Backed Finance’s Tokenized Stocks Product Volume Jumps to $300M
Tokenized equities are gaining traction, evidenced by Backed Finance’s xStocks achieving over $300 million in cumulative trading volume within a month of launching on Bybit, Kraken, and Solana. xStocks are 24/7 on-chain tokens mirroring U.S. equities, fully backed 1:1 by the underlying shares held in custody. This structure offers investors exposure to traditional assets within a transparent and secure Web3 environment, leveraging the Solana SPL token standard for efficient transactions. This rapid growth highlights a broader trend: the convergence of traditional markets and decentralized finance (DeFi). Similar initiatives by Robinhood and Gemini, offering tokenized U.S. stocks to European users, further solidify this shift.
However, the enthusiasm isn’t universal. Critics like Anton Golub, COO of FreedX, argue that tokenized equities are essentially tokenized contracts for difference (CFDs), not actual ownership. Buyers don’t gain voting rights or direct custody, only tracking a token mirroring the underlying asset. Golub points out that European CFD brokers already offer fractional U.S. stock trading with leverage, rendering the tokenization aspect less revolutionary than it seems. This perspective challenges the narrative of democratized access, suggesting that tokenization primarily reframes existing CFD mechanisms.
Furthermore, concerns exist regarding liquidity, particularly over weekends. The “cold start problem” – where initial liquidity depends on market makers assuming risk – can lead to wide spreads and potentially hinder trading during off-peak hours. This highlights the ongoing friction in these nascent markets. While the rapid adoption of xStocks demonstrates significant market interest, potential drawbacks and limitations regarding ownership and weekend liquidity should be considered before investing. The long-term viability and widespread adoption of tokenized equities remain to be seen.
