Overview
Crypto exchange Kraken, alongside the Swiss tokenization firm Backed, announced that they are launching xStocks, a collection of tokenized equities, on the Ethereum network. This move aims to integrate these equities into the decentralized finance (DeFi) framework.
Initiative Details
- Eligible Kraken clients will be able to deposit and withdraw xStocks directly on the Ethereum network, where they will be represented as ERC-20 tokens fully collateralized at a 1:1 ratio with the underlying stocks.
- This functionality allows investors to easily shift tokenized stocks and ETFs between the exchange and personal wallets while utilizing various Ethereum-based DeFi protocols.
Impact
The expansion onto Ethereum follows previous successful launches of xStocks on other networks, including Solana, BNB Chain, and TRON, where it has accumulated more than $3.5 billion in trading volume across both centralized and decentralized exchanges since its debut in June.
Ethereum’s standing as the leading smart contract platform ensures that xStocks will gain immediate exposure to numerous decentralized applications.
“Our multi-chain strategy is deliberate,” said Arjun Sethi, Co-CEO of Kraken. “It guarantees that tokenized equities are accessible across multiple ecosystems, can easily be transferred between wallets and protocols, and are compatible with applications that users already trust. Ethereum is the next logical step.”
Conclusion
The growing trend of tokenizing traditional financial instruments, such as equities, is being propelled by crypto exchanges like Gemini and Robinhood, which have ventured into offering tokenized U.S. stocks. However, these offerings have sparked concerns over limited shareholder rights and varying regulations.
