On-Chain US Stocks: TradeXYZ & Hyperliquid Lead the Charge

On-Chain US Stocks: A New Frontier in Decentralized Finance

The world of Decentralized Finance (DeFi) is witnessing a remarkable evolution, with increasing focus on integrating traditional assets into blockchains. One of the most prominent developments is the emergence of "On-Chain US Stocks," a concept that isn't entirely new but is gaining traction amidst the crypto market's sluggishness and the lack of clear direction for major coins.

Key Takeaways:

• The Rise of On-Chain US Stocks: Analysis of why this concept is gaining traction in the current crypto market.
• TradeXYZ and XYZ100: An in-depth look at the TradeXYZ protocol and its XYZ100 product, and how it leverages Hyperliquid.
• The Competitive Landscape: A review of other protocols operating in the on-chain US stocks space, such as xStocks, Derive.xyz, and Kraken xStocks.
• Risks and Challenges: Discussion of potential risks, including reliance on oracles and potential manipulation, as well as regulatory uncertainty.

The Shift Towards Traditional Assets

Over the past year, the market has seen numerous attempts to bring US stock indices, treasury yields, and even individual stocks on-chain. However, most of these products remained in the "shadow asset" stage, either excessively reliant on oracles for price feeds, suffering from insufficient trading depth, or exhibiting significant price discrepancies compared to traditional markets. Consequently, they couldn't be considered true "alternative markets."

Hyperliquid's HIP-3 upgrade appears to be a turning point. Technically, this upgrade allows for the permissionless creation of native on-chain order book perpetual markets. This, to some extent, ends the reliance of on-chain traditional asset trading primarily on synthetic assets or oracle-driven models, offering an alternative for building an independent market with self-price discovery capabilities.

An example is XYZ100, launched by TradeXYZ. Since its launch, its trading volume has been steadily increasing, with daily trading volume stabilizing at tens of millions of dollars, and the maximum open interest increasing from an initial $25 million to $60 million.

TradeXYZ: Pioneering Real-World Assets on Chain

TradeXYZ is a native protocol incubated within the Hyperliquid ecosystem, focusing on bringing real-world assets (RWAs) – such as US stocks, indices, etc. – into on-chain trading scenarios through tokenization. The protocol supports both spot and perpetual contract trading models, and integrates with Unit Protocol to handle spot asset liquidity and settlement. Users can use USDC for deposit, withdrawal, and trading. Their current core product is a HIP-3 standard-based equity perpetual contract, aiming to bridge traditional financial markets with a decentralized trading experience.

XYZ100 is a fully on-chain CLOB (Central Limit Order Book) model, supporting 24/7 trading with up to 20x leverage. The price is pegged via the CME (Chicago Mercantile Exchange) Nasdaq Futures oracle, and uses an 8-hour EMA (Exponential Moving Average) to smooth the price during non-trading hours to avoid extreme volatility.

Why Are Crypto Traders Turning to US Stocks?

Firstly, the "steady growth" of US stocks is trumping the "high volatility and low certainty" of crypto: Although there are signs of institutional accumulation of BTC, the "leverage crash" on 10.11 still makes retail investors wary. Meanwhile, the US stock market is currently experiencing a significant surge, with the S&P 500, Dow Jones, and Nasdaq all setting new record highs for three consecutive trading days this week.

At the same time, on-chain trading platforms are attracting global investors with their unique advantages: through 24/7 continuous trading, no KYC verification, and up to 20x leverage, users from different time zones in Asia, Europe, and elsewhere can adjust their positions at any time, completely eliminating the T+1 settlement mechanism and weekend closure restrictions of traditional markets.

The Competitive Landscape and Risks

With this surge in activity, the entire on-chain US stocks ecosystem is rapidly evolving, with multiple protocols approaching the market from different angles. However, there are still many risks and challenges, including reliance on oracles and potential price manipulation, as well as regulatory uncertainty.

Conclusion

The world of Decentralized Finance is undergoing a significant transformation, shifting towards the integration of traditional assets into blockchains. The emergence of on-chain US stocks represents a new opportunity for investors, but it also carries risks and challenges that must be considered. It remains to be seen how this burgeoning market will evolve in the future.

Disclaimer: The content in this article is for informational purposes only and does not constitute any investment advice. Investors should exercise caution and make informed decisions based on their own circumstances and assume responsibility for the risks.