Bitget Tests an On-Chain Strategy for Tokenized Stocks
RWA Signal Insight
StocksBitget, in collaboration with Reality, Keyring, IPOR Fusion, and 1Token, has conducted a simulation study exploring an on-chain equity basis trading strategy. The model involves holding tokenized stocks, issued as rTokens by Reality, while simultaneously opening short positions on corresponding equity perpetuals to capture funding payments. While the strategy aims to provide market-neutral income, the simulation revealed that high financing charges, execution expenses, and liquidity constraints significantly erode gross premiums. Specifically, while gross funding premiums ranged from 11% to 14%, net returns dropped to between 4% and 7% after accounting for operational costs. The study highlights a notable decline in performance between in-sample and out-of-sample periods, suggesting sensitivity to market conditions and model assumptions. Furthermore, the research identifies critical risks including negative funding rates, collateral valuation mismatches, and settlement delays inherent in bridging traditional stock markets with blockchain infrastructure. This initiative represents a broader industry trend of migrating institutional-grade basis trading strategies onto public blockchain rails. Bitget intends to use these findings to inform future product development under its Bitget Earn platform, though no live products have been launched.
Key points
- Simulation showed net returns of 4% to 7% after accounting for high operational costs.
- Gross funding premiums of 11% to 14% were reduced by 7 to 10 percentage points.
- Partners include Reality, Keyring, IPOR Fusion, and 1Token for infrastructure and risk monitoring.
- Strategy faces risks from settlement delays, negative funding rates, and collateral valuation mismatches.
Background
Bitget is a global cryptocurrency exchange that has increasingly focused on integrating traditional financial assets into its ecosystem through institutional-grade RWA strategies. Equity basis trading is a market-neutral strategy where an investor holds a long position in an asset and a short position in a derivative to profit from the price difference or funding rate spread. By tokenizing these assets, firms aim to automate and democratize access to institutional strategies that were previously restricted to private mandates.