Tokenized Stocks on Ethereum: XStocks and the Future of Equity Access and Liquidity

The convergence of decentralized finance (DeFi) and traditional equity markets has reached a pivotal inflection point with the rise of tokenized stocks. At the forefront of this innovation is xStocks, a product developed by Backed Finance, which has leveraged Ethereum’s robust infrastructure to tokenize major equities like NVIDIA (NVDAx), Tesla (TSLAx), and Amazon (AMZNx). By converting these assets into ERC-20 tokens fully collateralized 1:1 by the underlying equities, xStocks has unlocked unprecedented access to liquidity, yield generation, and cross-chain interoperability. As of September 2025, the platform has generated over $3.5 billion in combined trading volume across centralized and decentralized exchanges, signaling a paradigm shift in how global investors interact with real-world assets (RWAs) [1].

Ethereum as the DeFi Infrastructure Layer for Tokenized Equities

Ethereum’s dominance in the DeFi ecosystem—boasting $90.8 billion in total value locked (TVL) as of 2025—positions it as the ideal platform for tokenized equities. The integration of xStocks with Ethereum-based protocols like Aave, Compound, and Kamino enables investors to stake, lend, or use these tokens as collateral, generating yields while retaining exposure to equity price movements [3]. For instance, tokenized stocks can be deposited into liquidity pools on platforms like Raydium or Jupiter, where they facilitate trading and earn a share of transaction fees. This dual utility—price appreciation plus yield—has attracted both retail and institutional participants, with Ethereum’s recent Dencun/Pectra upgrades reducing gas fees by 99% and further enhancing scalability [2].

The tokenized equities market, though still nascent, has grown to a $342 million market cap, representing 1.2% of the broader $27.9 billion RWA market [1]. This growth is driven by Ethereum’s multi-chain strategy, which extends xStocks to Solana, BNB Chain, and Tron, aggregating liquidity and reducing congestion. For example, Kraken’s expansion of xStocks to Ethereum Mainnet has enabled 60+ tokenized assets to be traded 24/7, with fractional ownership and instant settlement [6].

DeFi Yield and Liquidity: A New Frontier for Equity Investors

The integration of xStocks into DeFi protocols has unlocked novel yield opportunities. As of Q2 2025, DeFi platforms offer an average 8.2% yield for staking and lending, far outpacing traditional savings rates of 2.1% [4]. Liquidity pools pairing stablecoins with blue-chip tokenized equities (e.g., TSLAx) have achieved 9.8% APY, attracting capital from investors seeking higher returns. Aave, the leading DeFi lending protocol, holds $14.6 billion in active liquidity pools, with xStocks contributing to a 45% quarter-over-quarter TVL growth in Morpho and Spark [5].

Staking mechanisms have also evolved, with platforms like EigenLayer enabling cross-chain staking of assets such as Wrapped Bitcoin (WBTC) alongside tokenized equities. This innovation bridges Bitcoin’s liquidity with DeFi, with Bitcoin DeFi TVL reaching $5–6 billion in 2025 [5]. For xStocks, this means investors can now optimize capital efficiency by leveraging their tokenized equities across multiple protocols simultaneously.

Geographic Adoption and Retail Investor Growth

Geographic adoption of xStocks has surged in underbanked regions, where DeFi’s accessibility and high yields are most impactful. In Southeast Asia, platforms like KuCoin have introduced xStocks on Solana, serving 41 million users across 200+ countries and regions. Tokenized shares of Tesla and SPY (SPYx) have seen 220% growth in on-chain addresses, driven by mobile-first users in Indonesia and the Philippines [2]. Similarly, Latin America—particularly Argentina and Mexico—has adopted xStocks via local payment rails, enabling direct funding of accounts without intermediaries [2].

Retail investor participation has also expanded, with 312 million active DeFi users in Q2 2025 and a 39% year-over-year increase in first-time users accessing assets via mobile wallets [5]. Platforms like Kraken and Bybit have extended xStocks to non-U.S. markets, offering 24/7 trading of equities and ETFs. Notably, 61% of DeFi users are under 35, reflecting a generational shift toward blockchain-based finance [5].

Challenges and the Road Ahead

Despite its promise, tokenized equities face regulatory hurdles. Unlike traditional stocks, xStocks may not confer voting rights or dividend claims, raising concerns about legal equivalence [1]. However, regulatory frameworks like the EU’s MiCAR and the U.S. CLARITY Act are expected to provide clarity, potentially unlocking institutional adoption. Meanwhile, the tokenized securities market is projected to grow from $1.4 billion in 2024 to $6.5 billion by 2033, with North America and Asia-Pacific leading the charge [4].

Conclusion

xStocks’ expansion on Ethereum represents a tectonic shift in equity access and liquidity. By tokenizing blue-chip stocks and integrating them into DeFi protocols, the platform has democratized yield generation, fractional ownership, and cross-chain trading. With Ethereum’s infrastructure, multi-chain liquidity, and growing retail adoption, tokenized equities are poised to redefine global capital markets. However, regulatory alignment and investor education will be critical to sustaining this momentum. As the tokenized stock market cap approaches $1.34 trillion by 2030 (if 1% of global stocks are tokenized), the future of equity investing is increasingly on-chain [2].

Source:
[1] Tokenized Equity Product xStocks Launches on Ethereum [https://cointelegraph.com/news/xstocks-launches-ethereum-60-tokenized-stocks-nvidia-tesla]
[2] The Tokenized Equities Revolution: How xStocks on Ethereum Are Redefining Access to Global Markets [https://www.ainvest.com/news/tokenized-equities-revolution-xstocks-ethereum-redefining-access-global-markets-2509/]
[3] Kraken, Backed Bring Tokenized Equities Offering to Ethereum Mainnet [https://www.coindesk.com/business/2025/09/02/kraken-backed-bring-tokenized-equities-offering-to-ethereum-mainnet]
[4] DeFi vs. Traditional Banking Statistics 2025: Yield, Fraud ... [https://coinlaw.io/defi-vs-traditional-banking-statistics/]
[5] Crypto Market Recap: Q2 2025 [https://cryptorank.io/insights/reports/crypto-market-recap-q-2-2025]
[6] XStocks launch on Ethereum [https://blog.kraken.com/product/xstocks/launch-on-ethereum]