Coinbase Brings Stocks into DeFi, Launches Tokenized Stock Products on Base Chain

Coinbase has launched tokenized stock products on its Base chain, allowing users to trade and use shares as collateral in DeFi protocols. The first four listings are Nvidia (NVDAc), Apple (AAPLc), Meta (METAc), and Alphabet (GOOGLc). Coinbase's founder Jesse Pollak stated that the goal is to expand the listings to 'thousands' of stocks.

The product structure uses the Base chain's proprietary B20 token standard, which handles dividends and stock splits through on-chain multipliers. This solves a long-standing problem for tokenized stocks entering DeFi: If a stock is being used as collateral in Aave and suddenly announces a split or dividend, what happens to the token balance?

Coinbase's entry into the market brings a level of credibility with institutional investors due to its compliance framework and custody arrangements. However, the product is not available to US users under the Regulation S framework.

The success of tokenized stocks in DeFi depends on several factors, including liquidity depth, liquidation mechanisms, and regulatory frameworks.