xStocks on-chain are backed 1:1 with shares held by a regulated third-party.
Crypto traders can now put shares of Nvidia, Tesla, and Strategy in their Solana wallets thanks to a new feature called xStocks, which puts tokens backed 1:1 with shares of select publicly traded firms on the Solana blockchain.
The feature from tokenization firm Backed, rolled out on centralized exchanges Kraken and Bybit this week in certain regions and also launched natively on the Solana blockchain, allows traders to gain exposure to popular American equities like Meta, Netflix, Coinbase, McDonald’s, and more on-chain.
In other words, eligible users can swap crypto or fiat for stocks on the aforementioned exchanges, or swap any Solana token for the xStock of their choosing via decentralized protocols like Jupiter or Raydium.
While tokenized stocks, or the process of putting shares of companies on-chain, is not a new idea, xStocks differs from previous implementations that simply reflected the price of an off-chain asset with a “mirrored” asset on-chain.
Instead, each xStock token is backed 1:1 by the underlying asset which is held by a regulated third-party. In other words, a user that purchases a share of Apple on-chain via xStocks is assured that their single share of Apple is held in custody and redeemable at any time.
“For the first time, people all over the world can own and use a share of a tokenized stock like they would use money. You can move it, hold it, spend it, or borrow against it. All from your wallet, with no intermediaries, no borders and no delays,” said Kraken co-CEO Arjun Sethi in a statement about the platform’s xStock launch.
According to Backed, trading tokenized stocks like xStocks offers a handful of benefits that users trading via a traditional brokerage would not get. For example, xStocks allows users to trade 24/7, while a brokerage is subject to the stock market’s hours.
Additionally, their use on global blockchains allows participants in other geographies to gain exposure to the American stock market, and for trades to take place without broker commissions. It also makes equities available for use in decentralized finance (DeFi).
While Kraken and Bybit have tapped Backed and its xStocks product for its tokenized equities, other platforms are looking to build their own tokenized product suites.
Coinbase has been seeking regulatory approval to offer tokenized stocks on its platform, with its Chief Legal Officer Paul Grewal calling that approval a “huge priority” in June.
