Solana's Tokenized Stock Market Surges Over $48 Million
By: Eliza Bennet
In recent developments within the cryptocurrency landscape, Solana's tokenized stock market has witnessed remarkable growth. Within a concise two-week period, the market valuation for tokenized stocks on Solana soared over three times from $15.28 million on June 20 to an impressive $48.53 million by July 4. This surge has placed Solana as a noteworthy participant, representing 11.4% of the total market capitalization for tokenized stocks across various networks. Notably, Algorand leads this segment with a commanding $294.71 million, followed closely by the XRP Ledger at $55.35 million.
The appeal of these tokenized shares lies in their representation as on-chain equivalents to traditional equities, which are settled under the SPL standard on the Solana platform. Prices for these tokenized entities are maintained through rigorous off-chain market-making procedures and regular audits that mirror the actual performances of the corresponding securities. The initiative on Solana is primarily driven by an entity named Backed Finance, based in Switzerland, which has been instrumental in minting 61 Solana-based tokenized stocks. As per data from July 4, this summed up to $48.53 million, accounting for a significant 31% of Backed's overall $155 million tokenization ventures across various networks.
These financial instruments are aptly termed xStocks by Backed and have received significant traction on major crypto exchanges such as Kraken and Bybit. Initiated initially in April, the token issuance witnessed a rapid acceleration via a secure mint-and-burn gateway linked to regulated custodians handling the base shares. Each token reflects a debt security situated 1-for-1 by the corresponding stock, with settlement navigated through designated authorized participants. Additionally, token holders can convert their tokens to underlying equities by adhering to the Know Your Customer (KYC) protocols.
The growth trajectory of Solana-based tokenized stocks has instilled optimism in market participants, contending these instruments as an efficient conduit between centralized broker-dealer liquidity and decentralized finance mechanisms like automated market makers and lending protocols. Backed Finance has announced its intention to broaden the spectrum by incorporating more equities and exchange-traded funds into its Solana portfolio in the latter half of the year, conditioned on substantial market maker demand. With sustained growth, Solana could potentially surpass the XRP Ledger's position in terms of total stock value within the coming months.
