Author: OneShotBug
The US stock market is an exciting market where astonishing unicorns and entrepreneurial myths emerge, such as Nvidia, which has seen its market value soar, making many Chinese-speaking investors eager to try. However, obstacles such as high transaction fees, cumbersome account opening processes, and foreign exchange controls make it difficult to participate directly in US stock investments.
As one of the practical applications of the RWA concept, stock tokenization provides a new investment avenue. RWA contracts issued by platforms like xStocks and Ondo allow investors to indirectly invest in the US stock market through tokenized assets, avoiding the cumbersome processes and high costs of traditional stock markets.
This article will focus on Bitget's recently launched 'RWA index perpetual contract', which has initially listed popular US stock assets including Nvidia (NVDA), Tesla (TSLA), and Circle (CRCL), and has made further innovations based on the RWA contract: on one hand, it calculates the prices of multiple issuers' products by weighting, and on the other hand, it allows for flexible investment using high-leverage trading. Overall, this seems to be a very suitable tokenized US stock investment product for Chinese speakers.
Next, I will briefly introduce the RWA index perpetual contract product and analyze its advantages, risk management mechanisms, and market opportunities.
Why is the cryptocurrency sector paying attention to stock tokenization?
As the most dazzling star in the ongoing deep integration of the cryptocurrency market and traditional financial markets, stock tokenization bridges the gap between the crypto market and the traditional stock market.
With the rapid development of blockchain technology, almost all tokenizable assets have begun to gradually enter the blockchain field. From the initial stablecoins to traditional financial assets such as real estate, bonds, and funds, and now the hot topic of stock tokenization, each innovation seeks to eliminate barriers and obstacles in traditional finance through blockchain, breaking limitations of time and geography.
The core of stock tokenization lies in converting traditional stock assets into digital tokens on the blockchain, enabling 24-hour global trading, fractional share purchases, and more efficient cross-border transactions. This model is particularly attractive to global retail investors, especially those from emerging markets, as it addresses their long-standing pain points such as difficulties in account opening, remittance, and mismatched trading hours.
Although stock tokenization is not a brand new concept, platforms like FTX and Binance attempted to launch related products as early as 2020, but their efforts ultimately could not be sustained due to regulatory pressures. However, with the recovery of market demand and improvements in technological conditions, stock tokenization has once again become a focus in 2024 and one of the hotspots for investors. Nowadays, the continuous development of RWA products has increasingly provided investors with opportunities to participate in US stock investments through tokenization.
What is the RWA index perpetual contract?
The RWA index perpetual contract is an innovative financial product launched by Bitget. According to the official website, the biggest innovation of the RWA index perpetual contract is its use of a multi-issuer weighted pricing mechanism. Each index is formed by integrating multiple platforms' (such as xStocks and Ondo) token prices, gathering multiple stock tokenized assets into a weighted index. Through weighted pricing, Bitget can aggregate token prices from multiple issuers.
This pricing mechanism makes RWA index contracts more flexible and stable, providing higher market transparency. Investors can clearly understand the weight of each token in the contract and obtain a comprehensive market pricing through the weighted index in the contract.
Opportunities for Chinese-speaking investors: Zero-threshold participation in the US stock market
For investors, the US stock market is full of opportunities, especially with rapidly growing world-leading companies like Tesla and Nvidia. However, for many Chinese-speaking investors, directly investing in US stocks has always been fraught with various obstacles. Firstly, investors need to open accounts through traditional brokerage platforms, a process that often involves cumbersome procedures, such as submitting a large number of identity verification materials and complex tax declarations. Additionally, many investors face high fees, including account management fees, trading commissions, and remittance fees, which undoubtedly compress investment returns significantly.
In addition to these traditional obstacles, foreign exchange controls present a huge challenge for Chinese-speaking investors. Even if investors are willing to pay fees, many times they cannot directly access opportunities in the US stock market due to market entry restrictions.
Because of this, directly investing in US stocks is not only a cumbersome process for many Chinese-speaking investors, but also requires overcoming numerous obstacles; the high threshold investment environment leaves them with no choice but to hesitate.
Bitget's RWA index perpetual contracts provide investors with a zero-threshold investment method, allowing easy participation in the trading of US stock tokenized assets through the platform. Investors no longer need the support of traditional stock accounts and do not even need to go through traditional banking systems for currency exchange. This once again demonstrates Bitget's expertise in enabling investors to engage with various innovations in the crypto field without complex processes.
Risks and opportunities of high-leverage trading
In addition to breaking through traditional investment barriers, the RWA index perpetual contract also provides investors with a high-leverage trading mechanism. With a maximum leverage of 10 times, investors can achieve higher returns in trading US stock tokenized assets with a smaller capital input.
Of course, in high-leverage trading, small market fluctuations can lead to significant financial losses. Therefore, investors must be particularly cautious when choosing leveraged trading, closely monitor market changes, and adjust strategies in a timely manner to avoid excessive losses from adverse fluctuations.
To help investors better control risks in high-leverage trading, Bitget has implemented multiple risk management measures. These measures are designed to minimize potential losses for investors during market fluctuations and protect their funds.
Trading hours: Available for trading 24 hours from Monday to Friday, specifically from 00:00 on Mondays to 00:00 on Saturdays in the US Eastern Time Zone (UTC-4). In addition, RWA contracts will be suspended during US public holidays when the stock market is closed.
Market freeze: Prices freeze during weekends and stock market closures to avoid liquidation, supporting order cancellations but suspending new order submissions, with funding fee settlements resuming with trading.
Leverage limit: The initial leverage cap is set at 10 times, supporting isolated margin models.
Risk fund: Bitget has equipped each RWA index perpetual contract with a risk fund to deal with potential risks from extreme market volatility. The initial amount of the risk fund is 50,000 USDT, used as compensation funds during severe market fluctuations. This fund provides investors with an extra layer of protection, mitigating risks from high-leverage trading.
Position limit: Bitget has also set a position limit for individual accounts to prevent any single investor from holding excessively large positions that could affect market liquidity and stability. By limiting the maximum position of individual investors, Bitget can better control market risks and avoid instability caused by excessive trading from any one investor.
These measures provide stronger safeguards for investors using high leverage. Regardless of how the market fluctuates, investors can feel a certain degree of safety net, reducing potential risks in trading.
Conclusion
From the on-chain real stocks driven by Kraken, Bybit, and Robinhood, to the compliant token issuance of xStocks, Dinari, and Ondo, and the 'on-chain asset reverse market entry' attempts by Tron Inc., this round of asset structure reconstruction is not just about innovations in smart contracts or product forms, but whether a complete on-chain financial ecosystem can be built.
The RWA index perpetual contract emerged in this context, opening the door to the US stock market for Chinese-speaking investors and building a bridge between the crypto market and the traditional stock market. With the integration of both, whether it can truly change the investment methods of investors and become the mainstream in the future remains unpredictable.
I don't know the answer either, but I believe that in the face of a constantly changing market, we should try more cutting-edge and innovative products. After all, investing is a game, and every decision is a race between the future and opportunity.