In 2025, I'm all about tokenizing meme stocks, reminiscing about my days of yield farming in 2020.

Original Title: "Witnessing Stock Tokenization Again, I Miss That Summer of 20 Years Ago"

Original Source: DeepTech TechFlow

In July, under the scorching sun, the cryptocurrency community in the peak of summer saw a wave of stock tokenization. Robinhood made a high-profile announcement that European users could trade US stocks on the Arbitrum chain 24/7; xStocks partnered with Kraken and Solana to launch on-chain tokens for 60 popular US stocks, and Coinbase also applied to the SEC to introduce tokenized securities...

For a moment, stock tokenization became one of the few correct narratives in the dull cryptocurrency world, and this wave has taken over everyone's timeline.

However, this was not the first time for stock tokenization. Memories of the past began to haunt me, making me nostalgic for that summer five years ago. In August 2020, the DeFi summer swept through the cryptocurrency community like wildfire, Uniswap's liquidity mining ignited a frenzy, Terra's Luna blockchain and UST surged, and on-chain finance had already made many innovations, including stock tokenization.

At that time, on Luna, there was a protocol called Mirror. I minted mAAPL (the token corresponding to Apple's stock) on Terra Station with a few US dollars, no KYC required, no account opening needed, bypassing the broker for the first time to feel the pulse of Apple's stock price. But there is a lyric that perfectly describes how an old hodler felt after experiencing all this: "You left a clamor in my life, but the silence after you leave is terrifying."

Luna eventually collapsed, and Mirror was crushed by the SEC's lawsuit, shattering the dream of 2020. Apart from transaction hashes, there seemed to be nothing to prove that as early as five years ago, during that summer, tokenized US stocks had already existed. Now, xStocks and Robinhood are making a comeback, reigniting hope for on-chain US stocks. Will it succeed this time? What is different from five years ago?

That Summer, Mirror's Free Utopia

If you don't remember Mirror Protocol or weren't in the community back then, let me help you recall some distant memories.

The core idea of the Mirror Protocol was: to use on-chain synthetic assets to track the stock prices of real-world US stocks. This approach gave rise to a category of assets called mAssets. The so-called "synthetic assets" mAssets are tokens that simulate stock prices through smart contracts and oracles. Holders do not hold the actual stocks but only something like a "digital shadow" to track price fluctuations.

For example, mAAPL (Apple), mTSLA (Tesla), mSPY (S&P 500 ETF), rely on Band Protocol's decentralized oracle to obtain real-time US stock data.

Although this is different from directly buying US stocks, the advantage lies in convenience: minting mAssets is straightforward. By over-collateralizing 150%-200% with the stablecoin UST on the Terra blockchain, one can easily obtain the corresponding tokenized stocks through Terra Station operation, without the need for KYC, with transaction fees of only around $0.1.

These tokens can not only be traded 24/7 on Terraswap (Terra's DEX) like Uniswap's token pairs, but also can be used as collateral in another in-house lending protocol, Anchor Protocol, for borrowing or earning interest.

Enjoying the growth benefits of US-listed companies while leveraging the flexibility of DeFi, it seems that the DeFi from 5 years ago has already mastered the tokenization of US stocks.

However, good times did not last long, as the dream of that summer was unexpectedly shattered. In May 2022, a well-known black swan event struck the crypto community. Terra's algorithmic stablecoin UST decoupled, Luna plummeted from $80 to just a few cents rapidly, mAssets went to zero overnight, and Mirror nearly came to a halt.

To make matters worse, the US SEC took action, accusing mAssets of being unregistered securities, leading Terraform Labs and its founder Do Kwon into a legal quagmire. From "sit tight, folks" to "we're sorry, we failed," the collapse of the Terra ecosystem also made the tokenization of US stocks on-chain disappear without a trace. While lamenting and reminiscing, you can also see its fatal weakness:

Synthetic assets heavily rely on oracles and UST stability, with no actual stock backing. The collapse of the underlying structure would turn the upper-layer assets into bubbles. In addition, while anonymous transactions attract users, they are bound to cross regulatory red lines. At that time, regulations and policies were far from as enlightened and lenient as they are today.

The fragility of synthetic assets, the risk of stablecoins, and the absence of regulation made this experiment pay a painful price.

What Makes This Time Different?

Unsuccessful then does not mean unsuccessful now. The summer of 2020 has passed, and this time, Kraken, Robinhood, and Coinbase, armed with more mature technology and compliance posture, are attempting to rewrite the story. As a veteran player who witnessed the DeFi summer, I can't help but compare: what is different this time compared to Mirror five years ago? Perhaps we can look at it from three aspects: product, participating entities, and market environment.

Product: From On-chain Shadow to Real-world Anchor

As mentioned earlier, tokens like mAAPL and mTSLA are just on-chain shadows simulated by smart contracts, not backed by actual stocks, only simulating price movements. However, xStocks is now taking a different approach. xStocks is custody by regulated brokers, ensuring the purchased stocks have a redeemable cash value.

Behind this process of tokenizing US stocks is Backed Assets, a Switzerland-based token issuer responsible for purchasing and tokenizing assets. It acquires stocks, such as Apple or Tesla, through Interactive Brokers' IBKR Prime channel (a professional brokerage service connecting to the US stock market), then transfers the assets to Clearstream (a custodian of the Deutsche Börse platform) for segregated storage, ensuring each token corresponds 1:1 to actual holdings and undergoes legal audits.

In essence, behind every on-chain purchase you make, there is a real stock purchase acting as an anchor.

(Image Source: X User @_FORAB)

Furthermore, xStocks enables token holders to redeem actual stocks through Backed Assets, allowing it to move beyond Mirror's pure on-chain speculative framework and bridge the gap between on-chain and off-chain.

Participant Entities: From DeFi Native to TradFi Integration

Mirror's stage belongs to DeFi-native players. The Terra community of retail traders and developers is the main force, with discussions on Discord and Twitter driving the popularity of mAssets. The success of Mirror is inseparable from the Terra ecosystem's Luna and UST craze, and the community's experimental spirit has made it shine like a comet. It's also a sobering thought that times have changed for the older generation.

The leaders of this wave of US stock tokenization are mainly traditional financial giants and compliant entities within the industry. For example, xStocks is provided by Kraken to offer a compliant platform, Robinhood brings traditional brokerage experience to the blockchain, and BlackRock's tokenization pilot project signifies institutional participation. Solana's DeFi ecosystem (such as Raydium and Jupiter) has indeed added vitality to xStocks, as retail traders can use the tokens for liquidity mining or borrowing while retaining some DeFi genes.

However, compared to Mirror's community-driven approach, xStocks is more like a grand production orchestrated by exchanges and TradFi giants: bigger in scale, lower in wildness.

Market and Regulatory Environment: From Grey Area to Compliance First

In 2020, Mirror emerged in the regulatory grey area. During DeFi summer, compliance was almost non-existent, and anonymous trading was the community's default rule. By 2022, the SEC deemed mAssets as unregistered securities, leading Terraform Labs into litigation, and anonymity became a fatal flaw. Back then, the market was small, and DeFi resembled more of a playground for geeks. The market and regulatory landscape in 2025 are vastly different. Projects like xStocks prioritize compliance, enforce KYC/AML, comply with the EU's MiCA regulation, and U.S. securities laws.

Upon taking office in January 2025, the Trump administration's SEC Chairman Paul Atkins referred to tokenization as the "financial digital revolution," and a more lenient policy was fostering innovation. In June 2025, Dinari obtained the first U.S. tokenized stock brokerage license, further paving the way for Kraken and Coinbase. The mainstream financial sector's embrace and the changing market environment allowed xStocks and Robinhood to navigate the legal pitfalls that Mirror faced with a compliance-first approach. However, it also seems to have stripped away some of the grassroots flavor of tokenized stocks on the blockchain.

Lingering Summer Vibes

Over these past few years in the crypto community, things seem to have changed and yet remained the same. The tokenization of U.S. stocks in DeFi five years ago was like a raw, impassioned party, full of zeal but lacking stability. Today, five years later, crypto has donned the cloak of compliance, walking a steadier path but losing some of its spontaneity and grassroots essence.

Similar product, different scenery. As more people view BTC as digital gold, as institutions eagerly prepare, and as crypto gradually becomes a tool to drive up traditional market stock prices, two waves of people inside and outside the industry may have inadvertently completed a shift in perspective:

Those who used to trade stocks couldn't understand why the crypto market was so hot; now, those trading coins are starting to wonder why crypto-labeled stocks keep soaring. It was only in that summer, during that frenzy of FOMO where everyone was eager to join the game, that ubiquitous recklessness and geek spirit may have long since dissipated with the wind.