The Stock-Paired Memecoin Squeeze Is a Lie

I regret to inform you that the grand ambitions of our stock-paired memecoins will not come to pass.

For those who don’t know what I’m referring to, I’m talking about the circulated agenda of having squeezes in onchain stock supply reverberate down into the “real” stock. Sadly, the mechanics just aren’t set up for this.

If you were logged off last weekend, you will have missed the outlandish price dislocations that occurred. Since liquidity pools are essentially a one-in, one-out ordeal, as people bought memecoins like BONER that were paired with tokenized equities, or TEQs, pronounced “tech,” they effectively parked and then cornered the supply of their paired Stock Token, leading to immense rallies from extremely constrained supplies.

AMC’s Stock Token briefly ran as high as $166.86 though the actual stock had closed Friday at $2.59. HIMS was less extreme, but still absurd, running to $132.64 against a $28.84 Friday close before coming back down to earth once markets reopened Monday. That’s roughly 64x and 4.6x their respective offchain prices.

Over the past few days, this “cornering the supply” sparked excitement about the second-order effects on, particularly, heavily shorted stocks. Could a wild, brave band of memecoin holders pump price so much that the cornered tokenized supply causes not only a short squeeze onchain, but also off?

Sadly, the answer is no.

Why the Squeeze Doesn't Work

The first problem is simply scale. Most TEQ supplies remain tiny compared to their underlying stocks. BONER, for example, accumulated 53% of HIMS Stock Tokens, which sounds incredible until you realize that equals only ~0.014% of actual HIMS shares.

But even at greater scale, there is a larger problem: cornering the Stock Token does not corner the stock.

Robinhood Stock Tokens are backed 1:1 by underlying shares held in custody, giving price exposure rather than ownership of the stock itself. So when BONER parks a huge portion of HIMS Stock Tokens in its liquidity pool, it makes the Stock Token scarce, not HIMS itself.

If that scarcity pushes tokenized HIMS far above the real stock price, Robinhood’s authorized participant can mint more Stock Tokens to arbitrage the gap. Those new tokens do require additional shares backing them, so new issuance can create some demand for the underlying stock. But cornering the existing tokens does not itself force equivalent purchases of HIMS. Instead, the main effect is to incentivize more Stock Token issuance, increasing the wrapper’s supply and pulling its price back toward the real stock.

The weekend basically proved this. HIMS could trade above $100 onchain while actual HIMS remained around $29. Once markets reopened, roughly 4,000 new HIMS tokens entered the market, and the gap quickly disappeared.

So the fabled short squeeze isn't impossible forever. We just need TEQs with much stronger bridges back to the actual equity.

What Would a Better TEQ Look Like?

Ironically, the closest setup appears to be on Solana.

Last year, Galaxy worked directly with Superstate to bring GLXY onchain. The difference is pretty simple: Robinhood gives you a token tracking a share. With Galaxy, the token is the share.

Existing Galaxy shareholders can convert their current GLXY into onchain GLXY. Those tokens remain actual Galaxy Class A common stock, carrying the same legal, economic, and voting rights as traditional GLXY. When the token changes hands, Galaxy’s official ownership records change with it.

That makes the onchain and offchain markets much more directly connected, as moving GLXY onchain moves the equity itself rather than simply creating another representation of it.

But Galaxy isn't there yet. Right now, its onchain shares can only move between approved wallets, and Galaxy has not enabled permissionless AMM trading.

So What Are Stock-Paired Memecoins Good For?

Thus, we must ask: is this all just novelty that gives speculators a reason to deploy capital?

I don’t think so.

The short squeeze is probably the most exciting mechanism people have latched onto first. But even without it, pairing stocks and tokens creates some genuinely new dynamics.

One leading theory, put forth by Eric Conner, is that these memecoins could become decentralized marketing machines for their paired companies. Holders naturally start tracking earnings, products, short interest, news, and everything else connected to the stock, producing memes and content around it along the way.

There are obvious limits here. BONER may be wonderfully aligned with Hims’ product suite, but a public healthcare company trying to build mainstream credibility may not want to officially embrace a "BONER" token.

Still, there is probably an in-between. The best companies today understand guerrilla marketing, and these communities create an organic distribution channel without the company necessarily having to acknowledge, let alone control, it.

The second, and probably more interesting, path is turning TEQs into new financial and game-like primitives.

This is already happening. NetNet Capital has coined its version “RW-Play,” essentially using tokenized stocks as programmable pieces inside games and DeFi products. Its COINflip pays winners in tokenized Coinbase stock, SpaceX Invaders pays in tokenized SpaceX, and MSFT Flight Simulator pays in tokenized Microsoft.

Instead of simply buying and holding stocks, they can become trading pairs, collateral, prizes, liquidity, or pieces inside entirely new applications.

Right now, people are largely running back the OG 2020 DeFi playbook with a new asset class. But the more interesting question is what happens once TEQs begin developing primitives of their own.

Ripe Brings Old School DeFi Farming to Robinhood Chain on Bankless

Ripe Protocol is bringing classic DeFi liquidity mining back on Robinhood Chain.

BanklessBankless

Beyond the enormous candles people have accrued on Robinhood Chain, this interaction between stocks and tokens feels like one of the most unique things to arise onchain in a while. Robinhood’s Stock Tokens make its chain the default home today, but I doubt that position goes uncontested.

Galaxy already shows that Solana can support TEQs with much stronger ties to actual offchain equities, and I’d expect Base to experiment with their own models. The competition won't just be about who puts the most stocks onchain, but who builds the most meaningful bridges between their onchain and offchain forms, and ultimately who gives people the most interesting things to do with them.

In the end, it’s nice to be around at the birth of a new meta. There’s plenty of opportunity to make money, but more importantly, plenty of room to see what entirely new mechanisms get designed.