Cheap on-chain borrowing key to tokenized equity adoption

Cetrini Research notes that tokenized treasuries are currently about 3.5 times larger than tokenized stocks, despite equities receiving more headlines. Sam McPherson explained that yield-bearing stablecoins like Sky are major buyers of tokenized treasuries to generate yield, creating a strong product-market fit for liquid, USD-denominated on-chain assets. He argued that the adoption of tokenized equities is bottlenecked by borrowing costs, noting that users will not move capital on-chain for idealism but for better rates.

McPherson predicts that global competition in DeFi lending markets will drive rates down, making on-chain borrowing against tokenized stocks cheaper than traditional brokerage margins at firms like Interactive Brokers. This rate compression is expected to be the primary catalyst for bringing more assets on-chain, following the initial wave of stablecoin and treasury adoption. McPherson argued that competitive on-chain lending rates, not just regulatory clarity, are the critical bottleneck for the mass adoption of tokenized equities. He emphasized that participants need to be getting a better deal to justify the shift.