The world of Decentralized Finance (DeFi) is witnessing a remarkable evolution, with increasing focus on integrating traditional assets into blockchains. One of the most prominent developments is the emergence of "On-Chain US Stocks," a concept that isn't entirely new but is gaining traction amidst the crypto market's sluggishness and the lack of clear direction for major coins.
Key Takeaways:
Over the past year, the market has seen numerous attempts to bring US stock indices, treasury yields, and even individual stocks on-chain. However, most of these products remained in the "shadow asset" stage, either excessively reliant on oracles for price feeds, suffering from insufficient trading depth, or exhibiting significant price discrepancies compared to traditional markets. Consequently, they couldn't be considered true "alternative markets."
Hyperliquid's HIP-3 upgrade appears to be a turning point. Technically, this upgrade allows for the permissionless creation of native on-chain order book perpetual markets. This, to some extent, ends the reliance of on-chain traditional asset trading primarily on synthetic assets or oracle-driven models, offering an alternative for building an independent market with self-price discovery capabilities.
An example is XYZ100, launched by TradeXYZ. Since its launch, its trading volume has been steadily increasing, with daily trading volume stabilizing at tens of millions of dollars, and the maximum open interest increasing from an initial $25 million to $60 million.
TradeXYZ is a native protocol incubated within the Hyperliquid ecosystem, focusing on bringing real-world assets (RWAs) – such as US stocks, indices, etc. – into on-chain trading scenarios through tokenization. The protocol supports both spot and perpetual contract trading models, and integrates with Unit Protocol to handle spot asset liquidity and settlement. Users can use USDC for deposit, withdrawal, and trading. Their current core product is a HIP-3 standard-based equity perpetual contract, aiming to bridge traditional financial markets with a decentralized trading experience.
XYZ100 is a fully on-chain CLOB (Central Limit Order Book) model, supporting 24/7 trading with up to 20x leverage. The price is pegged via the CME (Chicago Mercantile Exchange) Nasdaq Futures oracle, and uses an 8-hour EMA (Exponential Moving Average) to smooth the price during non-trading hours to avoid extreme volatility.
Firstly, the "steady growth" of US stocks is trumping the "high volatility and low certainty" of crypto: Although there are signs of institutional accumulation of BTC, the "leverage crash" on 10.11 still makes retail investors wary. Meanwhile, the US stock market is currently experiencing a significant surge, with the S&P 500, Dow Jones, and Nasdaq all setting new record highs for three consecutive trading days this week.
At the same time, on-chain trading platforms are attracting global investors with their unique advantages: through 24/7 continuous trading, no KYC verification, and up to 20x leverage, users from different time zones in Asia, Europe, and elsewhere can adjust their positions at any time, completely eliminating the T+1 settlement mechanism and weekend closure restrictions of traditional markets.
With this surge in activity, the entire on-chain US stocks ecosystem is rapidly evolving, with multiple protocols approaching the market from different angles. However, there are still many risks and challenges, including reliance on oracles and potential price manipulation, as well as regulatory uncertainty.
The world of Decentralized Finance is undergoing a significant transformation, shifting towards the integration of traditional assets into blockchains. The emergence of on-chain US stocks represents a new opportunity for investors, but it also carries risks and challenges that must be considered. It remains to be seen how this burgeoning market will evolve in the future.
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