In an interview with Crypto.News, Bitrue’s Chief Marketing Director Adam O’Neill shared insights into the launch of the new Xstocks platform.
BitRue’s XStocks offer Crypto users have access to tokenized versions of traditional stocks, allowing fractional ownership, faster settlement and 24-hour trading, even outside of US market hours. The first batch of platforms includes six assets: Apple, Tesla, Nvidia, MicroStrategy, Circle, and S&P 500 ETF, which is likely to follow soon. Each token is backed by the underlying inventory 1:1 and verified through proof of the spare mechanism of chain links.
Tokenized stocks are digital assets that seek to provide similar returns on blockchains of real-world stocks. This unique product offers global accessibility and low entry barriers while providing indirect equity exposure.
In the conversation below, BitRue’s O’Neill addresses how non-market time price discovery works, retailer risks and benefits, expansion plans, and how those approaches compare to previous tokenized stock products.
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Crypto.News: Tracked tokenized stocks 24/7 are the main selling point, but there is no official price supply if the US stock market is closed. How exactly does price discovery work during these off-hours periods? Also, is the risk of market manufacturers offering liquidity at a time when users pay high premiums?
Adam O’Neill: For tokenized stock, price discovery during these out-of-hours or weekend periods is heavily dependent on the supply and demand dynamics within the specific crypto exchange or blockchain platform in which these tokens are traded. While market manufacturers provide liquidity to stocks that have been tokenized outside of traditional market hours, this risk often leads to wider spreads for users, we feel that more options is important for users spreading around the world in different time zones.
CN: As a follow-up from my previous question, what should we expect in terms of liquidity and spreads for retail traders trading outside of business hours or weekends? Is Slippage a greater concern when there are fewer market participants or price references?
AO: Trading volume actually goes low outside of business hours, which means a more demanding trading environment for users. Users are encouraged to pay particular attention when trading during this period to make the most of the available data, including the depth of the transaction. This issue mainly affects large traders who are aware of risks that should be noted in general. This decreases when trading small amounts covering more than 95% of traders.
CN: What advantages do Bitrue’s offering tokenized stocks have to the daily retail investors compared to buying stocks through traditional brokers? Conversely, what risks and limitations should investors be concerned about when trading these tokenized stocks?
AO: Benefits include 24/7 trading access, fractional ownership, faster payments, global accessibility, reduced transaction costs, and increased transparency. Conversely, drawbacks include price dislocation risk, cybersecurity risk, and potential tax impacts depending on the user’s location.
CN: The first batch of tokenized inventory includes six major companies: NVIDIA, Apple, Tesla, MicroStrategy, Circle, and S&P 500 ETF. Why did BitRue choose these specific strains from the start? Are there any market capitalization considerations or other metrics that need to be met to include?
AO: Nvidia, Apple and Tesla are one of the most common and aggressively traded stocks, so listing them can reduce the potential friction of understanding the aspects of tokenization while meeting proven demand. These stocks generally have very high trading volumes in traditional markets, which makes basic price references strong.
ETFs, including the S&P 500 ETF, offer retail investors immediate diversification across a wide range of market indices. There are no minimum cap considerations, but we are currently focusing on offering famous blue chip brands.
CN: Are you planning to expand the range of tokenized stocks available on Bitrue? What can users expect next?
AO: Further extensions to the offering are based on user feedback. We are constantly monitoring what users are looking for on social media and analyzing available transaction data. The feedback was very positive in the days when these tokenized stocks became available for trading. So, in the next few weeks, we can add more famous names as tokenized stocks to the exchange. The exact inventory is still TBD, but Meta, Alphabet and Amazon are one of the finalists.
CN: How can users be sure that each tokenized inventory is really 1:1 backed by actual inventory? Is there a custody or proof of absorption mechanism to ensure that the token is fully secured?
AO:XStocks adopts chain link interoperability and data standards, including preproof of chain links, providing a robust and transparent mechanism to ensure that tokenized stock is actually backed up 1:1. ChainLink has been running for over 10 years and is the gold standard for blockchain-based verification systems.
CN: If someone buys these XStock tokens on BitRue, can they pull them out of the exchange? Can users keep tokenized inventory in their wallets or use it with Defi Ecosystems? Is it possible to exchange tokens for equity shares?
AO: These tokenized stocks are from the same technical perspective as other cryptocurrencies, so they can be withdrawn and used in Defi products that support them. However, they do not recognize ownership or similar rights and cannot be converted into underlying stock.
