Learn Concept: Tokenized Stocks on Solana and Their Market Impact

By: Isha Das

Tokenized stocks on Solana represent a burgeoning market in the cryptocurrency space, growing over three times in value in just two weeks—highlighting Solana's rising prominence in this niche market. As of July 4, Solana's tokenized stocks are valued at $48.53 million, forming 11.4% of the total market capitalization across networks. These digital stocks are governed by the SPL standard on Solana, using off-chain market-making for price maintenance, and they provide crypto traders a decentralized avenue for trading traditional equities.

Read more about Solana's Tokenized Stock Market

Initiatives by entities like Backed Finance have introduced “xStocks”, settling 1-for-1 with their corresponding real-world stocks. This process is facilitated by regulated custodians using a mint-and-burn gateway, ensuring the secure issuance of these financial instruments. Purchasers of xStocks, through platforms like Kraken and Bybit, are required to undergo Know Your Customer (KYC) compliance to convert tokens to traditional equity.

The strategic expansion by Backed Finance to include a greater range of equities in its Solana offerings underscores the potential of tokenized markets to bridge centralized liquidity sources with decentralized systems like Automated Market Makers (AMMs) and DeFi lending protocols. This growing domain showcases how innovative approaches can seamlessly blend traditional finance with blockchain technology, offering a glimpse into the future of investment.