How tokenized stocks work
An on-chain token pegged to a real share — with near-instant settlement and DeFi composability. What you actually own depends on how it's backed.
A tokenized stock is an on-chain token whose value is pegged to a real equity share — for example, a share of a listed company. The goal is to bring a traditional asset onto a blockchain, gaining near-instant settlement, fractionalization, round-the-clock availability, and composability with DeFi.
The backed model
The most common structure is one-to-one backed: a regulated custodian or brokerage buys and holds the real share, and issues a token on-chain representing an economic claim over it. Ideally there is:
- Proof of reserves — verification, often via oracles, that each token has real backing.
- A regulated issuer responsible for custody and redemption.
The token's price tracks the underlying asset through oracles that bring the market quote on-chain, plus arbitrage between the token and the real share.
Backed vs. synthetic
It's crucial to distinguish this from synthetic derivatives, which merely mirror the price using crypto collateral, without holding the real share behind them. The backed model gives exposure to something with real custody; the synthetic gives price exposure with a different risk profile, dependent on the collateral and the protocol.
What you actually own
This varies by model. In many cases you get economic exposure — price movement, and sometimes dividend pass-through — but not shareholder rights such as voting, since legal title to the share remains with the custodian. Reading the issuer's terms is essential to understand exactly what the token confers.
Why it matters. Tokenized stocks are where traditional finance and crypto try to meet in the middle: the asset is a familiar share, but the rails are open, fast, and programmable. The catch is that "owning" the token isn't always the same as owning the stock — and the gap between the two lives entirely in the issuer's legal fine print, not on the chain.