The US stock tokenization platform xStocks is facing a Crisis of Confidence: the founder's background is questionable and the operating model poses risks.

robot
Abstract generation in progress

Controversy over "Criminal Record" of US Stock Tokenization Platform: Founder's Background Raises Concerns, Operational Model Contains Potential Risks

Recently, the concept of tokenization of US stocks has sparked heated discussions within the cryptocurrency circle. Several well-known trading platforms and blockchain projects have announced their support for the tokenized stock trading of companies like Apple, Tesla, and Nvidia. Among them, some exchanges have chosen to adopt the Solana-based xStocks platform as the underlying architecture, while others have opted to issue tokens on other public chains.

However, just as the market's popularity continues to rise, a piece of news has sparked concern and worry within the industry. According to public information, the three co-founders of the xStocks platform's backing Israeli company, Backed Finance, all previously worked at a now-bankrupt blockchain project, DAOstack. This discovery inevitably raises questions about the credibility of xStocks.

DAOstack raised approximately $30 million through multiple rounds of financing from the fourth quarter of 2017 to May 2018, but closed at the end of 2022 due to depleted funds. More concerning is that the DAOstack team has been accused of a "soft exit," meaning that after issuing the Token, they allowed its value to drop to zero without fulfilling their responsibilities.

xStocks U.S. stock tokenization falls into "criminal record" doubts: DAOstack bankruptcy team operates, liquidity cost double shortcoming exposed

Nevertheless, xStocks currently offers an operable tokenization mechanism for US stocks. The platform purchases actual stocks in the US stock market and stores them in designated custodian accounts. Subsequently, the corresponding number of tokens are minted on the Solana chain, corresponding to the actual stocks at a 1:1 ratio. Investors can trade these tokens on major trading platforms or apply to exchange the tokens for actual stocks.

However, there are still some potential issues with the operation model of xStocks. First, the platform's liquidity is relatively insufficient, with each stock only providing a limited number of Tokens, which may lead to significant price fluctuations. Second, the trading and management fees are relatively high, which may increase the costs for investors. In addition, since the pledged stocks are held by off-chain institutions and lack public audits, there are certain risks involved. Meanwhile, the on-chain stock Tokens do not have shareholder voting rights, and in fact, resemble an unsecured note.

xStocks US Stock Tokenization Under "Criminal Record" Doubts: DAOstack Bankruptcy Team Manipulation, Liquidity Fee Dual Shortcomings Exposed

Finally, some users have reported that the buying and redemption process of xStocks is relatively slow, which affects the overall user experience. These issues need to be taken seriously and improved by the platform in future development.

Overall, although the concept of tokenization of U.S. stocks has sparked enthusiastic discussions in the market, investors still need to carefully assess the risks and rewards involved. Factors such as the historical performance of the team behind the platform, the sustainability of the operational model, and regulatory compliance are all worth close attention. In this emerging field, innovation coexists with risk, and investors should remain rational, conduct thorough research, and manage risks effectively.

xStocks US Stock Tokenization Under "Criminal Record" Doubts: DAOstack Bankruptcy Team Manipulation, Liquidity Fee Dual Shortcomings Exposed

SOL-3.4%
View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • 9
  • Share
Comment
0/400
EyeOfTheTokenStormvip
· 07-16 20:13
Day trading has made me bald, and the data is starting to trickle in.
View OriginalReply0
LiquidatedAgainvip
· 07-16 20:04
Rekt to realize how important risk control is, yet again being liquidated.
View OriginalReply0
fork_in_the_roadvip
· 07-15 12:39
It's the same old tricks, just changing the disguise to swindle.
View OriginalReply0
0xSleepDeprivedvip
· 07-13 20:49
Another founder who is slacking off.
View OriginalReply0
ponzi_poetvip
· 07-13 20:49
suckers are being played for suckers, waiting for a Rug Pull
View OriginalReply0
TokenTaxonomistvip
· 07-13 20:46
taxonomically speaking, yet another evolutionary dead-end protocol...
Reply0
ChainSherlockGirlvip
· 07-13 20:38
It's the old trick again. After operating a certain project, they immediately change their disguise and start a new one. From my observation, this founder's Wallet is also linked to two Rug Pulls. It's a seamless series.
View OriginalReply0
StableGeniusvip
· 07-13 20:22
called it months ago. another ponzi in web3 masquerading as "innovation"
Reply0
MEVHunterNoLossvip
· 07-13 20:22
Unethical capital Be Played for Suckers.
View OriginalReply0
View More
Trade Crypto Anywhere Anytime
qrCode
Scan to download Gate app
Community
English
  • 简体中文
  • English
  • Tiếng Việt
  • 繁體中文
  • Español
  • Русский
  • Français (Afrique)
  • Português (Portugal)
  • Bahasa Indonesia
  • 日本語
  • بالعربية
  • Українська
  • Português (Brasil)