S&P 500, On-Chain: SPXA Brings TradFi to DeFi

The most popular index in the world has now been tokenized. The first licensed S&P 500 index fund has been put on-chain by real-world asset (RWA) tokenization expert Centrifuge. By tokenizing the S&P 500, the platform is giving on-chain investors access to the world’s most recognized equity benchmark.

“The benchmarks of traditional finance still shape the global economy, and there’s no index more important than the S&P 500.”

– Centrifuge CEO Bhaji Illuminati

The Janus Henderson Anemoy S&P 500 Fund went live under the ticker SPXA this week exclusively on Base, a layer-2 network developed by the leading US crypto exchange, Coinbase (COIN -1.18%), which makes building, owning, and earning simple and accessible.

The L2 helps resolve Ethereum’s (ETH +0.67%) scalability problem while leveraging the security of the Ethereum mainnet with the ultimate goal of becoming a “Superchain” of fully decentralized and interoperable Ethereum L2 networks. 

Ethereum co-founder Vitalik Buterin recently expressed strong support for Base, calling it a model for how L2 platforms should evolve.

Critics say the network is too centralized, but Buterin argues that Base maintains decentralization while enhancing user experience. For security, he noted that the L2 relies on Ethereum’s secure base layer to guarantee non-custodial operation, which ensures that “user funds remain under L1 control, preventing theft or censorship by L2 operators.”

With the faster and cheaper blockchain as its base, Centrifuge has launched the first tokenized index fund, which is authorized by its operator S&P Dow Jones Indices (S&P DJI).

This offering marks the stepping stone for S&P Dow Jones Indices to “build the future of index-linked financial products”, said Cameron Drinkwater, chief product officer at S&P DJI, who also noted that SPXA will enable direct exposure to the S&P 500 Index within an “ecosystem that supports liquidity, transparency, and interoperability.”

S&P 500 Goes On-Chain with SPXA on Base

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The S&P 500 Index is a product of S&P Dow Jones Indices. It tracks the stock performance of 500 leading companies listed on US stock exchanges, covering approximately 80% of the available market capitalization. 

The S&P 500 Index boasts an aggregate market cap of more than $57 trillion. Interestingly, the ten largest companies on the index account for about 38% of its market cap, and the 50 largest account for 60% of the index.

Nvidia (NVDA +1.02%), Microsoft (MSFT -0.06%), Apple (AAPL -0.15%), Amazon (AMZN +0.06%), Meta Platforms (META -2.65%), Broadcom (AVGO +0.55%), Alphabet (GOOGL -0.18%), Tesla (TSLA -2.1%), Berkshire Hathaway (BRK-A -0.44%) & (BRK-B -0.61%), and JPMorgan Chase (JPM -0.38%) are currently the top ten largest companies.

This stock market index is widely regarded as the best single measure of large-cap U.S. equities. One of the most commonly followed equity indices, it has been historically used to provide insight into the direction of the stock market. It is also used as the standard for the performance of the economy at large.

One doesn’t directly invest in the S&P 500, though, as it’s an index, but rather in exchange-traded funds (ETFs) or mutual funds that use it as a benchmark and track its composition and performance.

By tokenizing the S&P 500, Centrifuge is bridging the gap between traditional finance (TradFi) and decentralized finance (DeFi).

Notably, this will allow it to trade around the clock with transparent holdings. The traditional US stock market operates only during limited hours, but now with the tokenized version, it will trade non-stop, which can potentially increase liquidity and flexibility for global investors who exist across different time zones.

Another great benefit of this tokenization is improved accessibility. Traditional S&P 500 ETFs or futures often require large capital, and that can now be eliminated through fractionalization. This lowers the entry barriers for retail investors, especially in emerging economies, who can now buy fractions of the index exposure.

This democratizes access, especially for investors in regions where US products are restricted.

By allowing investors outside the US to access the S&P 500 more easily, tokenization makes cross-border investing not just possible but also simpler, while removing issues like currency conversion and custodial barriers in the process.

Putting the index on-chain also comes with the added advantage of instant settlements and reduced counterparty risk, as blockchain removes intermediaries, unlike the traditional finance sector.

The crypto integration further opens up a whole new sector for the S&P 500. The tokenized index can now be integrated into various DeFi protocols, such as lending, borrowing, yield farming, and collateral in derivatives, unlocking new and exciting use cases for traditional ETFs that weren’t possible before.

Tokenized indices can even be packaged into new structured products such as yield-bearing tokens, finally introducing much-needed innovation in the Wall Street infrastructure.

Meanwhile, crypto traders, many of whom have only traded tokens and never really traded stocks, can finally gain TradFi exposure without leaving the familiarity of the blockchain ecosystem. This way, crypto natives can hedge their crypto portfolios with traditional assets.

Tokenized S&P 500 can also help crypto investors diversify their portfolio. With crypto assets known for their high volatility, traditional assets can provide the much-needed stability and reduce portfolio risks.

Traders can also capture the upside of the TradFi market and take advantage of new asset classes while seamlessly moving from one narrative to another. 

For instance, the S&P 500 index is up 2.2% in September so far, while Bitcoin (BTC +0.3%) is up only 1.15% and Ethereum is down 10.72% this month.

Moreover, the stock market recently hit a new peak. In contrast, Bitcoin is down 11.7% from its $124K all-time high (ATH) hit in mid-August, Ether has fallen 20.8% off its almost $5K peak, and the total cryptocurrency market cap is back under the $4 trillion mark.

Currently, the S&P 500 index is trading at 6,604.72, up 12.29% YTD and 15.42% in the past year. Meanwhile, its 3-year annualized return has been 21.38%. Just about six months ago, the index had fallen to almost 4,835, but it has since made a stellar recovery, hitting nearly 6,700 at the beginning of this week, representing a 38.5% upside. 

So, crypto traders can now easily capture these gains right from their crypto wallets without having to get a broker account. They can also take advantage of new arbitrage strategies between TradFi and crypto.

Not to mention, the integration of TradFi into DeFi makes the latter a multi-asset market. It will no longer be just about crypto but will expand into new assets and attract more users and capital. 

On-chain versions of the S&P 500 index can further make it easy for institutions to interact with crypto, smart contracts, liquidity pools, and its many other innovations, further accelerating the institutional adoption of blockchain and DeFi.

With this, the crypto market can also make its shift from speculative digital assets to the global financial layer.

How SPXA Works: Licensing, Managers, and Multichain Plans

The brand new SPXA is based on the S&P 500 Index, but it is in no way sponsored or sold by S&P DJI, Dow Jones, S&P, or their other affiliates.

While it is currently live on Base, the S&P 500 Index Fund has chosen Wormhole as its multichain provider, which will allow the seamless movement of SPXA across different supported chains. 

Wormhole is a decentralized interoperability protocol that facilitates secure transfer of data and tokens across more than 40 blockchain networks, including Ethereum, Solana, Sui, Cosmos, Aptos, and Arbitrum. Wormhole will handle SPXA’s future expansion to these other blockchains.

For the S&P 500 Index Fund, Centrifuge’s asset management arm, Anemoy, is serving as the investment manager and will oversee the fund, while crypto brokerage, FalconX, is the anchor investor in the product.

London-based global asset manager, Janus Henderson, which holds about $500 billion in AUM, is serving as sub-investment manager. 

The SPXA launch “is a natural progression of our blockchain strategy, bringing the world’s most important equity index to a new generation of investors,” said Nick Cherney, Head of Innovation at Janus Henderson. “This is the start of a broader effort to scale our tokenization capabilities and expand secure, efficient access to global markets.”

Janus will make sure the product is executed in line with the regulatory requirements.

The asset manager isn’t new to the tokenized world, having already tokenized two funds, JTRSY and JAAA, with Centrifuge. The first tokenized fund strategy (JTRSY) scaled beyond half a billion dollars in AUM within weeks, while the second one (JAAA) was the fastest to reach a billion dollars in AUM.

JTRSY also received an AA+f / S1+ fund credit quality rating from S&P Global Ratings in March, which is not only the highest rating given to any tokenized fund but also the second-highest rating awarded by S&P. Last year, the fund also got an “A+” rating from Particula and an “Aa” rating from Moody’s.

Following that success, they have turned to SPXA now, with which they are creating a “blueprint for how institutional finance can thrive onchain,” said Cherney.

Centrifuge itself has been involved in the tokenization space for several years now. It first built infrastructure for tokenizing fixed income and private credit back in 2017. With SPXA, Centrifuge is making its entry into equities, a tokenization trend that has gained significant traction in recent months.

“Indices are the best way to bring stocks on-chain,” said Illuminati in a statement. “They’re simple, collateral-ready and unlock liquidity in ways individual securities can’t.”

The company that enables its users to tokenize and distribute funds on-chain is aiming to position itself as the technology partner for the multi-trillion-dollar index industry with SPXA.

It was a few months ago that Centrifuge first announced its collaboration with the world’s leading index provider, S&P DJI, to bring the Index on-chain for the first time, thus laying the foundation for programmable asset management as well as seamless integration with institutional capital markets and DeFi.

The collaboration is expected to help licensed asset managers launch in the future compliant index-tracking funds using smart contracts.

“Having spent most of my career in the ETF industry, I’ve seen firsthand how index-based products transformed market access,” said Anil Sood, Chief Strategy and Growth Officer at Centrifuge at the time. And bringing the index data and fund infrastructure on-chain represents the “next logical leap,” making capital markets more open, efficient, and faster.

He added:

“It’s about taking everything we learned in traditional markets and reimagining it with programmability, transparency, and global, 24/7 accessibility.” 

As Centrifuge noted, the index trades more than a trillion dollars daily across ETFs, derivatives, and structured products. By bringing it on-chain, they are opening the doors for institutions, wealth platforms, and DAOs to license S&P DJI index data and receive seamless access to the most trusted benchmark in capital markets.

The Bigger Picture of Tokenization

The initiative from Centrifuge reflects the widespread trend of tokenization, where traditional financial instruments such as equities, funds, and bonds are increasingly being put onto blockchain rails.

Tokenization of these real-world assets (RWA), which also include real estate, art, wine, commodities, fiat currencies, and stocks, is being explored for operational gains, faster settlements, and around-the-clock availability. 

Major institutions like MultiBank Group, Deutsche Bank, JPMorgan, Franklin Templeton, BlackRock (BLK -0.08%), Libre, and Visa (V -0.04%) are already actively looking into tokenization, signaling its growing adoption in the TradFi industry.

According to Boston Consulting Group, tokenization is projected to reach $16 trillion by 2030. Today, it is sitting at $30.89 billion, doubling from the beginning of the year, with Ethereum dominating the market with more than half of all tokenized assets.

Its robust infrastructure, mature ecosystem, institutional adoption, and broad developer support have been the main driving factors behind Ethereum serving as the primary hub for RWA tokenization.

While tokenization has vast potential in terms of inclusiveness, programmability, composibility, accountability, and cost savings, challenges like smart contract vulnerabilities and regulatory uncertainty still need to be addressed for its broader adoption.

Some experts also argue that tokenization needs utility and liquidity to really work. Still, the tokenization sector is fast-growing, with several major developments taking place just this month alone.

For starters, Nasdaq-listed SharpLink Gaming (SBET -3.26%), which has transitioned into an ETH treasury company, plans to become the first public company to issue its common stock directly on the Ethereum blockchain. For this, it has chosen Superstate as the digital transfer agent, which will use its regulated on-chain issuance platform Opening Bell to tokenize SBET equity in a compliant manner.

“We are excited to raise the floodgates further by onboarding TradFi to composable DeFi on Ethereum. As one of the largest corporate holders of ETH, this major step forward reinforces SharpLink’s conviction that Ethereum is the foundation upon which the next generation of financial infrastructure will be built.”

– Consensys CEO Joe Lubin, who chairs SharpLink

With this move, SharpLink has joined crypto asset manager Galaxy Digital and Solana treasury company Forward Industries in utilizing Superstate’s Opening Bell for stock tokenization. 

Coinbase, Kraken, Gemini, and eToro are also pursuing on-chain solutions for public equities.

Despite the growing interest in tokenized entities, they have only captured about $710 million worth of assets. However, progress is ongoing, with Robinhood (HOOD -1.92%) CEO Vlad Tenev sharing plans to launch a publicly listed fund called the Robinhood Ventures Fund I, which would offer retail investors the opportunity to invest in private companies.

“For decades, wealthy people and institutions have invested in private companies while retail investors have been unfairly locked out. With Robinhood Ventures, everyday people will be able to invest in opportunities once reserved for the elite.”

– Tenev

Nasdaq, meanwhile, is seeking approval to enable the trading of tokenized stocks and ETFs on the same order book as traditional products.

These major developments come following the SEC’s Project Crypto initiative to update regulations for crypto and on-chain markets. The Commodity Futures Trading Commission (CFTC) is also working on modernizing capital markets and providing clear guidance to crypto businesses.

CFTC has launched an initiative for using tokenized collateral, including stablecoins, in derivatives markets. Just earlier this year, the agency tapped Ripple, Coinbase, Circle, Moonpay, and Crypto.com for a non-cash collateral derivatives pilot program.

In contrast to the crypto-friendly positioning of the US authorities under the Donald Trump administration, China’s Securities Regulatory Commission is giving top brokerages informal advice to pause RWA tokenization activities in Hong Kong. 

This comes after authorities asked brokers to stop endorsing stablecoins in their research in order to cool retail enthusiasm.

Still, fintech giant Ant Group is advancing in the field through its blockchain arm Ant Digital Technologies. They are currently working on bringing more than $8.4 billion worth of energy assets on-chain. They have already been tracking power output and monitoring outages across 15 million new energy devices in China, and moved it all onto its own AntChain. The company has also done financing for three clean energy projects through tokenization, raising about $42 million for the operating companies.

While Beijing is taking a guarded stance, Hong Kong has released a policy blueprint to accelerate RWA tokenization, while the European Commission is preparing its own tokenization proposals. Recently, the London Stock Exchange Group (LSEG) rolled out a blockchain platform for private funds and even completed a deal.

Amidst this surging interest, asset management firm Bitwise also submitted a proposal for the Bitwise Stablecoin & Tokenization ETF. 

If approved by the SEC, it would “provide exposure to assets poised to benefit from the growing adoption of stablecoins, tokenization, and fundamental shifts in how financial assets are exchanged and settled.”

Final Thoughts

The tokenization of the S&P 500 index through SPXA is the latest development in the rapidly growing on-chain space that has captured significant TradFi interest, marking a major shift by showcasing how legacy benchmarks can evolve into programmable, globally accessible financial assets. 

If the product becomes successful, it could not only democratize investing for retail participants and accelerate institutional adoption but also potentially lead to massive DeFi growth.

Click here for a list of the top real-world asset tokenization platforms.