went live roughly five minutes after the market opened, letting crypto buyers participate in IPO price action immediately (early buyers saw sharp gains).

“SpaceX IPOed on NASDAQ on June 12th. Ono's tokenized SpaceX stock was minted on Ethereum that same day also on June 12th.”—

No pre-IPO — They intentionally avoided pursuing pre‑IPO allocations because those are typically handed to large institutions and brokerages. Prior partners were disappointed when they didn't receive expected allocations.

“The problem with those preo allocations is that you are entirely dependent on getting an allocation in the IPO and that really gets handed out to large institutions, big brokerage…”—

Offshore flow — When a US stock lists, offshore users can buy wrapped token versions via the platform's DeFi integrations. Roughly 80–90% of current flow/TVL comes from outside the issuer's own front end through integrations with major wallets and exchanges.

“So available to offshore users offshore investors outside the US so that the moment something trades on one of the national exchanges in the US, people can buy it in…”—

FORECASTS

12–18 Months — The guest expects dramatic innovation in on‑chain asset and wealth management over the next 12–18 months as building blocks come together. He gives a plausible perp penetration path from roughly ~1% today to 4–8% over that period.

“The next 12 to 18 months once once all these building blocks are in place which is more or less happening right now people are going to dramatically innovate in…”—

Ondo’s RWA Moment

Ondo reflects on being early in real-world assets and watching widespread industry adoption of tokenized securities and RWA infrastructure.

How SpaceX Stock Hit Ethereum in Minutes

Ian explains how Ondo pre-deploys tokens and integrates market makers so tokens like SpaceX can be minted and trade within minutes of IPO listing.

What Actually Backs a Tokenized Stock?

Ondo clarifies that each token is backed by underlying shares bought immediately after minting and explains the collateralization and minting mechanism.

The Onchain and Offchain Market Machine

They map the hybrid on-chain/off-chain market structure: wallets, DeFi interfaces, RFQ market makers, and instant minting tied to exchange prices.

Where the Demand Comes From

Most demand for tokenized stocks comes from offshore wallets and DeFi integrations, with about 80–90% of flow occurring outside Ondo's own front-end.

The Most Popular Tokenized Stocks

Ondo lists the most popular tokenized stocks — Circle, Micron, semiconductors and other large-cap equities — driven by trader interest offshore.

Why Perps Need Better Collateral

Using tokenized shares as on-chain collateral unlocks DeFi margin and borrowing use cases that Robinhood can't provide for self-custodial users.

New Strategies for Onchain Asset Management

The rise of perpetual futures for RWAs is explained, including current capital inefficiencies when hedges and collateral sit off‑chain.

The Next 12 to 18 Months

Tokenizing underlyings and allowing them as perp collateral could push capital efficiency near 100%, dramatically improving market‑making and liquidity.

How Big Can Perps Get?

Perps plus tokenized spot enable new on-chain asset-management strategies, portfolio margining, and composable ETFs or leveraged products.

Offshore Versus Onshore Perp Markets

Ondo believes the next 12–18 months will see rapid product and liquidity innovation as building blocks like tokenized collateral and perps converge.

Inside Ondo Perps

Perpetuals can scale beyond crypto; they can rival options over time, but spot markets remain important and derivatives-only strategies have systemic risks.

Why Not Build on Hyperliquid?

Regulatory segmentation will leave powerful offshore perp markets while onshore venues evolve differently; both will coexist and serve different users.

Launch Timeline and Early Demand

On purpose (Ondo’s perp venue) is a hybrid design: off-chain execution with on-chain deposits/settlements and decentralized attesters for transparency.

Will Wall Street Incumbents Compete or Help?

Ondo chose a secure-enclave, attested off-chain execution model for performance, privacy, and multi-asset collateral, planning more on-chain migration later.

Ondo’s 2026 Roadmap

Ondo expects strong early demand for its perp product with retail, market-makers, and institutional users in the public beta, aiming for wide distribution.

Remembering Nathan Allman

Ondo aims for $1.5–2.0 billion in tokenized stocks by end‑2026, deep perp liquidity, and new on‑chain asset-management products, honoring co‑founder Nathan Allman’s vision.

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Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

No Guarantees: Past performance does not predict future results; investing carries risk.

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