xStocks: Tokenizing Equities on Solana

How do xStocks Work?

The basic idea of xStocks is simple. Each stock is tokenized as an SPL token that anyone with a wallet in allowed jurisdictions can buy, hold, and use. But under the hood, it has a lot of moving parts.

The issuance of xStocks happens under a regulated framework.

1. Share Acquisition - Backed purchases actual shares of companies like Tesla or Apple through traditional brokers and deposits them with a regulated custodian.
2. Token Minting - For every real share held in custody, Backed mints exactly one SPL token on Solana. So 1 Tesla share equals 1 TSLAx token. This keeps the supply tied to real holdings maintaining a strict 1:1 backing ratio.
3. Trading Ready - Chainlink runs dedicated data feeds to provide prices and corporate actions like dividends and splits. In the current xStocks design, the dividends are automatically reinvested into token balances.

xStocks utilize Token Extensions on Solana for Custom Functionality and Compliance Features

The Token Extensions allow issuers like Backed to enforce rules, manage metadata, and integrate with DeFi on Solana while staying within a compliant framework. It's important to note that the extension set for a token cannot be changed after creation, so some of the following are initialized without actively being used.

Each xStock token utilizes the following Token Extensions:

• Metadata Pointer – Links the token mint to off-chain metadata (like name, symbol, description, and market data) hosted by the issuer. This ensures xStocks display correctly across wallets and applications with up-to-date information.
• Scaled UI Amount Config – Allows the issuer to provide a multiplier that is used to represent onchain corporate actions like stock dividends, splits, and reverse splits. When an issuer updates this multiplier, all wallets holding the token automatically have their balance cosmetically adjusted. This enables point in time unilateral corporate action events that are historically extremely expensive to execute.
• Pausable Config – Lets the issuer pause all interactions with the token in case of emergencies, regulatory requirements, or security incidents — providing an important safeguard.
• Permanent Delegate – Assigns an authority designated by the token issuer (in this case, Backed) with ongoing rights to transfer or burn tokens from any address without requiring user-level permissions. This is often a regulatory requirement in order to seize assets based on a lawful court order.
• Default Account State – While currently set to have all token accounts start in an "initialized" state, adding this extension allows Backed to optionally support sRFC-37, enabling efficient blocklist management, in the future, as adoption increases.
• Transfer Hook – Enables custom logic on every token transfer. This can be used instead of sRFC-37 to support blocklists as required for regulatory compliance. Currently initialized, but disabled.
• Confidential Balances – Adds the framework for privacy-preserving transfers, where amounts and balances are hidden while still being verifiable and auditable. Currently initialized, but disabled.
• Token Metadata – Stores onchain metadata including the official name, ticker symbol, and a link to the issuer-hosted metadata file, ensuring transparent and verifiable asset details.

These features make xStocks programmable in ways traditional securities and assets cannot be, combining compliance tooling with DeFi composability. You can learn more in our 2025 Tokenized Equities Report.