Tokenization and Layer 1 Networks
What Tokenization of Private and Public Companies Means for Layer 1 Networks, Especially Solana
I’ve long been waiting for distributed ledger tech to do to banks, insurance companies and stock exchanges what the internet did to journalism, and for the first time, I think it’s really starting to happen. As a long-suffering Solana investor, I have long hoped that payments would lead to the next bull run and we now see everyone realizing the value of stablecoins for cross-border (and other) payments and can see a world where the banks and other middlemen are disintermediated out of all the bs fees and friction they put in everything from cross border remittances to Visa transactions. And, almost as a bonus, we are now seeing cracks in the way shares are held and traded, both public and private that could lead to similar outcomes. I cannot imagine a better use for blockchain than listing exchanges and illiquid private shares on these networks and I for one am trying to figure out ways to be long stablecoins and short banks for the foreseeable future.
The Two Prongs of Tokenization: Private and Public Markets
Tokenization—the process of converting real-world assets into digital tokens is quickly gaining momentum with a real potential to reshape how we interact with public and private shares, but what does it mean for the layer ones short and long term?
1. Tokenization of Private Companies
For years, Wall Street has discussed ways to offer shares in private companies to individual investors. So much media ink has been spilled on getting access to companies like OpenAI or SpaceX or even Uber before it went public that everyone knows the appetite is there for retail ownership of these brands. So far regulation has prevented passing the risk to retail investors until an IPO, but this week, Robinhood began to offer tokens in OpenAI and SpaceX.
In fact, Vlad Tenev, in a recent interview, described tokenization as “the biggest innovation in capital markets in over a decade,” saying investors will benefit from 24/7 trading, instant settlement, and self custody. While it surely will help Robinhood, what does it mean for us as venture investors and what does it mean for the layer ones that will presumably house these non-equity tokens.
How it Works: Tokenization breaks down regulatory barriers. Ownership in a private company or a private investment fund is converted into digital tokens on a blockchain. This allows for fractional ownership, making a stake in a startup accessible to a broader range of investors.
The Benefits: This unlocks new opportunities for both investors and companies. Investors gain the ability to diversify their portfolios and the potential for secondary market trading, while companies can access a wider pool of capital from a global audience.
A Key Challenge: While the technology is ready, legal and regulatory frameworks are still catching up. Issuers must ensure their tokenized assets comply with securities regulations, including KYC/AML checks and investor accreditation requirements.
2. Tokenization of Publicly Traded Companies (NASDAQ, etc.)
A whole other, but related topic is what we are hearing out of NASDAQ that they are set to offer longer trading days through on-chain ownership of their listed shares. Unlike Robinhood, they aren’t creating new financial instruments, but are merely digitizing the existing ones on a blockchain. NASDAQ CEO Adena Friedman recently gave a presentation at the All In conference where her enthusiasm for tokenization was very obvious despite her measured words.
We are starting to see startups take advantage of this trend as well with companies like Ondo that as of September 18, has almost 250 million in TVL for on-chain trading of public shares and ETFs, which is pretty remarkable for a company that only started late Summer 2025.
How it Works: Nasdaq, for example, has proposed rule changes that would allow member firms to trade tokenized versions of equity securities. A key element is that a tokenized share would have the same value, CUSIP number, and rights as its traditional counterpart. It simply adds an option for clearing and settling trades using blockchain technology.
The Benefits: The move to tokenized public assets promises to enhance market efficiency. This could lead to faster settlement times (from days to seconds), lower transaction costs by cutting out intermediaries, and 24/7 global trading. Financial giants like BlackRock are also exploring tokenized ETFs, highlighting the mainstream institutional interest in the space.
A Crucial Distinction: These tokens aren't just speculative assets; they are often "wrapped" tokens backed by actual shares held by a regulated custodian. This ensures they mirror the price of the underlying stock and maintain the integrity of the traditional financial system.
What This Means for Layer 1 Crypto Networks, and Solana in Particular
This influx of real-world assets (RWAs) onto the blockchain represents a massive opportunity and a critical test for Layer 1 networks. Here's why Solana is uniquely positioned to benefit.
The Need for Speed and Low Cost
The traditional financial system processes an immense volume of transactions. To handle the scale of tokenized stocks, bonds, and other securities, a blockchain must be fast, scalable, and affordable.
Ethereum vs. Solana: While Ethereum has a first-mover advantage and a large ecosystem, its current network structure and high gas fees are a significant bottleneck for high-frequency trading. The costs of a simple transaction can be prohibitively high, especially for retail investors.
Solana's Advantage: This area is where Solana shows its worth. Its Proof-of-History (PoH) consensus mechanism and parallel transaction processing allow it to handle tens of thousands of transactions per second with near-instant finality and minimal fees. For a market that demands efficiency and speed, Solana's technical foundation is a perfect fit.
Building the Rails for Real-World Assets
Solana's ecosystem is already proving its capability to handle tokenized securities. Projects like xStocks are tokenizing assets like Tesla and Apple shares, and platforms are emerging to manage issuance, investor onboarding, and secondary trading.
The Rise of RWA Projects: The rise of RWA projects on Solana is a strong indicator of its potential. While early RWA ventures gravitated toward Ethereum, Solana's low latency and low transaction costs are now attracting new applications. This shift highlights a growing user expectation for a more efficient and user-friendly experience in financial markets.
A Bridge Between TradFi and DeFi: Solana is building the "on-ramp" for traditional financial players. The network's robust and scalable infrastructure allows for seamless integration with existing financial systems while offering the benefits of decentralized finance (DeFi), such as using tokenized stocks as collateral for lending or earning yield in liquidity pools.
The Road Ahead and How we Hope to Profit
The tokenization of private and public companies is not just a trend; it's a fundamental shift in how ownership and value are recorded and exchanged. It will blur the lines between traditional finance and DeFi, creating a new, more efficient global financial system. And I for one would say that it is a real buy the companies that make the picks and shovels type moment.
For Layer 1 networks, it’s a defining moment and could be the catalyst for a major bull run perhaps sending the Solana token price to well over $1000 in the relatively short term. I’m always on the lookout for what gets regular people interested in crypto and this could be the thing for this cycle. The concern is that like in 2017 with ICOs and 2021 with NFTs and all the nonsense with the metaverse that this run could be built on similarly shaky ground. That said, I will stay long Solana until we see real bubble behavior and until these trends around tokenization, stablecoin payments, and an ETF all play out. Good luck out there and remember is all can happen very fast.