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Designed as open and token-agnostic, Alpaca’s “Instant Tokenization Network” allows builders and institutions to bridge assets to blockchains, and back again–even outside market hours.
AlpacaDB Inc. (“Alpaca”) launches their Instant Tokenization Network (“ITN”), the essential infrastructure layer enabling institutions to perform instant in-kind minting and redemption of traditional brokerage-held stocks to their various tokenized counterparts, 24/7.
Tokenized stocks have captured headlines this year. Yet beyond the excitement, the market still lacks the critical infrastructure to move past novelty. The most significant issue is the inefficient provision of on-chain liquidity: because market makers cannot mint and redeem tokenized stocks in-kind, they are forced to sell inventory and then repurchase its token counterpart in cash. This adds costs and delays, often causing the tokenized security’s price to deviate from its underlying asset–similar to an exchange-traded product or fund that trades above or below its NAV.
The SEC recently addressed similar frictions with crypto ETP markets by voting to approve in-kind creation and redemption for Bitcoin and Ether ETPs. Chairman Atkins noted that “investors will benefit from these approvals, as they will make these products less costly and
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more efficient”. With today’s launch of its Instant Tokenization Network, Alpaca aims to bring the same benefits to tokenized stocks.
Through Alpaca’s ITN, institutions can instantly tokenize portfolios with a single API call when minting without settlement delay. The reverse also applies: tokens can be burned on-chain to redeem the underlying shares in-kind, with access extending beyond market hours. By redeeming into the underlying asset, liquidity can move seamlessly across different tokenized stock variants through simple redemption followed by minting to another one within the network. This enables issuers on Alpaca’s network to benefit from free flowing liquidity rather vs. existing fragmentation.
Debuting onstage today at TOKEN2049 Singapore, Alpaca will be accompanied by key launch partners including Backed (xStocks), Ondo Finance, Dinari, and DRW. Instant Tokenization Network debuts with Solana as its exclusive settlement chain, with support for settlement to other chains in the near future.
“Rather than traditional securities or pure crypto tokens, tokenized assets should be seen as something entirely new, requiring a whole new infrastructure stack to be built for them,” said Arush Sehgal, Head of Crypto at Alpaca. “In-kind creation and redemption is a significant step forward, but it’s only the first step. We’re building further tools to help developers bridge traditional and crypto rails compliantly with investor protections and market integrity at the core.”
Deep, reliable order books are a foundational requirement for tokenized assets to mature. Alpaca’s Instant Tokenization Network removes trading friction across tokenized stock variants, making them behave more like a single, connected market for both builders and participants everywhere:
- Traders can confidently capture arbitrages across venues on the same underlying or backing asset with the certainty for par conversion on either side
- Derivatives desks can hedge open interest that far exceeds the circulating on-chain supply of a token by pushing and pulling liquidity from traditional markets
- DeFi loan protocols can redeem to the underlying security in the case of loan collateral liquidations; avoiding having to sell on illiquid crypto order books at moments of volatility
“Mass adoption of financial markets requires the best infrastructure components from both traditional and decentralized finance,” states Roberto Klein, Co-Founder at Backed (xStocks). “By doing so, we can create an ecosystem that is on-chain, inclusive, and gives power back to the investor.”
Alpaca’s Instant Tokenization Network leads with adoption by global partners including Kraken, Backed (xStocks), Ondo Finance, Dinari, DRW, Keyrock and Virtu Financial to safely push and pull billions in liquidity from TradFi to tokenized stock markets, which could reach a $10T market cap by 2030 according to Galaxy Research.
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“Tokenization represents a fundamental shift in how global investors access US markets,” said Ian De Bode, Chief Strategy Officer at Ondo Finance, “Global investors can now access tokenized U.S. stocks and ETFs onchain. We saw stablecoins export the U.S. dollar by bringing it onchain. Now, Ondo is doing the same for U.S. stocks & ETFs.”
“As TradFi and DeFi continue to merge, it’s important to understand how it will affect market structure and liquidity,” said Sam Courtney, Managing Director, Asia Pacific at DRW. “By working alongside fellow innovators like Alpaca, DRW continues to be on the frontier of providing liquidity in markets that are efficient, fair, transparent, and 24/7.”
“Tokenized equities are most powerful when they offer immediate access to traditional market liquidity, live market prices, shareholder rights, and regulatory compliance, all of which are foundational to Dinari’s approach and our tokenized security product, dShares,” said Anna Wroblewska, Chief Business Officer at Dinari. “We’re delighted to support Alpaca’s push into tokenized security infrastructure and expand access to dShares through the Alpaca network.”
About Alpaca
Alpaca is a US-headquartered self-clearing broker-dealer and brokerage infrastructure for stocks, ETFs, fixed income, 24/5, options trading, and offers crypto– raising over USD170 million in funding. Alpaca is backed by top-tier investors globally, including Portage Ventures, Spark Capital, Tribe Capital, Social Leverage, Horizons Ventures, Unbound, SBI Group, Derayah Financial, Elefund, and Y Combinator.
Alpaca’s Instant Tokenization Network is owned and developed by AlpacaDB, Inc. and Alpaca Crypto LLC
Additional geographic restrictions may apply for tokenization services based on local regulatory requirements. Neither Alpaca Crypto LLC nor Alpaca Securities LLC are the issuer of, nor directly involved in, the tokenization of any assets. Tokenization is performed by a third party. Tokenized assets do not represent direct equity ownership in any underlying company or issuer. Instead, tokenized assets generally provide economic exposure to the equity securities of an underlying issuer. As such, holders of tokenized assets have no voting rights, dividend entitlements, or legal claims to the underlying company shares or any residual assets in the event of the underlying company’s liquidation or insolvency, unless explicitly stated otherwise.
Cryptocurrency services are provided by Alpaca Crypto LLC, a FinCEN-registered MSB (NMLS #2160858) and subsidiary of AlpacaDB, Inc. Cryptocurrency assets are highly volatile and speculative, involving substantial risk of loss, and are not insured by the FDIC or any government agency. Customers should be aware of the various risks prior to engaging these services, including potential loss of principal, cybersecurity considerations, regulatory developments, and the evolving nature of digital asset technology. For additional information on the risks of cryptocurrency, please click here.
Securities brokerage services are provided by Alpaca Securities LLC, member FINRA/SIPC, a wholly owned subsidiary of AlpacaDB, Inc. All investments involve risk; for more information, please see our Disclosure Library.
AlpacaDB, Inc., the parent company of Alpaca Securities LLC and Alpaca Crypto LLC, provides services and technology, including the brokerage infrastructure API supporting Alpaca’s financial services. This is not an offer, solicitation of an offer, or advice to buy or sell securities or cryptocurrencies or open a brokerage account or cryptocurrency account in any jurisdiction where Alpaca Securities or Alpaca Crypto, respectively, are not registered or licensed, as applicable.
Alpaca and the entities mentioned in this article are not affiliated and are not responsible for the liabilities of others.
Media Contact
Patrick Valoppi
press@alpaca.markets
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