# How Tokenized Stock Collateral Solves the Liquidity Problem for Equity Perps Published: 2026-07-07T13:30:00.000Z Author: Ondo Finance Tags: Ondo Stocks URL: https://ondo.finance/blog/tokenized-stock-collateral-for-equity-perps --- Tokenized stock collateral can now back perp positions on Ondo Perps for many of the world's most actively traded equities, indices, and commodities. That means traders can now hold tokenized stocks as margin, starting with SPYon and QQQon for Pre-Alpha users, and trade 24/7 perps markets with up to 20x leverage for oil, gold, silver, SPCX, MU, TSLA, NVDA, and more. But bringing utility to tokenized stocks and moving RWA markets from passive exposure to productive collateral are not what is most remarkable here. What matters most is that traders can now access capital efficiency and ultimately liquidity on par with traditional derivatives markets. In this post, we explore why tokenized stock collateral matters, how it solves the fundamental liquidity problem for perpetual futures, and where it fits in the path to onchain prime brokerage. Why Tokenized Stock Collateral Matters While tokenization has expanded access to the world’s most in-demand markets, it has fallen short of delivering the utility offered in traditional finance, where equities can be used as collateral earning additional yield through lending, borrowing, and more. Tokenized stock collateral changes that. Instead of simply providing passive exposure to underlying markets, deploying tokenized stocks as collateral turns them into productive capital, bringing the same type of utility currently available in TradFi to the DeFi ecosystem. Ondo tokenized stocks can be deployed as productive collateral across: Morpho and Gauntlet: SPYon and QQQon can be used as collateral to borrow stablecoins through Morpho's isolated lending markets, with risk parameters managed by Gauntlet. Euler and Sentora: SPYon, QQQon, and TSLAon can be deployed to borrow stablecoins on Euler, with risk parameters set by Sentora. Ondo Perps: The first permissionless perps platform built to draw on the real liquidity of the underlying markets by letting traders post tokenized stocks and ETFs directly as collateral, starting with SPYon and QQQon. Beyond bringing utility to tokenized stocks, allowing them as collateral changes the fundamental liquidity model for equity perps. To explain how tokenized stock collateral and liquidity are connected, it helps to start with why equity perps in particular are such a compelling use case and the core problem that has held back adoption. Why Equity Perps Is Such A Compelling Use Case Perpetual futures are one of the most important and widely adopted instruments crypto has produced. They give traders continuous, leveraged, linear exposure to an asset without the machinery that makes traditional derivatives cumbersome, eliminating fixed expiries, contract rolls, expiration-cycle management, brokerage onboarding, and fragmented liquidity spread across dated contracts. A perp is always on, always the same contract, and accessible to anyone with an internet connection. For crypto assets, they've become the dominant way people trade, with the most active perps venues now turning over hundreds of billions of dollars in volume a month. However, to put the success of crypto perps in perspective, traditional equity and commodity derivatives are vastly larger, with volumes exceeding $11.4 trillion per day. Additionally, Ondo Stocks provides the onchain demand for tokenized spot exposure, reaching over $1 billion in TVL just 8 months after launch. The natural next step is to point to the same perps instrument that transformed crypto trading at the markets the world most wants exposure to: stocks, ETFs, and commodities. The Structural Liquidity Challenge for Equity Perps Today, crypto-native perps on BTC, ETH, and the major tokens have deep, mature liquidity. Equity perps do not. On the venues offering them today, liquidity sits at a tiny fraction of what exists in traditional derivatives markets, with wide spreads and shallow books. This isn't simply because the category is young. One of the primary structural constraints on other platforms is capital efficiency. Consider a market maker quoting a sell order on the AAPL perp. If a trader buys it, the market maker is now short the perp and exposed to the AAPL price rising, so they hedge by buying AAPL stock at a traditional brokerage. That means funding two separate positions at the same time with stablecoin margin on the perp venue and cash/inventory at the brokerage. The same economic exposure is now financed twice, in two places that don't talk to each other. The cost is mostly capital. Every dollar of quoting ties up close to two dollars, one on the perp venue and one at the brokerage. That extra dollar tied up to hold the hedge is a dollar that can't be deployed productively elsewhere. Inefficient capital earns a weak return, which means that the market maker quotes smaller size and wider spreads to make up for it. Wider spreads and thin books mean worse prices for traders, driving traders away, and in turn, leaving still fewer market makers willing to quote. The market settles into a low-liquidity equilibrium. While incentives can paper over the challenge for a short time, the capital inefficiency underneath it never goes away. Ondo Stocks Solved the Liquidity Problem for Spot Markets We had seen this pattern before, because tokenized stocks faced their own version of it. Early tokenized-equity venues required market makers to warehouse inventory directly on the crypto venue, cut off from the far deeper liquidity in the traditional markets for those same shares. Thin books and wide spreads were the result. Solving it is what Ondo Stocks was built to do. Drawing on everything learned from bringing tokenized Treasuries onchain through OUSG and USDY, Ondo Stocks was designed around a just-in-time liquidity model. Rather than being limited to pre-funded pools of tokenized stocks, onchain markets can tap into liquidity dynamically, in real time, via the underlying markets where that depth already lives. The effect has been dramatic. At launch, some competing platforms showed roughly 200 basis points of price impact on a $200,000 SPY trade. Ondo Stocks reduced that to around 2 basis points, a hundredfold improvement, by connecting directly to liquidity that already existed. It has since grown to more than $1 billion in TVL and continues to scale. The lesson was simple: don't rebuild liquidity that already exists somewhere else. Connect to it. How Tokenized Stock Collateral Solves the Liquidity Challenge for Equity Perps The mechanism that makes this possible is using tokenized stocks as collateral on Ondo Perps. Alongside stablecoins, traders can post Ondo tokenized stocks and ETFs as margin on Ondo Perps. That is what lets a market maker's hedge and their collateral become the same asset, rather than two separate pools of capital. Return to the market maker quoting a sell order on the AAPL perp. A trader takes it, and the market maker is now short the perp and needs to go long AAPL to hedge. Instead of tying up capital at a separate brokerage, the market maker buys tokenized AAPL on Ondo Stocks and then pledges those tokens as collateral on Ondo Perps. Both steps happen quickly and systematically within a couple of clicks. Once posted, that tokenized AAPL is doing two jobs at once within the same collateral account. It's both the hedge against the short perp, and productive margin backing the market maker's other perps positions. One pool of capital does the work that used to take two. Long-Biased Flow Helps Keep This Model Efficient It's worth noting that this advantage isn't uniform across the order book right now. Hedging a short perp means buying spot, which Ondo Stocks makes straightforward. Hedging a long perp would mean shorting the underlying, and you can't (yet) easily short a tokenized stock onchain at scale, so that hedge still has to be done the traditional way. The capital-efficiency advantage is strongest on the sell side of the book. This asymmetry makes sense as a starting point given that perpetual flow is structurally long-biased, especially for equity perps. The primary appeal for most users is permissionless access to leveraged long exposure to names like AAPL, NVDA, and TSLA. That means a steady stream of traders wanting to go long, so the asks are both where the persistent demand is and what market makers must supply deeply and continuously. In contrast, the bid side draws on a wider mix with traders closing longs, market makers quoting the other side, and a smaller set of users putting on shorts. Overall it doesn't face the same directional pressure. By enabling the sell-side hedge to be far more capital-efficient, using tokenized stocks as collateral on Ondo Perps deepens liquidity exactly on the side where the demand concentrates. A second effect reinforces this. When flow is long-biased, funding payments run from longs to shorts, so the market makers providing that sell-side depth, who are short the perp as a result, are paid funding for holding the position. The same side of the book that is cheapest to hedge is also the side that earns funding, which gives market makers a double reason to quote it deeply. Critically, because the spot hedge is bought on Ondo Stocks, the largest tokenized stocks platform and connected to the deep liquidity of the underlying equity markets, that hedge is cheap and reliable to put on. A market maker can quote tightly on the perp precisely because they know the stock leg behind it can be filled at real-market prices rather than against a thin onchain book. Tokenized Stock Collateral Drives the Liquidity Flywheel The advantage of using tokenized stocks as collateral on Ondo Perps compounds rather than staying a one-time improvement. Here’s how: With tokenized stock serving as both the hedge and the collateral, market makers no longer need to park a separate pool of capital at a different brokerage to back the same trade. That roughly halves the capital tied up. Quoting $1 million of exposure using the old model requires roughly $2 million of capital, $1 million of margin on the perp venue plus $1 million of cash/inventory at the brokerage. On Ondo Perps, the tokenized stock hedging the position is the same asset serving as margin, so that same exposure can be backed with closer to $1 million for ~2x the capital efficiency. Cutting the capital required for a given level of quoting in half roughly doubles the return on the capital deployed. If the activity earns, say, $100,000 over a period, that's a 5% return on $2 million but a 10% return on $1 million. A higher return per dollar makes the venue a more attractive place to put capital to work, incentivizing market makers to commit more capital. Quoting that was uneconomic under the old model becomes worthwhile. Market makers quoting tighter spreads and in larger size mean that traders experience deeper liquidity and lower slippage. This brings in more traders, and more traders generate more two-sided flow. That flow is what market makers earn. More fills means more spread captured and faster inventory turnover on the same capital. In turn, the increased activity lifts market makers’ returns and the flywheel accelerates. The difference between this and an incentive-driven liquidity push is the whole point. This cycle is powered by the structure of the system, not by rewards that have to be funded indefinitely. What’s Next The trading and margining infrastructure that now sits on top of tokenized assets is the foundation for what comes next. Perpetuals are a remarkable instrument, and pointed at equities, they're more remarkable still. Leverage, shorting, and 24/7 access to the assets most of the world wants exposure to are now available on permissionless rails. They have real structural advantages over traditional options and futures, yet among serious derivatives traders they never displaced the incumbents because the traditional venues had better liquidity, execution, and capital efficiency. Close that gap, and a perp on Apple or oil becomes attractive to traders in traditional markets. The only thing that stood between that promise and reality was a lack of real liquidity. Now that tokenized stock collateral has solved the problem, equity perps can scale and compete with traditional equity and commodities derivatives markets. Tokenized securities gave the world a better way to hold assets. Perps are a better way to trade them. The collateral model connects them. The implications run well beyond equity perps. This is just the first piece of a broader prime brokerage layer we're building onchain. Tokenized stock collateral and this liquidity model are the foundation, not the finish. More markets, more liquidity, and more products will follow.