Coinbase Launches Tokenized Stocks on Base

Coinbase Tokenizes Stocks on Base [0:12]

• Coinbase announced the tokenization of stocks to integrate them into the Base blockchain.
• The goal is to make stocks available 24/7, globally, instantly, and with lower transaction costs.
• This initiative aims to plug equities into the programmable economy of Base.

  "We're taking those stocks and equities. We're tokenizing them. We're putting them on base."

Legal Structure and Collaboration [0:52]

• Each tokenized stock has a one-to-one representation with a direct claim for users.
• The project is a collaboration with Abu Dhabi and Alpaca.
• Coinbase emphasizes its methodical approach to bringing trusted versions of products to market.

  "We've done this in collaboration with Abu Dhabi and Alpaca, and we think it's the best model for tokenizing equities."

Handling of Dividends and Governance [1:41]

• Tokenized stocks will include dividends and governance rights, mirroring U.S. stocks.
• Dividends are handled through a rebasing mechanism, where token balances increase.
• This rebasing model enhances composability within DeFi, particularly for borrowing and lending.

  "So on this, you're going to have dividends. You're going to have a direct claim to those. You're going to have governance rights."

Permissionless Access [3:08]

• The tokenized stocks are freely, permissionless, and publicly available.
• No KYC is required to hold the tokens.
• U.S. users face restrictions at the interface layer, with geofencing applied by others.

  "Freely, permissionless, publicly available. No KYC in there."

Initial Stock Offerings [4:22]

• The tokenization process starts with stocks showing the most retail demand.
• The first four stocks rolling out are NVIDIA, Meta, Apple, and Google.
• An additional eight stocks will be released shortly after, with plans to scale to thousands.

  "And so I think the first four that are rolling out are NVIDIA, Meta, Apple, and Google."

Leveraging Base's DeFi Ecosystem [5:26]

• Base has a robust DeFi ecosystem that has grown through the bear market.
• Base is the second-largest on-chain ecosystem for financing after Ethereum.
• Tokenized stocks will be plugged into this DeFi ecosystem to unlock new use cases.

  "And now we're bringing the largest asset class in the world."

Aerodrome and Liquidity [5:55]

• Tokenized stocks are launching with deep liquidity on Aerodrome, a key liquidity hub on Base.
• Aerodrome is expected to pioneer solutions for managing AMM liquidity for stocks.
• The partnership aims to build the deepest liquidity for stocks anywhere on-chain.

  "They're building liquidity for all of these stocks out of the gate."

Morpho, Aave, and Lending/Borrowing [6:36]

• Protocols like Morpho and Aave will offer borrowing and lending products for tokenized stocks.
• Deep USDC liquidity on Base will enable low borrowing rates against tokenized stocks.
• This creates a flywheel effect for borrowing, lending, and DeFi growth.

  "And then on the lending and borrowing side, you know, Morpho has grown huge on BASE. Aave as well."

Product Rollout and Minting/Burning [7:34]

• Initially, a smaller group will be able to mint and burn tokens.
• The long-term goal is to allow anyone to mint and burn, enabling self-custody.
• This allows users to tokenize their stocks and move them off traditional platforms.

  "And then they're providing liquidity into the broader ecosystem."

Role of Coinbase.com and App [8:24]

• In the U.S., tokenized stocks will initially be for non-U.S. customers due to regulations.
• Outside the U.S., this product opens new markets for Coinbase by simplifying integration.
• It allows Coinbase to offer tokenized stocks in many regions more easily than traditional equities.

  "But outside of the U.S., this is going to be a really powerful tool for opening up new markets for Coinbase."

Neo-Brokerages and Financial Apps [9:15]

• Neo-banks are transforming into neo-brokerages or neo-financial apps by leveraging crypto rails.
• These platforms can offer stocks, derivatives, yield generation, and borrowing alongside stablecoins.
• Base aims to be the backend infrastructure for these financial products.

  "And I'd say that's the big focus for us is basically making it so that these assets just become more useful because they're built on chain."

Monetizing Through Tokenization [10:40]

• Tokenized stocks enable neobanks to monetize trading flow and offer integrated financial services.
• This is particularly attractive in regions with limited access to U.S. financial systems.
• Base is positioned as the ideal platform for neobanks looking to become neo-brokerages.

  "And maybe I just make a call that if you are a new neobank and you want to become a neobrokerage, there's no better place to do that than base."

Global Jurisdiction of Crypto [11:49]

• Building on the global financial system of blockchains reduces complexity compared to traditional finance.
• While regional compliance is still necessary, the underlying technology stack is unified.
• This contrasts with the difficulty of establishing banking rails across multiple jurisdictions.

  "But I think the point that you're making is spot on, which is basically when you are building on that global financial system, it massively reduces the complexity in terms of what you need to be thinking about as a new product."

Off-Hours Trading [13:16]

• The nature of the tokenized stock product does not change during off-hours.
• Liquidity dynamics will differ, but price discovery is expected to move on-chain.
• This could lead to on-chain price discovery during traditional market off-hours.

  "No. I mean, the product is still the product. It's still going to be the tokenized one-to-one version of the stock."

Future Innovations and Use Cases [14:03]

• Coinbase is excited about builders creating real-world asset products and creative on-chain innovations.
• Base focuses on trading, financing, and payments, serving both large enterprises and crypto innovators.
• The goal is to make assets more useful by bringing new use cases and audiences.

  "And so I said this in another podcast the other day, which is that I feel like base is a barbell in terms of where we're focused right now."

Building the Global Economy [15:44]

• The introduction of tokenized assets like stocks signifies having all the necessary building blocks for crypto.
• Base aims to be the best platform for finance, enabling trading, financing, and payments.
• The vision is to build an 'everything exchange' for exchanging value globally.

  "And now we have incredible wallet experiences, incredible stable coins, including not just dollar stable coins, but I think base has like 25 currencies from around the world now that are available so you can build localized experiences and do FX on chain."

Global Currencies on Chain [16:43]

• A key focus is getting all world currencies on-chain to enable localized experiences.
• Building financial infrastructure for non-dollar stablecoins is crucial for adoption.
• This allows for one-to-one on-ramps and localized financial services globally.

  "I am still pretty focused on this whole, like, how do we get all of the world's currencies on chain?"

Stitching Pieces Together [18:38]

• The next step involves integrating existing assets and primitives into seamless user experiences.
• This includes infrastructure for portfolio line-of-credit for tokenized assets.
• The focus is on making these integrated financial products work out-of-the-box.

  "So this is a lot of the work that I'm actually doing right now with the Coinbase team."

Driving Adoption and Expanding Use Cases [19:31]

• Earn products are a key entry point, offering higher yields than traditional rates.
• The strategy is to onboard users with earn products and then introduce borrowing, equities, and other assets.
• This 'land and expand' approach aims to drive broader crypto adoption.

  "And so a lot of the selling that we're doing right now is get folks in with earn and then show them, Hey, it's not just earning."

Long-Tail Fiat On-Ramps [20:36]

• There's a significant opportunity for builders in creating long-tail fiat currency on-ramps.
• Issuing local currency stablecoins allows for monetization of float and subsidized on-ramps.
• This infrastructure is essential for bringing the rest of the world on-chain.

  "Long tail fiat currency issuers in particular, um, who come build with us on base."

Opportunity for Builders [21:21]

• While progress is being made, there's still a need for more builders in non-dollar stablecoin markets.
• Opportunities exist for creating lending markets for local currencies paired with global assets.
• This can transform local economies by increasing efficiency, global connectivity, and economic freedom.

  "And builders who lean into that and say, hey, we're going to make lending for Naira with US stocks huge."

Jesse Pollak's Role at Base [23:05]

• Jesse Pollak leads the Base chain, focusing on upgrades, go-to-market, and community.
• He handed off leadership of the Base app to Kobe, shifting focus to growing the chain.
• His domain includes shipping upgrades, marketing, business development, and community engagement.

  "So I, you know, a founder and leader of the chain. So anything on the chain, um, I'm leading."

Base Chain Technical Roadmap [24:59]

• The roadmap prioritizes making Base the best platform for trading, financing, and payments.
• Base complements Ethereum by providing specialized infrastructure for these use cases.
• The goal is to create a global economy that increases innovation, creativity, and freedom.

  "And if you think about Ethereum, you know, I was, I was like, you know, I think Vitali tweet the other day or, you know, maybe a couple months ago where he was like, you know, Ethereum isn't just for trading basis for trading."

Tokenized Stocks Beyond Base [26:32]

• Coinbase plans to bring tokenized stocks to more places beyond Base.
• The goal is to create a platform that connects different chains, with Base as a central hub.
• This expansion will increase the offering of tokenized assets across various networks.

  "I think that Coinbase is going to bring tokenized stocks to more places than just base."