Written by: Wu on Blockchain
This article does not constitute any investment advice. Readers are advised to strictly comply with the laws and regulations of their jurisdictions and not to participate in illegal financial activities.
On June 30, 2025, cryptocurrency exchanges Bybit and Kraken announced the launch of the xStocks product provided by the Swiss compliant asset tokenization platform Backed Finance. xStocks is a series of tokens backed 1:1 by real stocks, with the underlying assets held by regulated third-party custodians (such as InCore Bank and Maerki Baumann among Swiss banks). These tokens are issued according to the SPL standard on the Solana public chain, supporting 24/7 trading and on-chain instant settlement, breaking through the time and geographical limitations of traditional stock markets. According to compliance requirements, xStocks is currently only open to non-US users; US persons are prohibited from purchasing or holding this product. Subsequently, many top platforms such as Cryptocom and GMGN also launched xStocks.
Team Background
According to LinkedIn, the three co-founders of Backed Finance previously worked on the now-defunct DAOstack project. DAOstack raised nearly $30 million through private placements, pre-sales, and public fundraising from Q4 2017 to May 2018, with financing prices ranging from $0.708 to $0.9423. Major investors included Cultu.re, Endor Protocol, Gnosis, and Menlo One. However, the price of the GEN token for this project plummeted significantly after May 2021 and eventually approached zero. By the end of 2022, DAOstack officially closed down. This relatively negative team background has also sparked community discussions.
In 2021, inspired by the widespread application of stablecoins, these three founders left DAOstack to establish Backed Finance, aiming to introduce traditional assets such as stocks into the blockchain system in a compliant manner. Between 2021 and 2022, Backed completed project feasibility verification and seed round financing, establishing partnerships with custodial banks and brokers, and received EU regulatory approval for the related product prospectus. The first batch of products was launched in 2023, with a cumulative issuance scale exceeding $50 million. In April 2024, Backed completed a $9.5 million Series A financing, led by Gnosis, with participation from institutions including Exor Seeds, Cyber Fund, and Mindset Ventures.
Product System and On-Chain Deployment
Backed Finance currently provides on-chain tokenized securities services covering global blue-chip stocks, index funds, and short-term bonds through two main product lines — xStocks and bTokens. All tokens are backed 1:1 by physical assets and have EU-compliant ISIN numbers. The products have been issued on mainstream public chains including Ethereum, Solana, Avalanche, Base, and Polygon, and are integrated with DeFi protocols such as Kamino Finance, Raydium, and Jupiter Exchange, supporting on-chain strategy deployments like lending, market making, and arbitrage.
DigiFT analyst Ryan pointed out that the xStocks token is essentially a debt structure (corporate debt, tracking underlying assets), not an equity token. Issuing debt that tracks underlying assets does not require the issuer to have custody qualifications, so the backed issuer is an SPV, which lacks distribution qualifications. There is a Bermuda DA license entity PDSL involved in xStocks, which is actually a subsidiary of Kraken, and it is distributed through this entity.
Since it is debt, it relates to dividends; xStock directly airdrops tokens; the token also does not involve corporate actions. Debt can issue bearer bonds, so it is essentially more like stablecoins, classified as corporate liabilities. More importantly, the transfer of debt ownership does not require registration (equity does), so there is no stamp duty in between (although it is a very complicated tax class in traditional finance), allowing for arbitrary on-chain transfers.
The purchase process involves margin funding and stablecoin exchange, so there is a purchase limit for each transaction. Additionally, traditional brokers only support trading during working hours plus blueocean pre-market and after-hours, in order to compensate for market maker losses, the spread is set at 1%, and the fees are relatively high at 0.5%. In summary, it allows users to gain exposure to US stocks without further implications, but currently, it is sufficient. If institutionalization is to occur in the future, other issuance structures and schemes will still be needed.
Trading Experience: Insufficient Liquidity and Participation Barriers
Despite support from Bybit and Kraken, the actual trading activity of xStocks remains highly concentrated, with only NVDAx, MSTRx, TSLAx, CRCLx, SPYx, and AAPLx showing significant trading volume. According to on-chain data provided by defioasis, on the first day of product launch on June 30, 2025, the on-chain trading volume was $1.338 million, with 1,225 independent trading users and 2,510 transactions; on July 1, on-chain trading activity saw significant growth, with a trading volume of $6.64 million, adding 6,565 new independent trading users and reaching 17,879 transactions. Trading was mainly concentrated on a few tokens like TSLAx ($1.71 million), SPYx ($1.53 million), and CRCLx ($940,000), while most other tokens had very limited on-chain trading, with some pools having zero liquidity, and slippage issues were common.
Besides the on-chain path, xStocks can also be traded through internal matching on exchanges. Bybit provides trading pairs based on USDT, while Kraken supports trading methods using fiat currency as a medium but has not yet opened stablecoin trading pairs and has a minimum purchase amount restriction. It should be noted that whether through on-chain trading or exchange trading, both currently face the common problem of insufficient liquidity, with low user transaction efficiency and limited market depth, resulting in a noticeable gap in overall trading experience compared to traditional CFD platforms.
Advantages of Targeting Crowd and Structure
The Backed model primarily serves non-US users who find it difficult to access US stocks through traditional brokers, especially crypto-native users. Its advantages include: support for stablecoin payments and small transactions, no need for a US stock account, 24/7 on-chain matching and settlement, real asset custody, and compliance with EU regulations.
Expansion Path: Derivatives and Tokenization of Non-Listed Equity
Although xStocks provides the infrastructure for on-chain US stock investment, the liquidity bottleneck in the spot market still exists, making it difficult to form a scalable trading ecosystem. As a result, the industry is beginning to focus on derivatives paths with more trading attributes, especially perpetual contracts for stocks (stonk perps). Popular tech stocks have high volatility, combined with high leverage mechanisms, which can yield high volatile returns similar to altcoins, making them more attractive to crypto users. Such products do not require actual stock delivery and can rely on oracle prices and funding rate mechanisms to achieve purely on-chain trading, with a mature technical path that is suitable for priority deployment on decentralized platforms like Hypeliquid. Compared to the regulatory obstacles faced by centralized exchanges, decentralized derivatives platforms offer greater flexibility and experimental space.
Another noteworthy direction of development is the tokenization of equity in unlisted companies. Compared to the traditional private placement market, which is opaque and has limited exit mechanisms, issuing transferable equity tokens on-chain, combined with mechanisms such as DAO governance, contract lock-up, and thresholds for qualified investors, is expected to achieve an efficient and transparent early equity circulation structure, particularly suitable for star companies with high market attention like OpenAI and SpaceX. However, this path still faces challenges such as regulatory uncertainty and complex issuance structures, and it is more likely to exist in pilot or grey compliance forms in the short term.
Conclusion
xStocks provides a realistic path for compliant asset tokenization, showcasing strong product design capabilities with its on-chain structure, cross-chain deployment, and DeFi integration capabilities. However, the liquidity of the spot model is limited, and the capability to expand its user base is insufficient, making it difficult to solely support the growth curve of the tokenized stock market. In the future, breakthroughs around perpetual derivatives and early-stage equity tokenization may become key nodes in driving the on-chain securities market from 'tool-type products' to 'transaction-type assets'.