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Author: Nancy, PANews

In just over a year, the tokenized stock market has experienced explosive growth, with daily trading volume climbing from zero to nearly $4 billion, continuously hitting new highs. Regulatory easing in the U.S. is also expected to drive this sector toward mainstream adoption.

Beyond the direct tokenization of equity, from Hyperliquid pioneering on-chain pricing for private companies via perpetual contracts, to Polymarket partnering with Nasdaq to launch prediction markets for private companies, the valuation discovery and liquidity capture for Pre-IPO assets are unfolding across the on-chain world.

Polymarket Partners with Nasdaq, Prediction Markets Enter Pre-IPO Sector for the First Time

On May 19, Polymarket announced an exclusive partnership with Nasdaq to officially launch prediction markets linked to the performance of private companies, marking the first time prediction markets have ventured into the private market.

Under the partnership, users will be able to engage in predictive trading on metrics such as company valuations, IPO timelines, and secondary market trading activities. Nasdaq Private Market will serve as the exclusive settlement data provider for relevant contracts, providing the official data used to determine outcomes.

Notably, this also marks the first time Nasdaq Private Market has freely disclosed some private market valuation data. Previously, such data was typically only available to institutional clients through paid subscriptions.

The introduction of prediction markets allows more users to engage in price speculation, sentiment expression, and expectation trading regarding these popular private enterprises. Previously, most star tech companies completed much of their valuation growth before going public, leaving ordinary users with few ways to participate. According to Nasdaq data, there are currently over 1,600 unicorns globally with valuations exceeding $1 billion, including OpenAI, Anthropic, and SpaceX, with a cumulative valuation exceeding $5 trillion.

Of course, prediction markets also provide real-time market pricing and sentiment feedback for these Pre-IPO assets, creating more dynamic valuation references and promoting greater transparency in information flow and price discovery within private markets.

For Polymarket, this partnership drives business expansion while accelerating its transformation into mainstream financial infrastructure. Although competitor Kalshi has also launched prediction contracts related to private company IPOs, its settlements rely more on public information such as SEC filings and company announcements, which can be subject to lag and interpretation. In contrast, Polymarket directly utilizes authoritative Nasdaq data as the basis for settlement, significantly enhancing market credibility and the objectivity of results.

More importantly, the launch of private market products helps Polymarket further expand its business into traditional finance, attracting more global users beyond its original focus on politics, sports, and crypto assets.

For Nasdaq, this partnership is equally strategic. By opening private company data to the on-chain market, Nasdaq can not only capture valuation discovery and liquidity demand in the Pre-IPO market but also extend its data capabilities to global retail and crypto users, expanding the influence and monetization potential of its data products. Furthermore, as crypto platforms like Hyperliquid rise, Nasdaq's proactive embrace of the on-chain financial ecosystem strengthens its resilience against emerging competition.

Early Price Discovery: Hyperliquid Challenges Wall Street's Pricing Power

Compared to prediction markets, the leader in Pre-IPO DEXs, Hyperliquid, has already begun to challenge the pricing power long held by Wall Street.

Months ago, Hyperliquid's HIP-3 market began bringing traditional financial assets like silver, gold, and crude oil on-chain, gradually becoming an important price discovery market during weekends and U.S. stock market closures, attracting attention from traditional finance circles. In April alone, the average daily trading volume of oil-related contracts on the Hyperliquid platform exceeded $700 million.

Recently, Hyperliquid has extended its reach into the Pre-IPO space, launching perpetual contracts for Cerebras (CBRS) and SpaceX (SPCX). Notably, the CBRS contract's on-chain price was anchored within 3% of the Nasdaq opening price before the company officially went public, whereas the deviation on traditional secondary platforms reached 35%. This means that, to some extent, Hyperliquid is leading on-chain price discovery for Pre-IPO assets, challenging the pricing dominance long held by traditional secondary markets, investment banks, and private transactions.

Data shows that the 7-day trading volume of Hyperliquid's HIP-3 market is approximately $17.58 billion, with open interest around $2.54 billion. To lower entry barriers, Hyperliquid recently updated its HIP-3 documentation to gradually reduce the mandatory 500,000 HYPE staking requirement for deploying perpetual markets; any amount exceeding the new threshold can be unlocked, which is expected to attract more builders and further drive the expansion of on-chain financial assets.

As Hyperliquid's influence in traditional financial assets and the Pre-IPO market grows, a sense of crisis is rising in Wall Street. Recently, institutions including the CME Group (CME) and the New York Stock Exchange (NYSE) have begun urging U.S. regulators to increase scrutiny of Hyperliquid, citing potential market manipulation risks and issues such as sanction evasion.

Facing regulatory uncertainty, Hyperliquid is accelerating its compliance efforts. In addition to the Hyperliquid Foundation donating 1 million HYPE tokens to the lobbying group Hyperliquid Policy Center—led by veteran crypto policy lawyer Jake Chervinsky to drive regulatory communication—Hyperliquid co-founder Jeff has personally traveled to Washington to engage in dialogue with regulators, hoping to bring the on-chain derivatives market into the U.S. regulatory framework. Furthermore, Hyperliquid has hired veteran PR expert George Godsal as a spokesperson, emphasizing that all platform trades, liquidations, and funding rates are publicly verifiable, offering much higher transparency than traditional markets.

As more Pre-IPO assets migrate to on-chain markets, the valuation systems and price discovery mechanisms monopolized by Wall Street are facing a direct challenge from crypto-native markets.

Record Daily Trading Volume: SEC Innovation Exemptions May Be Released This Week

Tokenized stocks are rapidly moving from crypto-native innovation toward mainstream adoption, with traditional exchange giants like the NYSE and Nasdaq actively positioning themselves in this sector.

Data from The Block shows that as of May 18, the daily trading volume of tokenized stocks hit a record high of $3.57 billion. Most of this volume is concentrated on two major platforms, Binance and Hyperliquid, while platforms like xStocks, Ondo, and Bitget continue to drive the expansion of the on-chain stock market.

Meanwhile, regulatory easing in the U.S. is expected to serve as a catalyst for further growth in the tokenized stock sector. According to recent Bloomberg reports, sources say the U.S. SEC may release innovative exemption rules for tokenized stocks as early as this week, establishing a new regulatory framework for crypto versions of publicly traded stocks.

Based on currently disclosed information, the SEC tends to allow third-party institutions to issue tokens linked to stock prices without official authorization from the listed companies, and allow them to be traded on DeFi platforms. This means the tokenized stock market will gradually form a more open ecosystem of on-chain synthetic assets.

Previously, controversy arose when some projects launched related tokens without company authorization. For example, Anthropic once issued a public warning that unauthorized tokenized stock exposure does not carry real equity validity, which triggered market panic.

In essence, these third-party issued tokenized stocks are closer to synthetic assets that track stock prices rather than true stock ownership. Some products may lack rights such as voting or dividends associated with traditional stocks. Under the SEC's currently discussed proposal, if a platform cannot provide corresponding rights protection for users, it may lose eligibility to list such token products.

The innovative exemption rules for tokenized stocks are also seen by outsiders as the first large-scale test by U.S. regulators on the feasibility of migrating stock trading to crypto infrastructure. Supporters argue that tokenized securities can achieve near real-time settlement, 24/7 trading, and lower global circulation barriers, significantly improving capital market efficiency. Opponents, however, argue that such mechanisms could weaken KYC, anti-money laundering (AML), and investor protection systems, while increasing systemic market risk.

Amid the popularity of tokenized stocks, ARK researcher Lorenzo Valente warned that the Layer 2 and Layer 3 SPV (Special Purpose Vehicle) wrapper structures currently widely used in the market could become a core risk for the future development of tokenized stocks. He believes that Bullish's acquisition of Equiniti and institutions like Securitize pushing for real, compliant stock equity on-chain are the keys to whether tokenized stocks can truly enter the institutional market. The market may still see many \"wrapped\" products, including equity SPVs, debt notes, and other derivative structures; if the underlying equity, transfer restrictions, and investor rights are unclear, tokenized stocks could devolve into multi-layered speculative assets.