Sush K

This is how lending pools behave under stress. Zero exposure to Binance doesn’t matter if everyone withdraws at once, you can only pull what isn’t lent out. The rest comes back as loans get repaid, and rates spiking is what speeds that up

What a US stock is worth on a Saturday is turning into a real question. Walk through a weekend with this week's news: Fri 6pm ET: DTCC's new tokenisation service stops converting tokens back into DTC until Monday 2am. Tokens can still move between registered wallets, they just can't be converted back. Fri 8pm ET: the Chainlink feeds behind Aave's stock token market on Base freeze until Sunday 8pm. Nobody gets liquidated on price over the weekend, the whole thing reprices in one step Sunday night instead. All weekend: the live prices for these stocks come from 24/7 perps, almost all offshore. That's why ICE backing trade.xyz matters, along with Kraken's parent going the same way through Bitnomial. If the CFTC approves them, there's a regulated weekend price for US stocks for the first time. Lenders freeze the price today because there's nothing they trust to mark against. A regulated weekend market could be that mark. Bigger story than Americans getting perps imo. Until then the Sunday night reprice is the risk. @LlamaRisk's pre-launch numbers had roughly $0.3M to $1.1M of depth within 2% per stock token on Base. Not much to absorb a gap.

Robinhood stock tokens can now be used as collateral on Morpho. The weekend is the part I’d watch. The token can trade on Saturday, the stock can’t. So if a position gets liquidated on a weekend, whoever buys the collateral is holding something they can’t properly hedge until Monday. They’ll only bid at a discount. And Monday’s open can gap well past Friday’s close. So LTVs on stock collateral have to cover a weekend gap, not a normal day’s move. The depth that matters is Saturday’s, not Tuesday’s.

Glad this got picked up. Fund and cash leg on one ledger is the bit of the JPMD news that’ll matter most.

Per Dune’s After Issuance report, tokenized stocks are about 8% of on-chain RWA supply but 93% of the trading. Around a fifth of tokenized credit sits as collateral in lending protocols. Very little of it actually changes hands. So why put a loan on-chain at all? Two reasons, and neither is solved yet. 1. A secondary market. The token can trade while the vehicle keeps holding the loans. But a buyer can’t cleanly hedge borrower risk, so the bid is thin. With no bid, your exit is redemption, which depends on the manager having cash from repayments. That’s why credit funds have gates. 2. Distribution. Most private credit is still limited to accredited or professional investors, and that applies on every resale, not just the first sale. Solve that on the regulatory side and the pool of buyers gets wider, which is exactly what a secondary bid needs. The two feed each other. Crack both and you’ve got a pitch for investors and for issuers. Until then it’s the same illiquid loan with faster settlement.

Tokenized credit has more than doubled in a year, and per Dune’s After Issuance report about two thirds of it is traditional lending. Home equity lines, middle market loans. Worth sitting with what those assets actually are. None of them trade in TradFi either. A middle market loan isn’t illiquid because the record lived in a spreadsheet, it’s illiquid because selling it means finding someone willing to underwrite that borrower. Moving the record on-chain doesn’t touch that. Token settles in seconds, the loan behind it still takes weeks to shift. So the exit is redemption, and redemption means the manager selling into whatever bid exists. Which is thinnest exactly when everyone wants out at the same time. Not an argument against any of it. Just worth knowing you’re holding an illiquid asset with a fast settlement layer bolted on, and those are two different things.

The IMF’s new chapter is being quoted everywhere for one line: more than half of tokenised stock trading happens outside US market hours. Read as proof of demand. The rest of the chapter is less flattering. Same study: about 80% of those trades were for less than one share, and the tokens ran roughly 1.5x the realised volatility of the stocks they track, with thinner liquidity. Thats what overnight actually looks like. With the underlying closed you can’t hedge a single name cleanly, so anyone quoting is carrying the position to the open and pricing the wait. Weekends there’s nothing open at all. Which is why listing hundreds of tickers and having hundreds of tradeable ones are different numbers. The IMF studied five, because five were liquid enough to study. Issuance is the part that works. Getting out at size when the market you’re tracking is shut still doesnt, and until it does this is access rather than a market.

Most tokenized RWAs have a primary market and nothing after it. You can subscribe. After that your only exit is redemption from the issuer, on their timetable, at their minimums. That's a queue, not a market. The workaround has been synthetic exposure, which tracks the price without giving you a claim on the asset. Fine until the day you need the claim, which is the only day it matters. Issuance was the easy half. The venues and the settlement that make these things tradeable still aren't there. Tradfi is arriving and there's nowhere to trade any of it.

Institutions are finally arriving and there's less worth buying than there was two years ago. Not because there are fewer projects. There are more than ever. Most are built to make a quick return and disappear, and the people who can tell the difference see it in about ten minutes. Fewer of the serious teams are getting to the point of launching a token. The ones that do have to spend most of their budget on everything except the product, because that's what the market demands before anyone will look at them. And the rails aren't ready for that money anyway. The scale, the security, and the compliance requirements that come attached to institutional capital are all things we've mostly deferred. This is the moment to break the cycle, because the opportunity in front of us is bigger than another rotation of the same trade. The technology is genuinely useful to how finance works, and finance is finally looking. Either we're part of that evolution, or we run the same cycle again and earn every bit of the reputation we complain about.