The Crypto Desk desk. Editor: Sam Daodu.
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The market for tokenized stocks—blockchain tokens representing shares held by custodians—has grown dramatically, expanding about ten times over the past year. Ondo, one of the issuers, reports a total market value of $4.82 billion, up from $485 million the previous year.
In contrast, Ethereum (CRYPTO:ETH) is at $2,057, down 15.9% over the past 30 days and 30.8% since January. Similarly, Solana (CRYPTO:SOL), a competitor in the tokenized stock space, trades at $84 after a 20.6% drop in the last month. With tokenized stocks booming, how much of this market is built on Ethereum, and why hasn’t this surge positively impacted ETH’s price?
Ondo’s $4.82 Billion Tokenized Stock Figure Rises With Share Prices
The $4.82 billion figure reflects the market value calculated by multiplying the number of tokenized shares in circulation by their stock prices. This total can increase not only if issuers create more tokens but also if the underlying stock prices rise. Thus, even without new buyers entering the market, a year of rising stock prices can inflate these figures.
Ondo has a vested interest in showcasing a robust market size, as it sells its own tokenized shares, known as Ondo Stocks. These tokens can move across different blockchains, and recently, Ondo made Fidelity’s FCAT a mandatory verifier for these transfers. Rival issuer Binance claims its bStocks product holds $1.5 billion in assets, making it the largest single product in this market by that gauge.
xStocks, part of Kraken’s parent company Payward, has tokenized over 200 UK and EU stocks, including LVMH, Shell (NYSE:SHEL | SHEL Price Prediction), and HSBC (NYSE:HSBC). Many ETH holders view this growth as a positive sign for Ethereum, since Ethereum holds the largest share of the broader tokenized real-world assets market. However, that only holds if stock tokens followed the rest of that market onto Ethereum, and they mostly haven’t.
The Biggest Tokenized Stock Product Runs on BNB Smart Chain, Not Ethereum
The issuers and rwa.xyz, which tracks tokenized assets, do not provide a dated breakdown of the $4.82 billion by blockchain, nor do they separate figures for Ethereum’s layer-2 networks. However, they do indicate where their tokens are located, and that list doesn’t point to an Ethereum majority.
The largest product by assets is issued only on BNB Smart Chain. Other major issuers distribute their tokens across Ethereum, Solana, and other blockchains, while newer deals keep going elsewhere, like the NYSE-affiliated platform settling on Avalanche and one major issuer picking Solana over Ethereum.
Even a perfect snapshot would quickly go out of date, because Ondo holders can move tokens between chains. Chain data also misses most of the trading, which largely occurs within the order books of Binance and Kraken and never reaches a blockchain.
Why Tokenized Stock Growth Hasn’t Boosted ETH’s Price
Holders of tokenized stocks typically transact in dollars or stablecoins and need only a small amount of ETH for network fees. So while billions are represented in stock tokens, this doesn’t create significant demand for ETH—a trend also seen with tokenized funds from major banks. The fee burn, which destroys a portion of transaction fees, helped shrink ETH’s supply as network usage increased.
However, the Dencun upgrade in March 2024 drastically reduced fees on layer-2 networks, so less ETH is burned. The Ethereum network issues about 2,600 new ETH daily (roughly $5.3 million) to validators, who secure the network, while burns on quieter days only eliminate around 50 to 70 ETH. Thus, ETH supply continues to grow.
Ethereum co-founder Vitalik Buterin noted on November 8 that the burn “was never a true floor” for the price. Demand from spot Ethereum ETFs, which hold ETH and trade like stocks, likely has a more direct impact on the price than tokenization does, and these funds are still seeing net outflows. On November 9, they reported a $185 million net outflow, reducing total net assets to $12.1 billion.
ETH also remains below its 20-day average of $2,273, its 50-day average of $2,457, and its 200-day average of $2,152, after closing at $2,050 on November 10, its lowest close in 30 days. Our analysis of why ETH is still valued above Solana suggests settlement activity alone does not drive ETH’s price.
Does Most of the $4.8 Billion Tokenized Stock Market Operate on Ethereum?
It’s unlikely, although the issuers have not released a confirmed figure. Evidence suggests that Ethereum holds a minority share, as the largest single product is issued only on BNB Smart Chain, while multi-chain issuers split their tokens between Ethereum and Solana. This view might change if rwa.xyz or the issuers release a dated chain split showing that Ethereum and its layer-2 networks account for more than half of the market.
Even an Ethereum majority probably wouldn’t help ETH much while ETF selling continues. A clear sign that buyers are coming back would be a full week of net inflows into spot Ethereum ETFs after the November 9 outflow. On price, ETH could find some support if it closes back above its 200-day moving average near $2,152, but a close below the recent $2,050 low would indicate that sellers are still in control.
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Sam Daodu is a crypto analyst and the editor of 24/7 Wall St.'s Crypto Desk, where he covers Bitcoin, XRP, Ethereum, Solana and the altcoins investors search for most. His work focuses on price levels, spot ETF flows, on-chain data and the regulatory decisions that move crypto markets, written so a first-time buyer and a seasoned trader can both use it.
Sam has written about crypto professionally since 2019 and has published more than 2,000 articles. Before joining 24/7 Wall St., he wrote for crypto media outlets and Web3 companies and ghostwrote for crypto founders and token launches. His analysis is syndicated on Yahoo Finance, MSN and AOL and has been cited by other crypto news sites. He also founded MacLabs Marketing, a content and personal branding agency for crypto founders and executives.
When he isn't reading charts, Sam is usually at the gym or watching One Piece, a series he maintains has better tokenomics than most altcoins.
