Traders used stock-linked tokens on Robinhood Chain to buy memecoins in early September, pushing daily trading volume in “memecoin–stock token” pairs to about $440 million, Bloomberg reports. The activity matters because it turned tokenized stocks into liquidity for round-the-clock speculative markets whose prices can separate from the value of the underlying shares.

The trend emerged in the U.S. and other markets as traditional-asset tokenization developed and retail trading moved to 24/7 onchain venues. Traders could use tokens linked to public companies as liquidity for memecoins, creating new speculative instruments around those companies.

Low Che Sheng, a 27-year-old Singapore trader who has traded memecoins for about two years, previously bought them with cryptocurrencies such as Ethereum or Solana. He can now swap tokens linked to Snap or Nvidia shares directly for memecoins through liquidity pools.

“It feels like I’m in the Snapchat trade since I need to have it to buy the memecoin in the liquidity pool. And it doesn’t feel like gambling. It’s on Robinhood which is trustable,” Low said.

Tokenized stocks enter memecoin markets

Robinhood says each Stock Token is backed 1:1 by the corresponding shares held with a custodian. Each token also has an onchain price feed linked to the underlying asset.

However, a token’s price in a decentralized liquidity pool can diverge from the underlying share price, depending on available liquidity and the ratio of tokens in the pool. Stock Tokens are not shares and do not give holders voting rights in the companies.

Daily trading volume in memecoin pairs involving tokenized stocks reached about $440 million in early September before declining quickly, according to Dune. The combined market capitalization of popular tokenized stocks peaked at about $69 million, according to RWA.xyz.

Crypto investor Eric Conner described the activity as a natural result of tokenization’s development: “We tokenize stocks, and the first thing people do with it is meme it. I think that’s just a sign of the times and a sign of the future.“

Conner bought a memecoin tied to a Hims & Hers Health token when the memecoin had a market capitalization of about $600,000. About a week later, he said, its market capitalization had risen to $80 million.

Pool prices diverge from underlying shares

In late August, one liquidity pool accumulated a significant share of the Hims token supply, pushing its price to more than four times that of the underlying stock. Hims shares barely moved when the U.S. stock market opened on Monday.

Farmmi provided another example. The small company’s Nasdaq-listed shares rose as much as 321% on September 2. Before that move, Robinhood Chain traders had actively bought a memecoin named after one of Farmmi’s mushrooms. The memecoin was linked to an unofficial Farmmi token that had no connection to the company’s actual shares. At its peak, the memecoin’s market capitalization was roughly 10 times the company’s value.

Talos analyst Tanay Ved called Farmmi an example of what happens when “retail speculation and memecoin virality collide with 24/7 onchain markets.”

The model is open: Robinhood does not necessarily need to create a memecoin, and the company whose shares underpin a token does not need to participate in building the related market.

After Robinhood’s conflict with AMC Entertainment CEO Adam Aron, who demanded an end to trading in the AMC token without the company’s involvement, traders created A Meme Coin, or MEME, tied to tokenized AMC shares. Its market capitalization reached nearly $150 million at its peak.

“I think it is interesting because it shows that in the on-chain environment, like things you can permissionlessly build. Who knows what else we might find out with tokenized stocks one day?” said Alex Thorn, head of research at Galaxy Digital.

Robinhood will add the ability to redeem Stock Tokens for actual shares and provide voting rights.

Source: Incrypted