Following the launch of tokenized Coinbase stock in March, RWA asset issuer Backed has come up with a new strategy - this time partnering with the US crypto exchange Kraken to launch xStocks, a tokenized US stock trading platform. As a pioneer in the "US stock tokenization market", xStocks ignited the cooperation enthusiasm in the crypto market within just 2 days. Besides Kraken, platforms and projects like Bybit, Raydium, Solflare, Kamino, Jupiter, Chainlink, and AlchemyPay have joined its alliance. Platforms like GMGN and Backpack have also launched some US stock token trading windows, with many believing this move might signal a counterattack by crypto assets into the US stock market.
However, a series of questions have emerged: Can tokens purchased on the xStocks platform be redeemed for actual stocks? How is the price anchored? What are the specific fees? Do US stock token holders enjoy dividend or voting rights? My colleague Asher today made a brief trade of some US stock tokens through GMGN (details in "My First Day Trading Stocks on the Chain"), encountering numerous detailed issues. While understanding the general principle, the Odaily reporting team discovered that specific practices still require further verification and observation. In light of this, we have compiled a Q&A list for readers' reference and welcome everyone to discuss related issues or point out any omissions.
[The rest of the translation follows the same professional and accurate approach, maintaining the original structure and meaning while translating into English.]Q7: What Arbitrage Opportunities Exist for Crypto Native Audiences?
Currently, besides enjoying stock market fluctuations through buying low and selling high, crypto users can also generate income through methods like providing liquidity. Moreover, due to factors such as liquidity and "trading time differences", there are often price discrepancies between stock tokens and actual stocks. We recommend reading the article "Quick Overview of 5 Arbitrage Opportunities in Stock-Crypto Parallel Trading", which provides references for time zone arbitrage, cross-market arbitrage, and event-driven arbitrage. It's worth noting that since xStocks platforms share common liquidity pools, arbitrage opportunities between these platforms are relatively limited.
Q8: If Liquidity Continues to Be Insufficient, Will xStocks Introduce New Market-Making Mechanisms and Market Makers?
Currently, the official has not provided further information, and industry representatives in the crypto market have differing opinions. Jupiter co-founder siong wrote that classic AMM is not suitable for stock tokens and requires a new AMM design to achieve higher liquidity. Ordinary trading terminals are also unsuitable and may encounter issues like market cap mismatches.
Slow Fog security company founder Yu Xen also stated that after stock tokenization, the stock market gains new gameplay from crypto and new risks. If it becomes popular, there will be innovations and conflicts between the old and new worlds, with each influencing the other. Regarding specific risks, the author personally believes we might gain insights from previous "stock tokenization attempts" by platforms like Terra and FTX, including but not limited to regulatory risks, price manipulation risks, and short-term volatility risks.
Q9: Are Backed Team Members Behind xStocks the Original Team from the Rug Project DAOStack?
Based on existing information, yes.
According to previous crypto KOL @cryptobraveHQ's disclosure, xStocks is backed by the original DAOStack team. According to information about the Israeli development company Backed behind xStocks, its first three co-founders Adam Levi, Yehonatan Goldman, and Roberto Isaac Klein all previously co-founded DAOStack, which essentially stopped updating and operating around 2020. After raising approximately $30 million through its GEN ICO, the team didn't even maintain a small office and let the project fade away. The DAOStack team then started @xStocksFi, primarily driven by investors like Coinbase. Backed company information is also detailed on LinkedIn.
For more details about this backstory, please refer to the article "Deep Dive into xStocks Developer Backed: 'Zero' Team's Second Venture, Music Talent Management Project Growth".
Q10: Will Backed Issue Its Own Token?
The popularity of xStocks has sparked market speculation about whether the parent company Backed plans to issue its own token. However, according to official documentation, they currently have no plans to launch a token.
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