Investment research report on xStocks, a tokenized stock issuance platform

1. Project Overview

xStocks is a tokenized stock issuance platform based on blockchain technology that aims to achieve asset fragmentation, liquidity enhancement, and global trading by converting traditional stocks and ETFs (exchange-traded funds) into tradable digital tokens. The platform was launched by Kraken in partnership with Backed Finance, and the first batch of the platform covered more than 50 U.S.-listed stocks and ETFs such as Apple, Tesla, and Nvidia. xStocks' tokens (e.g., AAPLX, TSLAX, etc.) are issued on the Solana blockchain, support 24×7 uninterrupted trading, and can be further leveraged through DeFi protocols (e.g., lending, liquidity mining).

2. Technical architecture and operating model

1. The underlying technology of the blockchain
   xStocks uses the Solana blockchain as its underlying technology platform, which is ideal for high-frequency trading and integration with DeFi applications due to its high performance, low latency, and strong scalability. Solana's throughput can reach hundreds of thousands of transactions per second, far exceeding the T+2 settlement cycle of traditional financial systems.

2. Asset custody and support
   All xStocks tokens are purchased and held in escrow by Backed Finance, ensuring that each token is backed by a 1:1 ratio of physical assets. This mechanism not only boosts investor confidence, but also complies with the regulatory requirements of the Swiss DLT Act.

3. Trading & Liquidity
   xStocks supports trading on centralized exchanges (such as Kraken, Bybit) and decentralized exchanges (DEXs), and can participate in lending protocols and liquidity mining, further enhancing the use cases and value of tokens. In addition, xStocks' tokens are freely transferable and not locked to a single platform, allowing users to keep them in self-custody wallets.

3. Market performance and data

1. Market capitalization and trading volume
   As of May 23, 2025, xStocks has a market cap of $36,000 and a daily trading volume of $241,000. Despite its relatively small market capitalization, its trading volume shows a certain level of market activity.

2. Circulating Supply
   xStocks has a circulating supply of 999.93 million and no set maximum supply, which means that new tokens can be created over time. This design helps to keep the token flexible and adaptable.

3. Supported assets
   xStocks currently supports about 60 stocks and ETFs, including popular US stocks such as Apple, Tesla, Nvidia, Microsoft, Amazon, and more. These assets are highly liquid, which helps attract cryptocurrency investors to participate.

Fourth, market influence and competitive advantage

1. Break down traditional financial barriers
   xStocks uses blockchain technology to achieve 24-hour trading of traditional stocks and zero cross-border friction costs, breaking the T+2 settlement cycle and cross-border exchange restrictions of traditional securities trading. This provides a more convenient and low-cost channel for international investors to invest in U.S. stocks.

2. Promote the democratization of finance
   Adam Levi, co-founder of Backed Finance, said xStocks represents a huge leap forward in democratizing access to financial markets. Through tokenization, small investors can more easily participate in the U.S. stock market without having to go through traditional brokerages or banks.

3. Deep integration with DeFi
   xStocks is not only an investment target, but also a high-energy fuel for the DeFi ecosystem. Users can participate in liquidity mining, lending, staking, or building cross-chain arbitrage strategies to further activate the value potential of stocks.

5. Risks and challenges

1. Regulatory uncertainty
   Although xStocks operates under the Swiss DLT Act, the fragmentation of global securities regulations remains its biggest challenge. Different countries have different regulatory attitudes towards tokenized assets, which can lead to compliance risks.

2. Market volatility and speculative risk
   The introduction of tokenized shares may exacerbate short-term speculation and market volatility. Due to its price pegged to traditional stocks, but with the high volatility of cryptocurrencies, investors need to carefully assess the risks.

3. Technology & Security Risks
   Although blockchain technology has high security, there are still smart contract vulnerabilities, cyber attacks, and private key management risks. Additionally, scalability issues with blockchains such as Solana can also affect the transaction experience.

6. Future prospects

1. Expand the scope of your assets
   In the future, xStocks may further expand to include more global equities and ETFs, even real world assets (RWAs) such as real estate, bonds, and commodities. This will provide investors with a richer range of investment options.

2. Promote the integration of DeFi and traditional finance
   With the development of DeFi 2.0, xStocks may become the cornerstone of on-chain financial engineering, combining with synthetic assets to enable more complex financial product designs.

3. Regulation and standardization
   With the popularity of tokenized assets, regulators are likely to introduce a clearer dynamic regulatory framework to support the compliance development of platforms such as xStocks.

VII. Conclusions

xStocks, a tokenized stock issuance platform based on blockchain technology, is reshaping the boundaries of traditional financial markets. It not only provides cryptocurrency investors with access to traditional financial assets, but also promotes the evolution of financial markets in the direction of globalization, low friction, and high liquidity through 24-hour trading, fragmented ownership, and DeFi integration. However, its development still faces challenges such as regulatory uncertainty, market volatility and technological risks. In the future, with technological advancements and improved regulatory frameworks, xStocks is expected to become an important bridge between traditional finance and cryptocurrency.