Introducing xChange

With xStocks, for the first time, non-U.S. users around the world were able to get tokenized exposure to U.S. capital markets on a large scale, without barriers. Now it’s time to take it up a notch.

xChange is the new atomic engine powering swaps for all xStocks, providing a compliment to onchain liquidity. From blue chips to small caps, from Solana, to Ethereum, and more, tokenized equities can be traded onchain with the same liquidity from the stock market. DeFi connected to TradFi.

xChange is a complement to our existing liquidity systems. This is how it works:

1. User connects their wallet to and enter a USDC amount for the trade.
2. The xChange engine pulls the real market price.
3. When the user accepts the trade, our network of market makers and solvers see our quote, and can execute it. One blockchain transaction checks everything.
4. If all checks pass, the smart contract executes both the primary market and onchain transactions at the same time, allowing our market maker and solver networks to instantly fulfil orders.

The xChange settles atomically, functions using primary market liquidity, and is permanently recorded on the blockchain. Behind the scenes, each xStock remains fully backed by real shares held with a regulated custodian broker. This is the infrastructure to bring trillions onchain.

xChange is available on both Solana, Ethereum and Ink, powering execution during market open through a variety of apps with Chainlink oracle support. xStocks already can be sourced with stock market liquidity on top aggregators on Solana. It is coming soon to DFlow, Kamino, Byreal, Titan Exchange and more. On Ethereum, xChange is available on aggregators such as 1inch and Cow Swap, and coming soon to LI.FI, PancakeSwap and more.

A complete liquidity system

The stock market allows investors to get exposure to companies, track trends and trade events, but it has for long gated equities behind brokers and capital requirements, banks and borders. Tokenized equities expanded access to millions around the world for the first time, and now they take the next step. With xChange, tokenization is more than a tool to democratize finance, it's an upgrade.

This is the next piece composing the three-layered approach xStocks take to tokenized stocks:

1. Onchain liquidity that enables onchain price discovery when markets are closed
2. Hybrid RFQ that taps into off-chain liquidity from stock markets to feed onchain liquidity
3. xChange, enabling seamless connection between DeFi and TradFi during market hours

More than boosting liquidity during market hours, xChange complements the other layers. Vertically, by syphoning offchain liquidity into the blockchain through arbitrage, tightening spreads in liquidity pools, and horizontally, by enabling users to access the long tail of xStocks with size, turning headlines into actionable opportunities, and revealing preferences when there are no limits to asset liquidity.

Designed for users

Designed for users first, xStocks integrated with the most popular apps and exchanges on day one, going to people where they are, in the chains they use, and the platforms they trust. Retail traders and institutional investors should share a transparent, even playing field, built with equal, universal access in mind. This is the crypto solution.

“xChange is about redefining how equities trade in a digital-first world,” said Val Gui, General Manager of xStocks. “It brings real-world market liquidity onchain and turns tokenized stocks into fully programmable, always-on assets that can power the next generation of global financial applications.”

By transposing centralized structures onto decentralized technology, TradFi giants venturing into DeFi force competition in platforms that simply replicate legacy models, rules and limits on smart contracts. With a solution built from the ground up, traditional assets can be used without sacrificing self-custody, permissionlessness and composability.

With xChange, DeFi can finally tap into real-world liquidity without restraints from third-party availability or willingness to provide assets. It is a fundamentally different approach. Not Wall Street coming onchain, but decentralized finance accessing assets and the large pool of capital previously confined to traditional finance, in their own terms.

Designed for builders

DeFi has already constructed the infrastructure for a new economy—from primitives to sophisticated products—yet its potential has been constrained by onchain liquidity and the volatility of crypto. Trailblazing developers have explored countless possibilities for onchain finance, but scaling to mainstream adoption demands assets that stand the test of time while still tracking the market.

Tokenized equities occupy the ideal middle ground between low-risk stablecoins and volatile altcoins, memecoins, or even major cryptocurrencies. 1:1 backed by large-cap, time-tested companies, they serve as building blocks for structured products, whether they replicate traditional models or experiment with possibilities, and can be easily integrated into existing protocols. This is the way to create financial instruments that can be used by retail and professional investors alike. Investing, designed for everyone.

Tokenized equities offer builders the functionality of standard tokens, enhanced by the stability, scale, and proven longevity of large-cap, time-tested assets. They can be used as a medium of exchange or store of value, as savings or investment, as collateral for loans or liquidity pairs, a basis for options or perps, increasing or decreasing market exposure. With xStocks, the doors are open to welcome the next billion users.

Designed for institutions

Last year, the first in-specie tokenization engine debuted, allowing stock holders to seamlessly convert them to their tokenized versions for the first time. Through the xPort, institutional investors can port their holdings into the blockchain and back out to the real world with ease, entering a world where:

• Transactions are faster and cheaper
• There is no downtime or market closure
• Assets are free to move and be used

In the blockchain, smart contracts take the place of legacy paperwork, saving both time and legal fees. Institutions can explore new geographies through countless secondary markets, both centralized and decentralized, without spending on additional research and regulatory approval per territory. Industry leaders from traditional finance are already exploring tokenization, but here is the hack: just use xStocks.

With xChange, they are not limited by onchain liquidity. Whether entering or exiting a position, large or small, the new swap engine allows for near-instant transactions at market size. It opens the floodgates of demand for the long tail of assets, revealing retail preferences and increasing market efficiency for an ecosystem-wide improvement. When investing is designed for everyone, traders large and small benefit. This is the real tokenization unlock.

xStocks are issued by Backed Assets (JE) Limited (a Jersey private limited company) and offered to eligible Kraken customers via Payward Digital Solutions Ltd. (“PDSL”), a company licensed to conduct digital asset business by the Bermuda Monetary Authority. In the European Union / European Economic Area, xStocks are offered to eligible customers via Payward Europe Digital Solutions (CY) Ltd. (“PEDLS-CY”), a Cyprus investment firm authorized and regulated under EU MiFID II. xStocks are not registered under the U.S. Securities Act and are not available in the United States or to U.S. persons. xStocks are also not currently available in the United Kingdom or in any other jurisdiction where their offer or distribution would be unlawful or would require regulatory authorization that has not been obtained. Neither PDSL, Payward Europe Digital Solutions (CY) Ltd. (“PEDLS-CY”), nor their respective affiliates provide investment advice or recommendations, PDSL (Kraken) does not provide investment advice and/or recommendations, and no communication, through any Kraken App or website or otherwise, should be construed as such. Individual investors should make their own decisions or seek professional independent advice if they are unsure as to the suitability / appropriateness of any investment for their circumstances or needs, including potential tax treatment. Investing in xStocks involves an element of risk. The value of an investment may go down as well as up, and past performance is not a reliable indicator of future results. Geo restrictions apply. Read Kraken’s xStocks Risk Disclosure at kraken.com/legal/xstocks as well as the Base Prospectus and related Final Terms for xStocks at https://assets.backed.fi/legal-documentation to learn more.