Woofun AI reports that Grayscale Research Director Zach Pandl, in a report compiled by Wu Says Blockchain, has delineated a three-stage evolutionary framework for stock tokenization, identifying distinct infrastructure beneficiaries ranging from the DTCC and Canton Network to Securitize, Ethereum, Solana, BNB Chain, and Avalanche.

The initial phase of this evolution is characterized by the third-party "wrapper" model, which currently commands market dominance. In this structure, the original issuer retains the underlying stocks within a Special Purpose Vehicle (SPV), while the resulting tokenized assets represent a claim on the equity of that SPV rather than direct ownership of the shares themselves. As illustrated in Chart 1, this model accounts for over 70% of tokenized stocks by market capitalization today. Although these wrapped tokens do not confer true legal ownership, they offer utility within Decentralized Finance (DeFi) protocols and present an accessible entry point for retail investors. Consequently, these assets are primarily traded on established networks such as Ethereum, Solana, and BNB Chain, which have become the de facto venues for this dominant wrapper-based liquidity.

The second stage introduces the "entitlement" model, a shift exemplified by the upcoming pilot program launched by the Depository Trust & Clearing Corporation (DTCC). Unlike the wrapper approach, which creates new derivative-like tokens, the entitlement model focuses on bringing existing qualified securities directly on-chain. The DTCC is leveraging its regulated post-trade infrastructure to facilitate this transition, ensuring that the digital representation remains legally equivalent to the traditional security. The Canton Network has been selected as the first blockchain network to host this pilot, serving as the foundational layer for this institutional-grade experiment. This model represents a critical bridge between traditional finance and blockchain, allowing tokenized stocks and other assets to circulate within a strictly regulated financial system through robust blockchain infrastructure.

The third and most transformative stage is the issuer-led model, where companies bypass intermediaries to issue securities natively on-chain. A landmark event occurred last week when Securitize became the first publicly listed company to tokenize its common stock simultaneously with its initial public offering on the New York Stock Exchange. This move signals a potential shift toward direct corporate issuance, although Grayscale notes that this model still requires further regulatory clarity to achieve widespread adoption. Despite these hurdles, the issuer-led model is viewed as having the greatest long-term potential for reshaping capital markets.

Structurally, this model is expected to favor open architecture blockchains like Ethereum and Solana, as well as hybrid networks like Avalanche, which offer the necessary flexibility and scalability for native corporate issuance.

The suitability of various networks for these emerging models varies significantly based on their architectural design. While the wrapper model has thrived on high-throughput chains, the issuer-led and hybrid models demand different technical characteristics. Ethereum and Solana are positioned to benefit from the open architecture required for native issuance, allowing for greater composability and transparency.

Meanwhile, Avalanche’s hybrid network structure offers a compelling alternative for institutions seeking a balance between privacy and public verification.

The deeper driver here is the alignment of network capabilities with the specific regulatory and operational needs of each tokenization stage, determining which chains will capture value as the market matures.

Notably, these three tokenization models are not mutually exclusive and are likely to coexist for many years to come. The wrapper model will continue to serve retail and DeFi participants seeking ease of access, while the entitlement model will cater to institutional players requiring regulatory compliance and legal certainty. The issuer-led model will gradually expand as regulatory frameworks evolve and corporations recognize the efficiency of direct on-chain issuance. This coexistence suggests a fragmented but complementary ecosystem, where different models address distinct market segments and user needs, rather than a single dominant standard emerging immediately.

Woofun AI notes that the key takeaway is that the growth of stock tokenization will benefit a diverse set of blockchain networks, each aligned with specific stages of the evolution. Ethereum, Solana, and BNB Chain are poised to maintain their dominance in the wrapper model due to their existing liquidity and user base. The Canton Network is uniquely positioned to capture value from the entitlement model through its association with the DTCC pilot.

Meanwhile, Ethereum, Solana, and Avalanche are expected to gain traction in the issuer-led model as open and hybrid architectures become preferred for native corporate issuance. This distribution of benefits underscores the importance of network-specific advantages in the broader tokenization landscape.

To clarify the terminology and entities central to this analysis: DTCC refers to the Depository Trust & Clearing Corporation, a core post-trade infrastructure provider in the United States responsible for clearing, settlement, and custody. The Canton Network is a blockchain platform designed for institutional financial assets, emphasizing privacy and compliance. The Wrapper model involves third-party platforms holding underlying stocks via an SPV (Special Purpose Vehicle), issuing tokens that represent claims on that vehicle. The Entitlement model maps existing qualified securities on-chain through regulated post-trade systems. Securitize is a digital securities platform that recently tokenized its common stock upon listing on the NYSE, marking a significant milestone in issuer-led tokenization.