# The xStocks standard: DeFi-ready neutral tokenized stocks

- Channel: [Dappcon](https://streameth.org/dappcon)
- Date: 2025-06-19
- Duration: 19:50
- Watch: https://streameth.org/watch/6853f8a290bd41297b8a5580

## Transcript

Hi folks. Yeah, I'm David from BAC, Head of Growth, among many other things, wear many hats. Oh, I don't have a clicker. Thank you. Yeah, so we've been in the space for a very long time now, issuing real world assets. We're one of the first to do it. We started issuing, I think, two years ago, but we've been in the game for maybe four, doing a lot of R&D and making sure we are issuing products which actually make sense for people. And we recently launched a new brand to make sure this mission continues on and we accelerate this. And we're issuing 50 of the highest volume U.S. equities on day one as new tokenized stocks in collaboration with Kraken as our day one distribution partner. For a very long time, distribution of these assets has always been probably the biggest hurdle. And we think we have a real solution to that now. And we're excited to work with many new exchanges, be it on and off ramps and everything to make sure these assets get into the hands of people that need them. So our bet is that tokenized stocks are the next big thing for crypto. And why do we think this? Because a lot of people called us crazy. Maybe you're thinking we're crazy right now. But probably the easiest way to think about this is the analogy between tokenized equities and stable coins. So stable coins, many people argue, were the first real product market fit for crypto, right? Some would argue it was Bitcoin, but many say it was stable coins. And I can see why. They're moving trillions of dollars all the time. I mean, I get paid on chain, right? It took a while, but I eventually decided to get paid on chain. And I think anything that changes user behavior is when you start to see product market fit, especially on a mass scale. Stable coins, basically the way they rolled out was crypto natives. And then to people with maybe restricted dollar access in places like Turkey or whatever, where they have unstable currencies. But now we're starting to get to the point where companies across the world are starting to see it as just a straight up rails improvement. It took a while, but they did get there. Just the other day, I saw we had Amazon and Walmart announcing they want to develop their own stable coins because it's just an easier way to move money around. And it started off as just, yeah, something for crypto natives to trade easier. So let's take this analogy and take it to tokenized stocks instead. And it's the same way we imagine the adoption, right? So to begin with crypto natives, we started to see crypto natives use our assets on DEXs, LP, and even starting to borrow against them. And that's excellent. And we want that. It also avoids off ramping and all this other annoying stuff. And I'm looking forward to the day my behavior changes and I'm getting all of my equities on chain instead of off chain. Right. Once again, it's behavior change. The same with geography. There's a lot of the world under banks are underserved economically. They don't have access to the US stock market or other wealth building opportunities. And we think having these on chain helps to solve that. And it's one of the reasons we're working so hard with centralized exchanges to make sure we can tap into their user base and make sure they're distributed to the people that will actually benefit from this. And then we're not there yet. We don't see it on the horizon yet. But the idea is eventually we will get to this point where we have this real improvement as well. And it becomes obvious just as it is with stable coins now that this is just a better way to move financial products around. Why do stable coins continue to do this? Why they work? They were easy to bootstrap. They have incredibly liquid underlying assets and they have super straightforward price discovery. You can make all of these exact same promises. Well, analogies, except for maybe the first. But that's another story about tokenizing equities. You have extremely liquid underlying. You have massive capital markets moving things like Tesla and video around in trillions and trillions of dollars a day. And you have excellent price discovery, excellent off-chain price discovery. Which starts to make us think, okay, if these are actually very similar products at the end of the day, or at least there's a lot of analogies between stable coins and tokenized stocks. Why can't we just do it the same way? And that's basically what we've envisioned and what we're building. So the mission and the vision was always to make sure that we can trade these tokens permissionlessly like any other tokens. Or at least as permissionlessly as a stable coin. As much as there's a lot of promise for on-chain ID and permission pools and all of this stuff, in our opinion, it's still quite far away. And we want to build this now and start experimenting and figuring out the best way that this can change people's behavior and change the way people invest on-chain. So that's exactly what we did. Took two years of R&D, 15 lawyers, a lot of cigarettes and coffee to keep them awake, obviously. And we ended up being fully regulated in Europe and being able to issue permissionless financial products on blockchains that right now are on DEXs, on EVM chains. You can go and you can get them from a DEX right now. You could take some tokenized coin-based stock if you want and plug it into Morpho. We have a market for that right now. And yeah, it was always very important for us to work within regulation and not skirt around it. And it's led us to this situation where we can work with centralized exchanges. We do have a real pathway to reselling to retail, which is excellent. This is exactly what we wanted to do. And another part of the vision was we saw the mistakes in the past of having synthetic tokenized stocks on-chain. And we did not want a repeat of that whatsoever. So it was important for us to always have one-to-one backing so that each token is always one-to-one redeemable for a collateral we have in a custody account. So as I touched on before, the overall vision is that I want to be able to say to a crypto-native, hey, you can buy your stocks on-chain. You can get stock exposure on-chain. You can do that. At the same time, I want to tell my dad that he can do it, and he doesn't need a wallet or to figure all of that out. And fundamentally, I've always thought that CEXs, we maybe take it for granted as crypto-natives. Maybe we use decentralized exchanges a lot or whatever. CEXs for a lot of retail users are the way they access stuff, and we cannot discount that. So from the very start, the product had to be able to be integrable into both. It has to be 24-7 available. These tokens are built on top of the underlying, and as such, can be traded over weekends, outside of market hours. And that leads for very interesting financial activities in pools, for example, over the weekend when the prices aren't tracking. Yeah, and the ability to react to news when the markets are closed. And also, we wanted to have worldwide distribution of this. We're not quite there yet. We still definitely do not market or sell to U.S. persons. But thankfully, with this partnership with many of these exchanges we're talking to, and specifically with Kraken, we're getting these into the hands of people all over the world. Even just the simplicity of being able to self-custody an X stock. And say you're in a country, and the exchange you bought it from shuts down. Okay, you have this in your own wallet. You can go to another exchange and sell it there. Or you can go through a decentralized route. Even the ability to do that is a major selling point for many people. And I think further to that, having all of this allows, and especially the permissionless aspect, the integration into decentralized exchanges, allows for new products to be built onto that. And I think the most obvious case study for this is... I think the most obvious use case for this is decentralized lending markets, and the power that they will have when tokenized stocks are integrated into these. So as I mentioned earlier, we already do this. And we're advancing this in a big way in a couple weeks when we go live with all of this. If Big Daddy Bezos wants some cash, he doesn't liquidate his stocks. He takes out a loan. Because why would he do anything else? He can avoid the capital gains tax. It's just easier for him. It makes more sense. If I want to do that, that's not really a possibility, right? I don't have a fat enough brokerage account to do that, definitely. And to actually have the connections to get that... I'm probably going to get an awful rate, even if I did manage to find a way. Whereas if I've got some ETH on the chain, even $100, whatever, I can take a loan out against that. I've done that with tokenized Coinbase stocks. I can take it. I can go to Morpho. It's completely disintermediated. And I can take out a loan against that. The world right now is hooked on paying three, unsecured lending, all of this stuff. The bubble is eventually going to burst. But people still want to build extensions onto their houses or find deposits for homes. What if, instead, you could do secured lending against this stuff? You know, you're still investing in your S&P 500 ETF every month. Hey, I'm short on a deposit for my dream house. Instead of liquidating this and paying tax or whatever, I can take out a loan against it in a decentralized manner. And then, great, I have some liquidity and I've still got exposure to that asset. I've not decided to sell. I'm still investing in my future. And that's just the beginning. That's probably the most obvious use case that we can think of. But we're already speaking to many builders who are already building on top of this in new ways and figuring out ways to use these Xstocks building blocks to build things like PERPs and on-chain options, on-chain indices, and leveraged vaults. And it's very straightforward to build all this. It's essentially the same way you would build a leveraged ETH token or on-chain indices for, I know, Reserve Protocol are doing a lot around that. And on-chain PERPs and options, they'll come down the line. We need to figure out more liquidity first. But it's the exact same way you would build any financial product, just in a decentralized and open way with transparency right on-chain. And fundamentally, we are just issuers. Like, we are very focused. We get asked to tokenize many cool, interesting things like real estate or vaults or watches or whatever. And that's really interesting, great. But for us, we want to tokenize the most liquid stocks in the world and do it as well as possible. We're not going to build exchanges, DEXs, lending markets. We want other people to do that. And, you know, you don't go to Circle or Tether to say, hey, I want to integrate USDC or USDT. You just do it. So you can just do it and integrate Xstocks into your app. And please, we want to see that. And equally, get in touch with us. We'll help you and give you any insights you need on how to make that happen. We're building what we're calling the Xstocks Alliance. Right now, we've got Kraken, Solana, Alchemy Pay, Gnosis, and many others along the way that will be joining this to help us make sure that when we're doing this, bringing stocks on-chain, that they are truly neutral, that they are not favoritized by any sort of exchange, any sort of chain. No. These need to be, for the sake of the user and stopping liquidity fragmentation, these need to be accepted everywhere possible, or else we don't have that critical mass of liquidity and usability that will make changes in users' behavior. So we're working with many centralized exchanges, market makers, and a key thing for us is that this has to use existing DeFi infrastructure and existing chains. We're rejecting the idea of RWA-Fi, permission tools, all of this stuff. It's going to be very useful, I'm sure, at some point. But right now, we have apps that work. We have builders who are building excellent products. Let's use those. Let's not build new chains. Let's use the chains we already have. We think this makes much more sense and has been fundamental to our vision from the very beginning. And at the end of the day, we have this shared goal of bringing trading volume from FradFi to crypto. We're not trying to take volume away from anyone else. We want this to be completely consolidated between centralized exchanges, decentralized exchanges, and making sure we're taking away from FradFi, bringing it to crypto, and not encroaching on anyone else. So, yeah, that's about it. Covered the Xdox vision, what we're trying to do, how we're going to get there. We will be launching in a few weeks a global distribution by Kraken. Also, extremely large amounts of distribution via on-chain venues on Solana, which I cannot name yet, but we're almost there. Coming to EVM as soon as possible. We have a very long-standing relationship with Gnosis, and they've backed us for a very long time, and we're excited to finally be on the next steps of making all of this a reality. Yeah, and we think this is what investing looks like when it's designed for everyone. Thank you, David. Any questions for David? Paul. In-house question asker. There's a lot of practice. Hi, thank you. So, I have a very simple question, I guess. So, let's say that I've been buying, you know, S&P 500 ETFs through my regular Web2 bank for the last 10 years, and you convinced me I want to move all of those on-chain. Can I just do that? Or do I have to sell them first and then kind of move them on-chain and sort of pay taxes along the way? Okay, first, I'm not a tax advisor, so I could not possibly comment on that part of it. However, we are, right now, the way we issue and redeem is we take stable coins. However, we are starting to work with very large institutions that want to move these shares on-chain by just transferring to a custody account. So, we can do that. It's not open to the public yet. We need to kind of figure out how to scale that because it takes a very long time for these, you know, interbank shares transfers, cross-country shares transfers that are complicated. But it is something you could do. As for the tax thing, I'm not a tax advisor, but I think in my jurisdiction, at least in the UK, if I did that, I would maybe still have to pay tax. In some jurisdictions, you may not because it's asset to asset. As I say, I'm not a tax advisor. Your mileage may vary. I have a quick question. Yeah. The one thing that's really kept me from taking out a loan against my assets is smart contract risk. So, with xDocs, you said it's securitized, right? So, does that mitigate the smart contract risk? Like, are you, is there insurance? Sorry, did you say something about securitization? Yeah, I probably, I don't know really a lot about, you know, loans and stuff like that. I probably am not understanding the use of the word securitized probably correctly. But is there smart contract risk when taking out a loan with xDocs? I guess any interaction on-chain will always inherently have some smart contract risk. I'm trying to cast my mind back to a time when there's been a problem in, say, Morpho or Aave that's led to, like, a major exploit that would constitute what you described as a smart contract risk. I guess if you're trying to bring in the angle about securitization and how the legal structure impacts your rights over, say, if there was a problem, we have had situations where users have lost access to their tokens through buggy smart contracts or whatever, as you say. And we've actually been compelled through legal routes, through Swiss courts, to basically burn these tokens and mint new ones, because they've proven that they were the beneficial owner of these assets. They lost access because of a buggy smart contract. And as such, they are still the owner, they've just lost access. Please burn these tokens and mint new ones. Now, we can't just do that. We need a court to compel us to do that. But fundamentally, these tokens, they aren't just, you know, thin air. They are real legal guarantees, real financial products. Essentially, it's just the blockchain is the way we define ownership. And yeah, if you lose access to your tokens and you can convince a court, hey, I actually just lost access because of a hack or something like that. Yeah, there are powers in these tokens to freeze them, mint new ones, if there is a disaster or something like that. So yeah, there might be some mitigation there, but there is always going to be some smart contract risk, I guess. And what does constitute a securitized loan? What does that mean? So maybe I'm misunderstanding the question slightly on like a securitized loan. But, you know, when I say like borrowing or if I'm borrowing against an Xstock, it's as simple as, do you know what Aave is? Yeah, yeah, yeah. It would be as simple as putting your ETH into Aave and getting your SBC back. So that's what you meant by securitized in the context of your presentation. I don't think I said that word. I can't remember saying it, to be honest. But using your tokenized securities to take out loans. Okay. Yeah. Does that make sense? Yeah. Okay. Cheers. Great. Any other questions? I think everyone's very tired. I think so too. Thank you so much, David. Cheers. Thank you. Cheers.