Demand for trading stocks on-chain is real.
Switzerland-based Backed Finance's tokenized U.S. equities product, xStocks, has seen a cumulative trading volume of over $300 million less than a month since going live on Bybit, Kraken, and Solana decentralized finance (DeFi) platforms.
xStocks are 24/7 onchain tokens representing shares in publicly traded U.S. firms. Each token is fully backed 1:1 by the corresponding underlying stock held by a licensed custodian, allowing investors to take exposure to traditional assets while ensuring transparency and security.
These tokens are issued by Backed Finance, which operates under the country's DLT regulatory framework. They are built using the Solana Program Liberty (SPL) token standard to facilitate high-speed transferability and on-chain compatibility with Web3 and decentralized applications.
“xStocks have crossed $300m in Total Transaction Volume Onchain, a testament to the demand for tokenized equities,” xStocks said on X, calling the growth “just the beginning” that could see volumes double from here.
The increased demand for tokenized stocks is part of the broader macro trend of accelerating convergence between traditional markets and decentralized finance. Recent launches by giants like Robinhood and Gemini, offering tokenized U.S. stocks to European users, are proof of this accelerating shift.
Not everyone is impressed by tokenized equities
While moving stocks to the blockchain rails and enabling access to overseas investors sounds revolutionary, not everyone is impressed.
According to Anton Golub, chief operating officer at crypto exchange FreedX, tokenized equities are merely a wrapper and not actual equities.
“You're not buying Tesla. You're buying a token that tracks Tesla. Issued by an offshore SPV or broker structure that holds underlying shares,” Golub said in a LinkedIn post.
Golub explained that buying tokenized equities doesn't provide the buyer with voting rights, direct custody of the stock, or actual ownership, as is the case with stock CFDs issued in Europe.
CFD, or Contract for Difference, is a contract that stipulates the buyer will pay the seller the difference between the current value of an asset and its value at the time the contract was initiated.
The stock CFDs are fractionalized, allowing traders to buy and sell a fraction of the underlying asset's value with leverage. That allows traders to control a larger position with a smaller capital investment.
“CFD brokers in Europe [have] let you trade fractional U.S. stocks for years. You can buy Tesla, Apple, or S&P 500 with 5x leverage and full liquidity,” Golub noted. This [tokenization] isn’t democratizing access. It’s just reframing CFDs with tokenization narrative.”
Additionally, concerns have been raised about liquidity drying up over the weekend. Liquidity refers to the ease of executing large buy and sell orders at stable prices.
“There are still significant frictions with these new products,” Parsec Finance noted in its newsletter early this month. “Liquidity cold start problem (liquidity begets volume but relies on market makers taking the risk and betting on real usage), spreads will be wide and probably insane on weekends.”
Read more: Backed Finance Debuts Tokenized Stocks on Bybit, Kraken and Solana DeFi Protocols
