Tokenized Stocks in DeFi: How Ondo Finance Works

Key Takeaways:The tokenized stock market grew from $30M to $1.2B — a 40x expansion — in 2025, representing over 2,500% year-over-year growth, according to Forbes.Ondo Finance offers 200+ tokenized US stocks and ETFs — including the popular iShares Core S&P 500 ETF (IVV) — that anyone can trade 24/7 on Ethereum and Solana without a traditional broker account.In June 2025, Ondo became the first platform to offer round-the-clock minting and redemption of tokenized stocks, meaning you can acquire real share exposure at 3 AM on a Sunday for the first time in financial history.The DTCC — Wall Street's central clearinghouse — announced a July 2026 production pilot with 50+ institutions including BlackRock, JPMorgan, and Goldman Sachs, signaling that tokenized stocks are becoming mainstream infrastructure.Real-world assets (RWAs) like tokenized stocks represent a broader $25B market on blockchain, with tokenized stocks being one of the fastest-growing segments alongside US Treasuries and money market funds.

Table of Contents

• What Is a Tokenized Stock, Really?
• How Ondo Finance Works: Step by Step
• Why DeFi Rails Change Everything About Stock Trading
• Ondo Finance vs. Other Tokenized Stock Platforms
• Where Do Bitcoin and Crypto Assets Fit In?
• The Big Picture: Real-World Assets on Blockchain
• What Are the Risks and Limitations?
• Practical Takeaways: What This Means for You
• Frequently Asked Questions

Imagine buying a share of Apple stock at 2 AM on a Saturday morning, from your phone, without filling out a brokerage application — and having that ownership represented as a digital token you can use as collateral in a lending protocol by Monday. That's not science fiction. As of 2025, it's exactly what tokenized stocks in DeFi make possible.

Tokenized stocks are blockchain-based tokens that represent 1:1 ownership exposure to real, underlying shares of stock, enabling 24/7 trading and programmable financial use cases previously impossible in traditional markets. For most of financial history, owning a stock meant going through a broker, waiting for markets to open, and settling your trade two business days later. Tokenization is dismantling all three of those constraints simultaneously.

Ondo Finance — one of the leading platforms in this space — is at the center of that disruption. This guide explains everything from scratch: what tokenized stocks actually are, how Ondo Finance builds them, why it matters for everyday people, and how the broader world of real-world assets on blockchain is reshaping the way we think about money.

What Is a Tokenized Stock, Really?

Let's start with an analogy. You've probably seen a coat-check ticket at a restaurant. You hand over your coat, get a small paper ticket, and that ticket represents your coat. You can hand the ticket to someone else, and they can go claim the coat. The coat never moved — but the claim to it did.

A tokenized stock works the same way. Instead of a coat, the underlying asset is a real share of stock — say, a share of the iShares Core S&P 500 ETF (IVV). Instead of a paper ticket, you get a digital token on a blockchain. That token represents your economic claim to that share: its price movements, its dividends, and in some cases, even its voting rights.

Here's the key: the real stock stays in a regulated brokerage account. It never disappears. If you decide you want the underlying share instead of the token, you redeem the token and the stock is transferred to you. The token is just a more flexible, programmable, always-on representation of that ownership.

As Ian Dvau, Chief Strategy Officer of Ondo Finance, explained it: "When you tokenize an asset, what it really just means is that you acquire the underlying. So if it's tokenized Tesla, you make sure that you can buy Tesla, put it in a brokerage account, and then mint a token on a blockchain that represents the economic exposure of that Tesla stock."

Simple enough. But the implications are enormous.

How Ondo Finance Works: Step by Step

Ondo Finance, built by the team at Ondo Finance, launched over 200 tokenized US stocks and ETFs on Ethereum and Solana in 2025. That catalog includes household names like Apple, Tesla, and Nvidia — along with major ETFs like the iShares Core S&P 500 ETF (IVV), which tracks the 500 largest US companies.

Here's exactly how the process works under the hood:

1. Acquisition: When you want to buy a tokenized stock on Ondo, the protocol (or its regulated partner) purchases the actual underlying share on a real stock exchange and holds it in a regulated custodial brokerage account.
2. Immobilization: That physical share never leaves the brokerage. It stays locked as the permanent backing for the token. Think of it as the coat never leaving the coat check.
3. Minting: A corresponding token is created ("minted") on the blockchain — one token equals one share's worth of economic exposure. This token is a smart contract on Ethereum or Solana.
4. Circulation: The token can now travel freely: you can hold it in your crypto wallet, trade it on a decentralized exchange (DEX), use it as collateral to borrow other assets, or send it to anyone in the world in seconds.
5. Redemption: At any time, the token holder can burn (destroy) the token in exchange for the underlying stock being transferred to their brokerage account — or for cash equivalent.

What makes Ondo's June 2025 milestone genuinely historic is the introduction of 24/7/365 minting and redemption. Before this, platforms offered 24/7 trading of existing tokens, but the actual creation and redemption of tokens was restricted to market hours. Ondo broke that barrier — meaning for the first time ever, you can initiate real share acquisition at any hour of the day or night.

Why DeFi Rails Change Everything About Stock Trading

Traditional stock markets have opening bells for a reason — human-operated systems need downtime. But blockchain networks run continuously, and smart contracts execute automatically without anyone needing to be at a desk. This creates something genuinely new: programmable stock ownership.

Here are three things you can do with a tokenized stock on DeFi rails that you simply cannot do with a traditional brokerage account:

• Use your stock as loan collateral — instantly. On DeFi lending protocols, you can deposit your tokenized IVV shares as collateral and borrow stablecoins against them within minutes. No credit check, no loan officer, no waiting period.
• Trade at 3 AM on a Sunday. Stock markets are closed on weekends. DeFi DEXes are not. Tokenized stocks trade around the clock, and with Ondo's 24/7 minting, the token price stays anchored to reality because real arbitrage can occur at any time.
• Send stock ownership across borders in seconds. Wire transfers take days. Sending a tokenized stock token to someone in another country takes the same time as sending any other crypto — usually under a minute, for a fraction of a dollar in fees.

For someone in a country with limited access to US financial markets — which includes most of the world — this is transformative. You don't need a US Social Security number or a US brokerage account. You need a crypto wallet. As explained in our guide on non-custodial Bitcoin exchanges, the same borderless principle applies to trustless asset access across DeFi.

Ondo Finance vs. Other Tokenized Stock Platforms

Ondo isn't operating in isolation. Several platforms are competing in this space, each with different regulatory approaches, asset catalogs, and geographic focuses. Here's how the major players compare as of mid-2026:

Two distinct regulatory paths have emerged, as Forbes reported in May 2026: the Wall Street Rail, where the DTCC and Nasdaq integrate tokenization into existing regulated infrastructure (slower, institutional, T+1 settlement), and the DeFi Rail, where platforms like Ondo operate with broader asset catalogs, instant settlement, and self-custody options.

Dinari's approach is worth noting: they secured a US broker-dealer license in 2025, meaning their tokenized shares operate under the same regulatory umbrella as traditional brokerages — potentially making them more accessible to US retail investors who are nervous about grey-area products. But that regulatory caution comes with fewer assets and less flexibility. From a pure functionality standpoint, Ondo's combination of the largest catalog, true 24/7 minting, and multi-chain support makes it the most feature-complete DeFi-native option available today.

Where Do Bitcoin and Crypto Assets Fit In?

Here's a question worth sitting with: if you can tokenize Apple stock and use it in DeFi, why would anyone use Bitcoin as a DeFi asset? The answer is that they're complementary, not competitive. Bitcoin DeFi assets — including tokenized or bridged BTC — serve as a base layer of value in DeFi ecosystems. Bitcoin is the most liquid, most recognized, and most globally trusted crypto asset. Tokenized stocks add exposure to real-world corporate earnings and equity growth. Together, they form a more complete on-chain financial system.

But using Bitcoin in DeFi has historically required wrapping — a process where you hand your BTC to a custodian who gives you a token like WBTC in return. That custodian is a single point of failure. If they get hacked or go insolvent, your BTC exposure could vanish.

Protocols like Teleswap take a fundamentally different approach. Teleswap, built by TeleportDAO, enables trustless BTC-to-ERC20 swaps using SPV (Simplified Payment Verification) light client proofs — meaning Bitcoin transactions are verified cryptographically on-chain, without handing your BTC to a custodian. TeleBTC, Teleswap's trustless wrapped Bitcoin token, is backed 1:1 by real BTC and secured by these cryptographic proofs rather than a committee of humans who can be pressured or compromised.

Think of it this way: tokenized stocks on Ondo require trusting a custodian brokerage to hold the underlying shares. That's a necessary concession given securities law. But for Bitcoin — a bearer asset with no issuer — there's no reason to accept custodial risk. As detailed in our guide on safely bridging Bitcoin to Ethereum in 2026, trustless solutions exist and are getting better.

As the on-chain financial system matures, the ideal portfolio looks something like: trustless BTC exposure (via SPV-verified bridges) + tokenized stock exposure (via platforms like Ondo) + stablecoins for liquidity. All composable, all programmable, all in one ecosystem.

The Big Picture: Real-World Assets on Blockchain

Tokenized stocks are one piece of a much larger puzzle called real-world assets (RWAs) on blockchain — the process of representing traditionally illiquid or broker-gated assets as blockchain tokens.

The broader RWA market hit approximately $25 billion in total value in 2025, according to Forbes. That figure includes:

• Tokenized US Treasuries — government bonds that earn yield and can be used as DeFi collateral
• Tokenized money market funds — WisdomTree's tokenized money market fund alone holds $733.3 million
• Tokenized stocks and ETFs — the fastest-growing segment, expanding 2,500% YoY in 2025
• Tokenized real estate, commodities, and private credit — still early but growing

The institutional signal here is impossible to ignore. On May 4, 2026, the DTCC — the organization that clears nearly every US stock trade — announced a July 2026 production pilot involving over 50 institutions, with BlackRock, JPMorgan, and Goldman Sachs named explicitly, per Forbes reporting. A full launch covering the Russell 1000 stocks, major ETFs, and US Treasuries is expected by October 2026. Meanwhile, regulators are moving too. The SEC's Nasdaq rule change — approved in March 2026 — enables tokenized trading of Russell 1000 stocks through conventional market infrastructure. Hong Kong's SFC and Singapore's MAS are expanding their own tokenization frameworks. The UK saw Baillie Gifford launch a tokenized bond fund in 2025. This isn't a fringe experiment anymore. It's becoming financial infrastructure.

What Are the Risks and Limitations?

No financial innovation is without risk, and intellectual honesty requires acknowledging the real challenges here.

Custodial risk is real. Platforms like Ondo rely on regulated custodial brokerages to hold the underlying shares. If that custodian fails, is hacked, or becomes insolvent, your token's backing is at risk. This is categorically different from holding Bitcoin itself — you are trusting a human institution, not just math.

Regulatory uncertainty hasn't fully resolved. While the DTCC pilot and Nasdaq rule change are major steps, many DeFi-rail platforms operate under "innovation exemptions" that could be revisited. US retail investors in particular may face access restrictions depending on how regulations evolve.

Liquidity can be thin. A tokenized stock is only as useful as its ability to be traded. Dinari's dShares, for example, had only a few million dollars of TVL across all DeFi protocols as of 2025. Thin liquidity means larger spreads and more slippage when you trade.

Smart contract risk exists. The code that governs minting, redemption, and token transfers could have bugs. Audits reduce this risk but don't eliminate it. DeFi is still a "do your own research" environment. None of these risks mean tokenized stocks are a bad idea. They mean you should understand what you're holding and size your exposure accordingly.

Practical Takeaways: What This Means for You

Whether you're a curious newcomer or an active DeFi participant, here's how to think about tokenized stocks right now:

• If you're outside the US and want US equity exposure: Tokenized stocks on platforms like Ondo may offer access you can't get through local brokerages. Check whether your jurisdiction is supported — geographic restrictions vary by platform.
• If you're already in DeFi and want diversification: Tokenized stocks let you hold real equity exposure inside the same wallets and protocols you already use. Using IVV tokens as DeFi collateral while maintaining S&P 500 exposure is a genuinely new financial primitive.
• If you're an institution watching this space: The DTCC pilot is the signal that this is no longer experimental. By late 2026, tokenized equity settlement may be a routine option for institutional trades.
• If you're a Bitcoin holder: The rise of tokenized stocks on DeFi rails makes the case for trustless BTC access even stronger. You don't want to sacrifice the security model of Bitcoin just to participate in on-chain finance. Solutions like those detailed in our BTC atomic swap guide demonstrate that trustless alternatives exist and are getting better.

The core insight is this: tokenized stocks don't replace traditional markets. They extend access to them — removing the geographic, temporal, and institutional gatekeeping that has historically made equity markets unavailable to most of the world's population.

Frequently Asked Questions

What are tokenized stocks in DeFi?

Tokenized stocks in DeFi are blockchain-based tokens that represent 1:1 ownership exposure to real, underlying shares of stock, enabling 24/7 trading and direct use in decentralized finance protocols. The actual stock is purchased and held in a regulated brokerage account, while a corresponding token is minted on a blockchain like Ethereum. This token can be traded, transferred, or used as collateral in DeFi protocols outside traditional market hours — including on weekends and holidays.

How does Ondo Finance work for beginners?

Ondo Finance lets you buy tokenized versions of US stocks and ETFs directly on blockchain networks like Ethereum and Solana, without needing a traditional brokerage account or meeting broker eligibility requirements. When you purchase a tokenized stock on Ondo, the protocol acquires the real underlying share through a regulated custodian, mints a corresponding token for you, and deposits that token in your crypto wallet. You can redeem the token at any time to receive the equivalent cash value or the underlying share itself.

What is Ondo Finance's IVV token?

Ondo's tokenized IVV represents economic exposure to the iShares Core S&P 500 ETF, which tracks the 500 largest US-listed companies by market capitalization. By holding an IVV token on Ondo, you get the same price exposure as owning the ETF — including dividend entitlements — but in a blockchain-native format that can be used in DeFi protocols, traded 24/7, or used as loan collateral.

Are tokenized stocks safe?

Tokenized stocks carry several distinct risks that traditional stock ownership does not, including custodial risk, smart contract risk, and regulatory uncertainty, requiring careful due diligence before investing. The underlying shares are held by a custodial broker, which means you're trusting that institution's solvency and security practices. Additionally, the smart contracts governing minting and redemption could have bugs or vulnerabilities. Always research the specific platform's security audits, custodian arrangements, insurance coverage, and regulatory status before committing capital.

How big is the tokenized stock market?

The tokenized stock market grew from approximately $30 million to $1.2 billion in 2025 — a 40x expansion representing over 2,500% year-over-year growth — according to Forbes data. This explosive growth is part of the broader real-world assets (RWA) on blockchain market, which reached approximately $25 billion total in 2025. Major institutional milestones in 2026 — including the DTCC's production pilot with 50+ institutions and Nasdaq's regulatory approval for Russell 1000 tokenization — suggest continued rapid expansion as mainstream financial infrastructure begins adopting the technology.

What is the difference between Ondo Finance and WBTC or wrapped Bitcoin?

Ondo Finance tokenizes traditional stocks and ETFs, while WBTC tokenizes Bitcoin — these are fundamentally different asset classes with different custodial models and security assumptions. WBTC requires a human custodian to hold your BTC and issue wrapped tokens, creating counterparty risk if that custodian fails. By contrast, trustless alternatives like TeleBTC (issued by Teleswap) use SPV cryptographic proofs to verify Bitcoin transactions on-chain without handing custody to anyone. Tokenized stocks inherently require custodial holding because securities law mandates it; Bitcoin as a bearer asset does not have that same legal constraint.

Can US residents use Ondo Finance tokenized stocks?

Access to Ondo Finance's tokenized stocks for US residents depends on the specific product and regulatory classification, and geographic restrictions may apply based on state residency and SEC guidance. As of 2025–2026, many DeFi-rail tokenized stock platforms operate under innovation exemptions that may limit access for US retail investors. Dinari, which holds a US broker-dealer license, may offer a more compliant path for US residents. Always check the platform's terms of service and consult a qualified financial advisor for jurisdiction-specific guidance before trading.

The Bottom Line

Tokenized stocks in DeFi aren't just a technical curiosity — they're a structural shift in how financial markets operate. Ondo Finance's catalog of 200+ tokenized US stocks and ETFs, combined with 24/7 minting and multi-chain support, represents the most complete implementation of this vision available to everyday users today. The DTCC's institutional pilot and Nasdaq's regulatory approval signal that this technology is graduating from experiment to infrastructure.

For someone new to crypto, the takeaway is simple: blockchain is becoming a place where you can own a piece of the S&P 500, lend it as collateral, and trade it on a Sunday afternoon — all from a single wallet. That's a fundamentally different relationship between people and financial markets.

And for those already thinking about how Bitcoin fits into this on-chain financial future: the same principles that make tokenized stocks powerful — permissionless access, programmability, 24/7 availability — apply to BTC. The key is making sure your Bitcoin access is as trustless as Bitcoin itself. Explore how Teleswap enables trustless BTC swaps across DeFi — no custodian, no wrapping, just cryptographic proof.

For more beginner-friendly guides on DeFi, Bitcoin, and the on-chain economy, visit academy.teleswap.xyz.