Tiger Research: The Tokenization of the Stock Market in the 2020s and the Rise of Perpetual Contracts

This article is written by Tiger Research. Despite the cryptocurrency market being in a downturn, the tokenized stock market continues to grow. It is divided into fully collateralized spot futures and perpetual futures, with perpetual futures being the most notable and giving rise to a series of new strategies.

Key Points Summary

• While the stock market continues to hit new highs, both the market capitalization and trading volume of cryptocurrencies have declined. As the trends of the two diverge, the tokenized stock market has achieved growth by constructing open interest in perpetual futures.

• The market is divided into fully collateralized spot futures and perpetual futures. Perpetual futures are noteworthy because they allow for 24/7 trading of stocks that cannot be accessed on domestic exchanges, and they also offer leverage.

• After regular trading hours, price movements will serve as leading indicators for the next day's spot opening price, not only predicting the direction of price movements but also the magnitude of price fluctuations.

• Two retail trades, one delta-neutral trade, earn premiums through spot trading as capital, and utilize price gaps for cross-exchange arbitrage.

• The same structure also applies to market makers, regional oracles, token issuance, and basis hedge funds. Although smaller in scale, there are opportunities in both investment and business as institutional investors join.

1. The Stock Market is Absorbing Cryptocurrency Liquidity

In the first quarter of 2026, the total market capitalization of cryptocurrencies fell by 20.4%, and the trading volume on centralized exchanges dropped by 39.1%. Bitcoin has been declining since hitting an all-time high in October 2025.

The stock market, on the other hand, is performing quite the opposite. The S&P 500 index easily surpassed its annual target, and the Korea Composite Stock Price Index (KOSPI) has doubled this year, benefiting from the semiconductor industry's rally. Meanwhile, the total market capitalization of cryptocurrencies has significantly decreased, while stock markets in most countries have reached historic highs. The divergence between these two paths has never been so clear.

2. Collateral Segmentation Market, Funds Flowing to Criminals

The tokenized stock market is divided into two parts based on collateral structure.

Fully collateralized spot trading deposits real stocks at a 1:1 ratio and then issues tokens. Investors hold the stocks themselves or their legal claims. The issuance details vary by platform, but there is always an underlying asset.

Perpetual futures operate differently. They do not hold any actual stocks. Traders pay margin and open a contract that tracks the price, so there is no claimable underlying asset. Margins are usually paid in stablecoins, and more platforms are now accepting other assets, such as Ethereum (ETH).

Perpetual contracts are notable because they retain the advantages of spot trading, allowing for around-the-clock trading of stocks that cannot be traded on local exchanges and providing higher leverage. Some fully collateralized spot products on Kraken xStocks offer up to 3 times margin, while perpetual contracts can have leverage up to 20 times, depending on the product. Since there is no need to custody the underlying assets and prices are tracked only through oracle data sources, the listing speed is fast, and the range of tradable stock codes is broad.

Compared to traditional markets, it is still relatively small. The average daily trading volume of the U.S. stock market is about $1.1 trillion. The open interest of stock options (i.e., the total amount of currently valid contracts) is $2.25 billion. Due to different metrics, direct comparisons are challenging, but it is clear that this market is still in its early stages.

The direction is clear. Open interest (OI) is growing each quarter, and regulators are beginning to view it as a market. The U.S. Securities and Exchange Commission (SEC) has classified such contracts as an innovative financial product, and the U.S. Commodity Futures Trading Commission (CFTC) is publicly reviewing its institutional operations in the U.S. This contract was initially outside of regulation but is now accelerating into the regulatory framework.

3. 24-Hour Market vs. Physical Market

Tiger Research has tracked this change and provided a tool to compare the prices of Korean stocks in the overseas perpetual contract market with the spot prices on the Korea Exchange (KRX) in real-time. This tool aggregates prices from perpetual contract exchanges supporting stocks like Samsung Electronics, SK Hynix, and Hyundai Motor, using a volume-weighted average and displaying it alongside the domestic spot prices for each stock.

Current data shows three patterns.

3.1. Overnight Criminal Movements Predict Next Opening

The Korean stock market is closed at night. The U.S. stock market fluctuates, and reports from Nvidia show that exchange rates also fluctuate, but the Korean stock market does not resume trading until the next morning. Criminals, however, trade during the night.

This raises a question. What price do criminals reference after spot trading closes?

The answer is that they do not follow established market prices. During trading hours, criminals extract spot prices from institutional data. After trading hours, their own trades directly determine the price. They do not replicate the concluded spot market prices but discover new prices based on overnight news and macroeconomic variables.

Data confirms this. On days when stock prices rise after the market closes, the probability of Samsung Electronics and SK Hynix opening higher the next trading day is 82% and 95%, respectively. When stock prices fall after closing, the probabilities of Samsung Electronics and SK Hynix opening lower the next trading day are 96% and 78%, respectively. The consistency of the two trends is about 85%, with a correlation coefficient between 0.85 and 0.89.

The increase also aligns with stock price movements. An overnight stock price increase of 3% leads to an opening price increase of about 3%. The regression coefficient between the increase in Samsung Electronics' stock price and the actual opening gap is 0.93, while for SK Hynix, it is 1.00, which almost predicts the magnitude of the increase.

Weekend movements are even sharper. From Friday's close to Monday's open, the predicted stock price movement for Samsung Electronics matches the actual opening price on Monday with a rate of 93%, while for SK Hynix, this rate is 87%, as the predicted stock price movement absorbs two days of global market volatility.

By observing overnight futures prices, one can gain insights into the early morning opening price movements.

3.2. Spot Premium Delta-Neutral Trading

Perpetual contracts have no expiration date. To prevent prices from deviating too far from the reference price, longs and shorts periodically exchange fees, known as funding rates.

For example, when the price is above the reference price, the profitable longs need to pay a premium to the losing shorts. The higher the premium, the higher the payment. When one side profits beyond the reference price, they must pay the corresponding fee. To avoid this fee, traders adjust their strategies, and the final price tends to revert to the vicinity of the reference price.

Data shows that the trading price of Korean stock futures is higher than the spot price, with Samsung Electronics' average intraday premium at 0.15% and SK Hynix at 0.23%. Selling futures means earning this premium as capital in each trading cycle.

The strategy is as follows: buy KRX spot during the day while selling an equal amount of options contracts. If the stock rises, the spot gains increase, and the options contract incurs losses; if the stock falls, the opposite occurs. The two offset each other, so regardless of the stock's movement, the final result is close to zero. In return, the capital comes from the sold options contracts. This position profits solely from the options premium without betting on direction. This method of eliminating directional risk is delta-neutral trading.

The premium does not last long. The spot gap typically narrows by half in about 40 minutes. It is applicable during high-volatility phases when premiums expand but requires continuous monitoring.

3.3. Arbitrage Using Cross-Exchange Price Gaps

At the same time, even for the same stock, there are price differences for perpetual contracts across different exchanges. Data from June 2026 shows that the price of Samsung Electronics' perpetual contract on Binance is, on average, 0.93% higher than on Hyperliquid. The contract price for SK Hynix is 1.03% higher, with some instances reaching as high as 2.3%.

Positions cannot be transferred between different exchanges. Traders need to establish opposite positions simultaneously on two exchanges. Shorting on the exchange with the higher price and going long on the exchange with the lower price allows for the directional gains and losses to offset each other. As the two prices converge, the initial price difference turns into profit. Short positions on the exchange with the higher price can also earn capital, thus increasing returns.

Latecomer exchanges often maintain higher prices due to less arbitrage capital flowing in. As more exchanges are launched, this price gap tends to reappear in the early stages. During nights and weekends, when spot trading is closed, each exchange determines its own prices, further widening the price gap.

4. Market Changes and Emerging Opportunities

One major challenge in this market is its decentralization, which is both a risk and an opportunity. Due to the same named tokens being dispersed across existing exchanges in Korea and platforms like Hyperliquid, Binance, and Lighter, liquidity is fragmented. Price differences exist between different trading platforms, making it difficult to determine which token is the true trade, while price discrepancies provide room for confusion and manipulation. Adding leverage in a situation of insufficient liquidity can lead to chain liquidations. This is both an opportunity and a risk.

The openings listed above are for retail. The same structure also provides opportunities for other commercial uses.

• Market Makers: The trading price difference for the same stock across different exchanges ranges from 0.15% to 0.75%, and the overnight price difference tends to widen further. In the early market with scarce arbitrage capital, the price difference is likely to remain large. Due to insufficient liquidity and multiple exchanges managing fragmented liquidity, the demand for market making is expected to continue growing.

• Regional Oracles: Criminals discover prices during the closure of spot trading, and their accuracy depends on the oracle. Currently, oracles specifically providing accurate prices for assets in Asian time zones, such as Korea, Japan, and Taiwan, are still in development.

• Tokenized Issuance: Currently, listed Korean companies are limited to Samsung Electronics, SK Hynix, and Hyundai Motor. The market needs an intermediary to list and manage KOSPI 200 index constituents and major Asian companies.

• Basis Hedge Funds: Investors convert premiums above spot prices into capital hourly. Funds that specialize in collecting basis and funding gaps from various exchanges have a faster capital turnover than traditional basis trading, although the market size is still too small to fully absorb.

Compared to traditional markets, the illegal trading market is smaller in scale, but its importance should not be overlooked. It is the first to discover prices, trades 24/7, and is rapidly moving towards institutionalization. There are enormous opportunities in both investment and business.