This article takes you to understand the recent popularity of Xstocks

Xstocks is a tokenized stock product launched by Swiss financial technology company Backed Finance. It uses blockchain technology to convert traditional stocks into digital assets, thereby achieving deep integration of cryptocurrencies and traditional financial markets. This innovation not only provides investors with more convenient trading methods, but also brings new investment opportunities to the cryptocurrency market and creates a new situation in the digitization of financial assets. The following are its core points:

1. Basic concepts

Tokenized stocks: Xstocks converts the stocks of U.S. listed companies such as Apple (AAPL), Tesla (TSLA), and NVDA (NVDA) into digital tokens (such as AAPLx, TSLAx) on the blockchain. Each token is endorsed by 1:1 real stock assets held by Backed Finance, and the price is synchronized in real time with the corresponding stock.

Trading method: Users can purchase cryptocurrencies (such as USDT, BTC) on cooperative exchanges without the need for traditional stock accounts.

2. What are tokenized stocks (xStocks)?

Tokenized stocks are digital representations of real-world stocks on blockchain. Each token is fully backed by actual shares held by regulators. This ensures that the price of tokenized stocks reflects the value of their underlying assets.

By using blockchain technology, tokenizing stocks makes it possible to trade some stocks and provide round-the-clock access to the market, reducing the need for intermediaries such as brokers and clearing houses. For example, you can buy a portion of Tesla\'s stock tokens for $1 instead of buying entire stock worth hundreds of dollars.

These tokens provide financial exposure to popular stocks, but it is worth noting that most tokenized stocks do not carry shareholder rights, such as voting at company meetings. They are primarily designed for trading and investment purposes.

3. Operating mechanism

Underlying technology: Based on the Solana blockchain, it uses its high throughput and low transaction costs (about US$0.01/transaction) to achieve efficient transactions.

Asset Custody: Backed Finance is responsible for purchasing and custody of actual stocks, ensuring that tokens are strictly anchored with the underlying assets, and supporting users to redeem tokens for cash value.

Trading venues: Online platforms include centralized exchanges such as Kraken and Bybit, as well as Solana Ecosystem\'s DeFi protocols (such as Raydium and Jupiter), where users can conduct transactions, mortgage loans or provide liquidity.

4. Core advantages

All-weather trading: Support 7×24-hour trading (limited to synchronized prices during the opening hours of U.S. stocks, suspended on weekends and holidays), breaking through the traditional U.S. stock trading time limit.

Low threshold and low cost: No cross-border brokerage accounts, no commissions (Kraken platform), and the settlement time is shortened to near real time, reducing cross-border investment frictions.

DeFi compatibility: Tokens can be deposited into crypto wallets for decentralized financial scenarios (such as mortgage lending, liquidity mining) and expanding asset usage scenarios.

5. Risks and Restrictions

Regulatory risks: Due to non-compliance with U.S. SEC regulations, U.S. users are prohibited from participating; it is only open to users in Europe, Asia, Latin America and other regions.

Loss of equity: Token holders do not enjoy traditional stock rights such as shareholder voting rights.

Technical and credit risks: There are smart contract vulnerabilities, platform bankruptcy (refer to the FTX case) or asset unanchoring risks, and the credibility of the custodian needs to be relied on.

6. Market impact

Promoting the tokenization of RWA(real-world assets): Becoming a benchmark case for the integration of traditional finance and crypto ecosystems, may increase the liquidity of U.S. stocks (trading volume of Tesla and other stocks is expected to increase by 10-15%).

Challenge traditional finance: Impact on the intermediary role of securities firms and promote institutions such as Nasdaq to explore blockchain settlement systems.

Summary

Xstocks is essentially an on-chain mapping of traditional stocks. Through tokenization, global investors can trade U.S. stocks 24/7 in cryptocurrency, and at the same time integrate into the DeFi ecosystem. Its innovation lies in breaking down regional and time barriers, but it needs to be vigilant about regulatory and technical risks. If the compliance framework is improved in the future, it may reshape the global asset trading model.