How to Buy Tokenized Stocks on Arbitrum: A Step-by-Step Guide
Learn how to buy 1:1 backed tokenized stocks on Arbitrum with low fees and instant settlement. This guide provides a step-by-step process for trading on GM Markets.
How to Buy Tokenized Stocks on Arbitrum: A Step-by-Step Guide
Buying tokenized stocks on Arbitrum combines the performance of global equities with the efficiency of a leading Layer 2 network. On our platform, you can use your existing crypto to purchase 1:1 backed, fully reserved tokenized stocks and have them settle directly in your wallet on the Arbitrum network. This guide provides a direct, step-by-step process for acquiring these assets and explores how to integrate them into the Arbitrum DeFi ecosystem.
Why Trade Tokenized Stocks on Arbitrum?
Arbitrum has established itself as a prominent scaling solution for Ethereum. We chose to support Arbitrum because it offers distinct advantages for trading tokenized assets, anchored by its mature and expansive DeFi ecosystem.
Low Transaction Fees
Arbitrum significantly reduces the cost of transacting compared to the Ethereum mainnet. Data from sources like L2Fees.info consistently shows that an average token swap on Arbitrum costs a fraction of a mainnet transaction, often in the range of $0.10 to $0.25. This makes it more economical to build, manage, and rebalance a portfolio, especially for smaller or more frequent trades.
Fast Settlement
As an optimistic rollup, Arbitrum processes transactions off-chain and then posts them to Ethereum, enabling near-instant settlement. This speed is critical for time-sensitive trading decisions, ensuring the price you see is the price you get. You can find more details on the network's architecture in the official Arbitrum documentation.
Deep DeFi Composability
With a Total Value Locked (TVL) of approximately $3 billion as of May 2024, per DeFiLlama, Arbitrum hosts one of the largest and most diverse DeFi ecosystems. Once you own a tokenized stock on Arbitrum, it exists as a standard ERC-20 token in your wallet. This unlocks its use across a wide array of protocols for lending, borrowing, and providing liquidity, a topic we explore in detail later.
Self-Custody and Security
Unlike traditional brokerage accounts, you maintain direct control over your assets in your own crypto wallet. Our platform uses a secure, embedded wallet with multi-party computation (MPC) to ensure you are always in control, with no single party having access to your full private key. This combines the security of self-custody with a user-friendly experience.
A 4-Step Guide to Buying Tokenized Stocks on Arbitrum
The process on GM Markets is designed to be direct and simple. Our platform abstracts away complexities like gas fees, allowing you to focus on your investment strategy.
- Connect Your Wallet and Select Arbitrum: Visit GM Markets and connect your wallet. You can use an existing wallet like MetaMask or create a new, secure embedded wallet using an email or social login. Once connected, ensure you have selected Arbitrum from the network menu.
- Deposit Stablecoins: To trade, you need to fund your account. We use a unified stablecoin balance called USDF, which is backed 1:1 by USDC and USDT. You can deposit USDC or USDT directly from the Arbitrum network into your GM Markets account. Deposits are free and typically confirm in under a minute.
- Navigate to Your Desired Stock: Go to the markets page to browse our list of available tokenized stocks and ETFs. You can search for a specific ticker, such as NVIDIA (NVDA) or Tesla (TSLA). You will see real-time pricing sourced directly from our regulated market-making partners.
- Enter and Confirm Your Trade: Enter the amount of USDF you wish to spend or the quantity of the tokenized stock you want to receive. Our platform provides a final, all-inclusive quote. When you confirm, the trade executes and the tokenized stock settles directly to your wallet on Arbitrum within seconds. We handle the native gas fee for you; it is paid by our smart account and deducted from your USDF balance automatically.
What You Own: 1:1 Backing and On-Chain Transparency
When you buy a tokenized stock on our platform, you are not buying a synthetic derivative. Each token we issue is a representation of one real share of the underlying company, such as Apple or Microsoft. These shares are held in a segregated customer account at a regulated broker-dealer, including Interactive Brokers and Alpaca Markets.
We provide full transparency for this backing through our Proof of Reserves system. Our third-party attestation partner, Accountable, continuously and programmatically verifies the shares held at our custodians and publishes the data on-chain. This allows anyone to confirm that our token supply is fully collateralized by real-world shares. This system provides a verifiable link between the on-chain tokens and their off-chain collateral.
It is important to understand that holding our tokenized stocks provides you with economic exposure to the asset's price movements and dividends. It does not, however, confer shareholder voting rights, which remain with the custodian holding the underlying shares.
DeFi Composability: Putting Your Arbitrum Tokenized Stocks to Work
The market for tokenized real-world assets (RWAs) is projected to grow significantly, with firms like Boston Consulting Group forecasting a multi-trillion dollar market by 2030. A key driver of this growth is the ability to make traditional assets productive within DeFi.
The Foundation: ERC-20 Tokens on Arbitrum
Because our tokenized stocks are standard ERC-20 tokens, they are immediately composable within the Arbitrum ecosystem. This creates a level of capital efficiency that is not possible in traditional finance. Your equity holdings can become active, productive capital rather than static investments. While the ecosystem for RWA composability is still developing, the architectural foundation is already in place across several key protocol types.
Lending and Borrowing Protocols
Arbitrum-native lending protocols are building frameworks designed to incorporate RWAs. For example, Silo Finance uses a risk-isolated model where each asset is contained within its own lending market, a structure well-suited for tokenized stocks. Similarly, Dolomite is a protocol built to support a very large number of collateral assets. While these platforms do not yet have active markets for our specific tokenized stocks, their underlying designs show a clear path toward future integration.
Liquidity on Decentralized Exchanges (DEXs)
Major DEXs on Arbitrum like Uniswap and Curve provide the infrastructure for creating liquidity pools for any ERC-20 token. This means you could, for example, pair your tokenized Apple (gAAPL) with USDC to create a liquidity provider (LP) position and earn trading fees. While deep, active liquidity pools for tokenized stocks are still nascent, the tools to create them are permissionless and available today.
Understanding Costs, Security, and Risks
We believe in transparent and simple pricing. Our only revenue comes from a small trading fee that ranges from 0.10% to 0.20% (10 to 20 basis points), which decreases as your trading volume increases. You can see the full schedule on our pricing page. There are no fees for deposits, withdrawals, or custody.
Your asset security is paramount. Our embedded wallets are operated by Privy and use multi-party computation (MPC), which means no single party, including GM Markets, has access to your complete private key. You can learn more about our comprehensive security measures on our security page.
All trading and investment activities carry risk. The value of tokenized stocks can fluctuate, and markets can move against you. You may lose money. Tokenized assets also carry specific risks, including smart contract vulnerabilities, counterparty risk with custodians, and settlement risk. Please review our legal and risk disclosures before trading. GM Markets does not provide financial advice and is not available to users in the United States or other restricted jurisdictions.
Frequently Asked Questions
Do I need ETH on Arbitrum for gas fees?
No. Our platform uses gas abstraction. When you execute a trade, the required network gas fee is paid by our smart account and the equivalent value is deducted from your USDF balance. You do not need to hold ETH or any other native gas token in your wallet.
Can I buy a fraction of a share?
Yes. Our tokenized stocks are fractional down to six decimal places. This allows you to invest with as little as $1, making it possible to build a diversified portfolio regardless of the price of a single share.
How are dividends handled?
We use a total-return model. When a company pays a dividend, the funds are used to purchase more of the underlying stock. This increases the net asset value (NAV) of the token, so the dividend value is reflected in the token's price rather than being paid out as a separate cash distribution.
How quickly does my trade settle?
Trades on GM Markets settle nearly instantly on-chain. Once you confirm your trade, the tokenized stock is sent directly to your wallet on the Arbitrum network, typically within seconds.
Can I move my tokenized stocks from Arbitrum to another chain?
The tokens are native to the chain on which they are minted. However, our platform supports multiple chains, including Base, Optimism, and Ethereum. You can trade assets across any of our supported networks directly within the GM Markets interface.
Start Trading on Arbitrum
By using GM Markets on Arbitrum, you can directly access global equity markets with the efficiency, low cost, and self-custody of decentralized finance. You can convert crypto to tokenized stocks in a few steps and hold them in your own wallet, ready to be integrated into the growing Arbitrum DeFi ecosystem. Explore the available markets on our platform to get started.
