Just two days later, the RWA project Backed announced on March 8 that it had launched the Coinbase stock derivative token wbCOIN on the Base network, with the value of the token supported 1:1 by the COIN stock. Although Backed claimed to clarify that this move was unrelated to Coinbase, the speed of the action makes it difficult not to speculate.
Over the weekend, crypto analyst Tiao.sol posted on X, analyzing the multiple arbitrage opportunities that may exist between the two markets under the "parallel crypto-stock" model, which may provide some new trading inspirations in the face of an uncertain market outlook.
With Backed launching a tokenized version of Coinbase stock (wbCOIN) on the Base blockchain, SEC regulation seems to have opened the floodgates. This may mark a transformative change in the financial markets, hinting that other U.S. stocks may soon be tokenized. For traders, this not only brings new market opportunities, but also introduces unique trading strategies.
Opportunity One: Price Arbitrage Scenario
The traditional U.S. stock market may experience violent fluctuations due to news, macroeconomic data, or corporate events (such as earnings releases), while the on-chain tokenized stocks (such as wbCOIN) may not immediately reflect these changes due to lack of liquidity or delayed price information.
Strategy
Monitor the price spread between the traditional market (such as Coinbase stock COIN) and its tokenized asset (such as wbCOIN). If COIN experiences a significant drop (or rise) in the traditional market, while wbCOIN lags in the crypto market, traders can buy (or sell) COIN at a lower (or higher) price in the traditional market, and simultaneously sell (or buy) wbCOIN at a higher (or lower) price in the crypto market.
Risks
Delayed price data, high transaction fees, blockchain network congestion, and legal risks between the token and the actual stock value (such as the token not effectively pegging the stock).
Example
If COIN drops to $200 in the traditional market, but due to liquidity issues, wbCOIN remains at $205, the trader can buy COIN in the traditional market and sell wbCOIN in the crypto market, locking in a $5 profit (after deducting fees and slippage).
Opportunity Two: Liquidity Spread Arbitrage Scenario
The liquidity of tokenized stocks in the crypto market is often lower than in the traditional U.S. stock market, especially during low trading volumes, resulting in wider bid-ask spreads.
Strategy
Buy the stock (such as COIN) at near-market prices in the traditional market, convert it to a token (such as wbCOIN) through a blockchain mechanism (such as Base or other DeFi platforms), and then sell it at a premium in the crypto market. Alternatively, provide liquidity (as a market maker) in the low-liquidity market and profit from the bid-ask spread.
Risks
Lower liquidity may limit trading volume and make it difficult to exit quickly; the on-chain gas fees may also erode the profits.
Example
If the buy price of wbCOIN on the AerodromeFi or CoWSwap platform is $205 and the sell price is $210, traders can provide liquidity by placing buy and sell orders to earn a $5 spread.
Opportunity Three: 24*7 Time Arbitrage (Time Zone Arbitrage) Scenario
The traditional US stock market is only open from 9:30 AM to 4:00 PM Eastern Time on weekdays, while tokenized stocks trade 24*7 around the clock. This provides an opportunity to take advantage of global market fluctuations during the US market's closed period.
Strategy
After the US market closes, the global market (such as Asia or Europe) may affect the price of Coinbase or other US stocks due to news or events, while wbCOIN in the cryptocurrency market may not have fully adjusted. 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
Severe price fluctuations may result in losses; token prices may deviate from their true value due to low participation.
Example
After the US market closed on Friday, an event in Asia boosted the outlook for Coinbase, but wbCOIN had not yet risen. Traders can buy wbCOIN at a low price in the cryptocurrency market and sell it when the US market reopens on Monday.
Opportunity Four: 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 different platforms. If the price on Base is lower than the price on Ethereum or the traditional market, traders can use cross-chain bridges or traditional market entry and exit channels to buy at a low price on one platform and sell at a high price on another.
Risk
Delays in cross-chain transactions, higher gas fees, and regulatory differences between platforms.
Example
If the price of wbCOIN is $200 on Base but $205 on Ethereum, traders can buy on Base and sell on Ethereum, earning the spread (after deducting cross-chain fees).
Opportunity Five: Event-Driven Arbitrage Scenario
Major events (such as Coinbase earnings reports, regulatory news, or hacker attacks) may lead to asynchronous price movements between traditional stocks and their tokenized versions.
Strategy
Predict events that may impact Coinbase or other US stocks (such as changes in SEC policies, mergers, acquisitions, etc.), predict price movements, and trade on the price differences between traditional stocks and tokenized stocks after the event.
Risk
The outcome of the event is highly uncertain; prices may further deviate from expectations.
Example
If Coinbase releases a positive earnings 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 recover.
Key Factors
- Sufficient liquidity: Currently, the liquidity of tokenized stocks is still relatively low, which to some extent limits the scale of arbitrage.
- Fees and slippage: On-chain gas fees, traditional market commissions, and transaction fees in token trading may erode profits.
Summary and Recommendations
With the launch of wbCOIN, the tokenized versions of other US stocks (especially those with high liquidity and high visibility, such as Apple, Amazon, and Tesla) are expected to gradually go on-chain.
In summary, the price, liquidity, and time differences between tokenized stocks and traditional stocks, as well as the fluctuations driven by cross-market and events, provide traders with various 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 the costs.
