xStocks Faces Scrutiny Over Co-Founders' Past Involvement With Failed DAOstack

xStocks, a stock tokenization issuer under Backed Finance, has recently come under scrutiny due to the past involvement of its co-founders with DAOstack, a decentralized autonomous organization (DAO) infrastructure project that raised nearly $30 million during its initial coin offering (ICO) and private funding rounds between 2017 and 2018. DAOstack, which aimed to build governance tools for DAOs, ultimately shut down in late 2022 due to capital exhaustion.

DAOstack's GEN token, which was tied to the project, never surpassed its funding price and crashed in 2021, declining to near-zero before the team shut it down. Despite early traction and the launch of products like the Arc modular framework and the Alchemy DAO platform, the project failed to deliver returns and collapsed further after the 2021 market crash.

In its final efforts, DAOstack announced the closure of its operations and shifted its focus toward the Common platform. However, it failed to bring the Common platform to market readiness. Following its shutdown, DAOstack launched the Common Open Development (COD) program, offering shared ownership for contributors building the Common platform. Under this initiative, external contributors are granted non-exclusive rights to build and launch the Common product, retaining ownership of their input and sharing any future proceeds proportionally.

The connection between xStocks and DAOstack has raised questions about the execution and continuity of Backed Finance's leadership. As xStocks gains traction in the stock tokenization space, industry observers are watching how the company navigates the legacy concerns tied to its leadership's prior project. The recent attention surrounding xStocks adds context to the new venture, which is now following a project that failed to meet its original goals.