This article comes from: Tiao.sol
Compiled by Odaily Planet Daily ( @OdailyChina ) ; Translated by Azuma ( @azuma_eth )
Editor’s Note:
On March 6, market rumors spread that Coinbase was interested in restarting its plan to tokenize its stock COIN and other securities. In 2020, Coinbase made its first attempt at this, but abandoned it due to regulatory obstacles. With the establishment of a new cryptocurrency working group by the SEC, Coinbase seems to have seen an opportunity to restart the plan.
Just two days later, on March 8, the RWA project Backed announced that it had launched the Coinbase stock derivative token wbCOIN on the Base network, and the value of the token was supported by COIN stock 1: 1. Although Backed clarified that this move had nothing to do with Coinbase, it is hard not to imagine such a fast action.
Over the weekend, cryptocurrency analyst Tiao.sol published an article on X, analyzing the multiple arbitrage opportunities that may exist between the two markets under the coin-stock parallel model, which may help you find some new operational inspiration at a time when the market outlook is uncertain.
The following is the original content, translated by Odaily Planet Daily.
With Backed launching a tokenized version of Coinbase stock (wbCOIN) on the Base blockchain, the SEC’s regulatory oversight appears to have completely opened the door. This could mark a transformative shift in the financial markets, foreshadowing that other U.S. stocks may soon begin to be tokenized. For traders, this not only brings new market opportunities, but also introduces unique trading strategies.
Below, I have listed several potential arbitrage opportunities and strategies, and I welcome your comments.
Opportunity 1: Price Arbitrage
Scenario
Traditional U.S. stock markets may experience dramatic fluctuations in response to news, macroeconomic data, or corporate events (such as earnings releases), while on-chain tokenized stocks (such as wbCOIN) may not immediately reflect these changes due to insufficient liquidity or delayed price data.
Strategy
Monitor the price difference between the traditional market (such as Coinbase stock COIN) and its tokenized assets (such as wbCOIN). If COIN drops (or rises) sharply in the traditional market, and wbCOIN lags behind in the cryptocurrency market, traders can buy (or sell) COIN at a lower (or higher) price in the traditional market, and sell (or buy) wbCOIN at a higher (or lower) price in the cryptocurrency market.
risk
Price data delays, high transaction fees, blockchain network congestion, and legal risks between tokens and actual stock value (such as tokens failing to effectively anchor stocks).
Example
If COIN drops to $200 in the traditional market, but wbCOIN remains at $205 due to liquidity issues, the trader can buy COIN in the traditional market and sell wbCOIN in the cryptocurrency market, locking in a $5 profit (after fees and slippage).
Opportunity 2: Liquidity spread arbitrage
Scenario
Tokenized stocks in the cryptocurrency market are generally less liquid than traditional U.S. stock markets, and bid-ask spreads tend to be wider, especially when trading volumes are low.
Strategy
Buy stocks (such as COIN) at close to market price in the traditional market, convert them into tokens (such as wbCOIN) through blockchain mechanisms (such as Base or other DeFi platforms), and then sell them at a premium in the cryptocurrency market. Alternatively, by providing liquidity (market maker) in low liquidity markets and profiting from the bid-ask spread.
risk
Lower liquidity may limit trading volume and make quick exits difficult; on-chain gas fees may also erode profits.
Example
If the bid price of wbCOIN on AerodromeFi or CoWSwap is $205 and the ask price is $210, traders can provide liquidity by placing buy and sell orders and earn a $5 spread.
Opportunity 3: 24*7 time arbitrage (time zone arbitrage)
Scenario
While traditional US stock markets are only open from 9:30am to 4:00pm EST on weekdays, tokenized stocks on the chain are traded 24/7. This provides an opportunity to take advantage of global market volatility during periods when US markets are closed.
Strategy
After the US market closes, global markets (such as Asia or Europe) may have news or events that affect Coinbase or other US stock prices, and wbCOIN may not have fully adjusted in the cryptocurrency market. Traders can buy (or sell) wbCOIN at a lower (or higher) price in the cryptocurrency market and wait for the price to recover when the US market reopens.
risk
Significant price fluctuations may result in losses; token prices may deviate from their true value due to low participation.
Example
Events in Asia boosted Coinbases prospects after the U.S. markets closed on Friday, but wbCOIN has not risen yet. Traders can buy wbCOIN at a low price in the cryptocurrency market and sell it after the U.S. markets reopen on Monday.
Opportunity 4: Cross-market arbitrage
Scenario
Tokenized stocks are often traded on multiple chains (such as Base, Ethereum, Polygon), multiple traditional exchanges (such as NYSE, Nasdaq), and multiple DeFi protocols (such as Uniswap), and there may be price differences between different platforms.
Strategy
Monitor the prices of wbCOIN or other tokenized stocks on various platforms. If the price on Base is lower than the price on Ethereum or in traditional markets, traders can use cross-chain bridges or traditional market access channels to buy low on one platform and sell high on another.
risk
Cross-chain transaction delays, higher gas fees, and regulatory differences between platforms.
Example
If the price of wbCOIN on Base is $200, but on Ethereum it is $205, traders can buy it on Base and sell it on Ethereum, earning the difference (after deducting cross-chain fees).
Opportunity 5: Event-driven arbitrage
Scenario
Major events, such as Coinbase earnings, regulatory news, or hacks, can result in asynchronous price movements between the traditional stock and the tokenized version.
Strategy
Predict events that may impact Coinbase or other US stocks (such as SEC policy changes, mergers, acquisitions, etc.), predict price movements, and trade on the price difference between traditional stocks and tokenized stocks after the event.
risk
The outcome of events is highly uncertain; prices may deviate further from expectations.
Example
If Coinbase releases a positive financial report, COIN rises 10% in the traditional market, while wbCOIN only rises 5% due to low liquidity. Traders can buy wbCOIN at a low price in the cryptocurrency market and wait for the price to repair.
Key elements
Adequate liquidity: The current liquidity of tokenized stocks is still low, which limits the scale of arbitrage to a certain extent.
Fees and slippage: On-chain gas fees, traditional market commissions, and transaction costs in token trading can all erode profits.
Summary and suggestions
With the launch of wbCOIN, tokenized versions of other U.S. stocks (especially liquid and well-known stocks like Apple, Amazon, and Tesla) are expected to be gradually put on the chain.
In summary, the price, liquidity, and timing differences between tokenized stocks and traditional stocks, as well as cross-market and event-driven volatility, provide traders with multiple potential arbitrage opportunities.
In terms of tools, I recommend using real-time market data tools (such as TradingView, Coingecko) and blockchain analysis platforms (such as Dune Analytics) to track prices and liquidity. At the same time, set strict stop loss and take profit levels, monitor gas fees and slippage, and ensure that profits can cover costs.
