Tokenized stocks vs. CFDs: Two ways to trade equities in web3
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The US stock market reflects both the success of established corporations and the rise of promising startups, with major exchanges like the New York Stock Exchange and Nasdaq-100 hosting a diverse range of companies from industry giants to emerging players.
Historically, the market has delivered an average annual return of about 10%, as measured by the S&P 500 index. Despite fluctuations and occasional downturns, the US stock market has demonstrated a strong upward trajectory, exemplified by prolonged bull markets.
This secular bull market has attracted a new generation of investors and traders who have started experimenting with stocks, equities and other alternative assets. In recent months, web3 companies are seizing the opportunity to attract these TradFi traders, while simultaneously catering to crypto-native users by introducing innovative instruments such as tokenized stocks and stocks contract for difference (CFD) trading.
In this article, we’ll explore the key differences between the two, break down how each functions and learn how traders can use each of them based on their needs.
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