Tokenized equities are in the spotlight in 2026, but can billions of dollars of real stock safely plug into DeFi’s yield engine?
Sentora, a merged entity combining IntoTheBlock’s crypto data analytics with Trident Digital’s institutional yield strategies, argues that tokenized equities plus stablecoin money markets could be the next major disruption across both cryptocurrencies and traditional finance — if a list of frictions can be solved.
Here’s a look at the four key hurdles the firm believes stand in the way.
Speakers hosting a recent Sentora webinar were blunt: First-generation tokenization mostly disappointed. Credit and real‑estate deals were often illiquid, concentrated in a single issuer and never truly embedded in DeFi as collateral. They claim that the real use case is tokenized equities posted into on‑chain money markets to borrow stablecoins and to generate yield on stocks that have appreciated massively but pay no dividend, such as any of the Mag 7 tech stocks.
They argued that, if a retail investor who put US$10,000 into NVIDIA (NASDAQ:NVDA) and is now sitting on US$100,000, can click to borrow US$20,000 to US$30,000 at 5 percent without selling, that is a qualitatively new product versus today’s roughly 10 percent margin loans from brokers constrained by Basel capital rules.
At scale, they suggested that even a one percent penetration of the roughly US$25 trillion in US retail equity holdings would exceed the entire current DeFi market and could lift base DeFi yields by a few hundred basis points.
Turning that vision into something robust requires solving liquidation, oracle and market structure problems that don’t exist for purely crypto collateral. Sentora’s view is that it is a mistake to try to rebuild Nasdaq on‑chain with thin automated market makers and retail liquidity providers.
Instead, liquidations should use existing equity liquidity: when a loan backed by tokenized Nvidia, for example, breaches its thresholds, a liquidator posts stablecoins, borrows the underlying stock from a securities lender, sells it on Nasdaq, and then unwinds the token wrapper once settlement catches up.
Because this process spans multiple days, early implementations will need conservative loan‑to‑value ratios, wider spreads and a tolerance for basis risk between on‑chain prices and off‑chain fills. Issuers like Ondo that can wrap and unwrap within hours help, as do traditional data providers such as Bloomberg and Reuters that already stream millisecond‑level equity prices and can serve as the backbone for hybrid on/off‑chain oracles. The complexity is high, but their BTC and ETH carry‑trade strategies, where smart contracts constantly lever and delever to avoid liquidation, are the blueprint they want to port over to equities.
Even if the mechanics work, Sentora points out that almost none of the trillions parked in brokerage accounts can currently be used. Today’s tokenized shares are typically newly issued products that you buy specifically to use on‑chain; they will never unlock the scale they are targeting.
The real unlock is letting investors transfer existing fully paid shares from brokers such as Morgan Stanley (NYSE:MS) or Schwab (NYSE: SCHW) into a platform like Kraken or Robinhood Markets (NASDAQ:HOOD) and convert them into tokens as a tax‑free event, preserving beneficial ownership and avoiding capital gains.
The obstacle is issuer‑by‑issuer approval. Each company has to authorize a portion of its outstanding shares to exist on a distributed ledger. The speakers argue the pitch to issuers is stronger than many tokenization providers have realized: shares locked as DeFi collateral reduce free‑float supply and may be price‑supportive, and adding borrow‑against‑your‑stock and synthetic dividend functionality can make a non‑dividend growth stock more attractive.
On the equity side, Sentora’s researchers argue that if users stay within the existing rule, where each share is held in the owner’s name and all rights travel with the token, there is “really no regulatory hurdle.”
In their view, trouble starts with wrappers that mimic economic exposure, but strip votes and dividends.
That distinction matters because US regulators have begun to specifically examine tokenized US equities and DeFi trading venues, with an eye to when these instruments begin to look like swaps or unregistered securities.
On the funding side, everything depends on stablecoins. Neobanks and fintech companies such as PayPal (NASDAQ:PYPL), Revolut, Coinbase Global (NASDAQ:COIN), Kraken, Robinhood and others are racing to offer abstracted DeFi yield to mainstream users through tokenized deposits and on‑chain money markets.
At the same time, the GENIUS Act has pulled stablecoins into a bank‑like regulatory regime, tightening who can issue them and how reserves must be held, while large US banks lobby to slow or shape that evolution to protect deposit franchises. This tension is likely to define the pace at which tokenized equity collateral can scale.
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