Tokenized Stocks Race: DeFi Route Battle Between Brokerage-Backed L2 and Exchange L2

Tokenized stocks are emerging as a new hotspot in the crypto market. Recently, a leading brokerage-backed L2 network saw its TVL climb rapidly to around $618 million within its first month, drawing market attention. At the same time, a major exchange’s L2 network has also accelerated the rollout of tokenized stock products, with the two ecosystems competing in DeFi and RWA. This article analyzes the key variables behind this trend: the financing pain points of tokenized stocks, the role of native lending protocols, and the future market opportunity.

#1. L2 Network TVL Growth: A Signal That Tokenized Stocks Are Heating Up

• The brokerage-backed L2 network reached a TVL of $618 million about one month after launch, showing remarkable growth.
• For comparison, the early performance of a major exchange L2 network: its TVL reached about $1.4 billion in its first year.
• At the current growth rate, the former may see even larger growth in the near term, driven by the narrative of tokenized stocks and RWA.
• At the same time, the network’s vault TVL is also climbing, laying the foundation for scenarios such as an in-app DeFi wallet.

#2. Core Pain Point: Tokenized Stocks Are “Holdable but Hard to Finance”

• In markets such as the US, tokenized stocks currently mainly function as holdings and custody, lacking financing capability.
• In traditional brokerage accounts, users can pledge stocks after purchase to obtain margin for other trades; however, tokenized stocks in DeFi wallets cannot directly undergo similar operations, limiting their value.
• This pain point has created demand for native lending protocols. Arrow Finance, the native lending protocol on this brokerage-backed L2 network, allows users to deposit tokenized stocks or other RWAs, mint the overcollateralized stablecoin AUSD, and borrow other assets for trading.
• Arrow Finance uses the standard CDP (collateralized debt position) model. It entered testnet when the network launched, and the product is now fully usable, but initial limits are relatively conservative. The team is working with Sherlock DeFi on an external audit.

#3. Collateral Tiers and Ecosystem Expansion: From Large Caps to Cultural Assets

• Arrow Finance initially divides collateral into Tier 1 and Tier 2. Tier 1 includes widely traded retail stocks such as Apple and Nvidia, making it easier for traditional brokerage users to understand and adopt.
• The team takes a conservative approach, prioritizing tokenized assets that are already widely distributed on-chain and held by users as collateral to reduce the risk of the new protocol.
• Another project worth watching in the ecosystem, Index, combines RWA with memecoin distribution. While users engage in speculative trading, it accumulates RWA into their accounts, forming a “distributed distribution funnel for real-world assets.” This model could accelerate user education around tokenized stocks.
• Arrow Finance also states that it is technically asset-agnostic and may include certain cultural assets (such as memecoins) as collateral in the future, though with more conservative limits and borrowing costs.

#4. Incentive Strategy: Gas Subsidies and DeFi Economic Stimulus

• The L2 network launched a gas fee subsidy program early on to lower users’ on-chain transaction costs, consistent with its parent company’s zero-commission stock trading strategy.
• This strategy helps attract early community users and drive growth in RWA and memecoin trading volume.
• Projects in the ecosystem are also actively leveraging this traffic: Index combines RWA airdrops with memecoin campaigns to create incentives; Arrow Finance focuses on providing a liquidity entry point for these assets.
• In the long run, the native lending protocol may be integrated into the network’s official DeFi wallet, creating deeper integration.

#5. Market Opportunity and Competitive Landscape: Who Will Win the Tokenized Stocks Race?

• The total addressable market (TAM) for tokenized stocks is enormous. In the short term, non-US markets have the most direct demand for “buying and self-custodying tokenized stocks”; over the medium to long term, it will depend on the breadth of on-chain products and institutional participation.
• Institutional entry is key to accelerating adoption: companies with brokerage backgrounds have traditional finance compliance and brand advantages, and if their L2 networks can connect with institution-grade products, they will unlock a larger market.
• Industry analysis predicts that annual trading volume of tokenized stocks could reach $120 trillion to $150 trillion within 24 months, with an annual growth rate as high as 220%.
• In terms of competition, a major exchange L2 network responded quickly after launching tokenized stocks, showing its emphasis on this track. However, the two have different approaches: the brokerage-backed L2 emphasizes the fusion of culture and DeFi, starting with the memecoin community and gradually introducing RWA; the exchange-backed L2 relies on its spot trading advantages and user base.
• The next 8–12 months will be a critical window. Whoever first builds a complete product ecosystem—especially lending and derivatives—is likely to dominate the tokenized stock space.

#Conclusion

Tokenized stocks are no longer merely ownership records; their real value release depends on DeFi primitives such as lending, leverage, and stablecoins. As more native protocols go live and institutional participation deepens, this track could become the crypto market’s next trillion-dollar growth area. While investors watch the platform battle, they should pay even more attention to the maturity of underlying infrastructure and risk control capabilities.