Kraken launches xStocks vaults with yields on tokenized stocks

Kraken has launched three xStocks vaults offering estimated net yields of up to 2% on tokenized versions of Nvidia shares and two U.S.-listed exchange-traded funds.

According to Kraken’s official announcement, eligible customers can earn variable on-chain yields on SPYx, QQQx and NVDAx while retaining exposure to the underlying assets’ prices.

SPYx tracks the SPDR S&P 500 ETF Trust, while QQQx follows the Invesco QQQ Trust and NVDAx provides tokenized exposure to Nvidia shares. Kraken’s product page shows an estimated net annual percentage yield of 2% for SPYx and QQQx, compared with 1.8% for NVDAx during the initial rollout.

Kraken charges a 25% performance fee on earnings generated by the vaults. The exchange has already deducted the charge from the APY displayed to customers, while deposits and withdrawals carry no additional platform or Ink network gas fees, according to its documentation.

Returns accrue continuously and are converted into the same xStock that a customer deposited. Kraken then reinvests the rewards into the vault balance, removing the need for users to claim or redeploy them manually.

The quoted rates are not fixed returns, however. Kraken says the regular APY is based on the previous seven days and changes with stablecoin borrowing demand in the lending markets used by the strategy.

Kraken xStocks vaults route deposits through DeFi

After a customer deposits an eligible xStock, Kraken transfers the asset to an embedded self-custody wallet on Ink, its Ethereum layer-2 network. The system wraps the token for vault accounting before placing it into infrastructure provided by Veda.

Sentora, which designed the strategy and serves as its risk manager, then moves the wrapped xStock across chains to Solana. Once there, the asset enters the Kamino lending market as collateral for a stablecoin loan.

Borrowed stablecoins are assigned to selected decentralized finance strategies that generate the vault’s return, The Defiant reported. Any proceeds are converted back into SPYx, QQQx or NVDAx, depending on the customer’s original deposit, and added to the position.

Kraken provides access to the product but says it does not manage the strategy or control the protocols receiving the assets. Sentora handles risk management, while Veda administers the vault infrastructure.

The arrangement adds several operational steps between a customer’s Kraken account and the final source of the return. Deposits travel through an Ink wallet, a wrapped token, a Veda vault, a cross-chain transfer and a Solana lending market before the borrowed stablecoins reach other DeFi positions.

Customers do not need to create an external wallet or store a mnemonic phrase because Kraken automatically generates the embedded wallet after their first DeFi Earn allocation. Users may export the wallet’s private key through the platform’s Earn settings, although Kraken warns that the action is permanent and cannot be reversed.

Withdrawals are available at any time but are subject to a three-day waiting period before the xStock reaches the customer’s Kraken balance. During periods of high demand or market stress, Kraken says a shortage of immediately available liquidity could cause further delays.

Leverage can increase losses as well as returns

Unlike simply holding an xStock, the vault uses the deposited token as collateral to borrow stablecoins. Kraken identifies borrowing structure as leverage, which can raise returns but also increase the position’s sensitivity to changes in asset prices and market liquidity.

A steep fall in the value of SPYx, QQQx, or NVDAx could force the strategy to close positions quickly. Heavy withdrawal demand may produce a similar result if collateral must be released while liquidity is limited, according to the xStocks vault documentation.

Losses from liquidation, bad debt, or severe market moves are shared proportionally among users of the affected vault. Kraken’s risk disclosure says customers may lose part or all of their initial deposit, and neither the principal nor the rewards are insured or guaranteed by a bank or government protection program.

Smart contract failures present another risk because the product depends on several on-chain protocols. Even audited and widely used contracts can contain bugs or suffer exploits, Kraken cautions.

Moving the assets between Ink and Solana also introduces cross-chain execution risk. Transfer delays or technical faults could prevent the manager from adjusting positions promptly, leaving the vault exposed while market conditions change.

Customers may face risks tied to assets other than the xStock they deposited because the strategy handles wrapped tokens, synthetic assets, and stablecoins. Kraken lists the loss of a stablecoin’s peg and the failure of a custodian among the events that could reduce a vault balance.

Token holders do not receive shareholder rights

Although SPYx, QQQx, and NVDAx follow products traded in U.S. markets, Kraken states that xStocks are not the same as shares held through a traditional brokerage account. Token owners receive price exposure but do not gain voting rights, dividend rights, or a legal claim against the company or fund represented by the token.

The distinction also extends to tax treatment, according to Kraken, which tells customers that holding an xStock in a vault and owning the corresponding security through a broker are separate arrangements. The company advises users to seek independent guidance about the tax consequences in their jurisdiction.

xStocks entered the market in June 2025 with tokenized versions of U.S. shares and ETFs for eligible non-U.S. customers. In March, crypto.news reported the launch of xChange, an on-chain trading engine supporting more than 70 tokenized equities across Ethereum and Solana.

Company figures cited in the report showed $3.5 billion in on-chain volume, $25 billion in total trading volume and more than 80,000 holders at the time. Each xStock was described as fully collateralized by the corresponding security held in custody, although the tokens still lacked the ownership rights attached to conventional shares.

Days later, coverage of Kraken’s strategy detailed the company’s planned acquisition of xStocks issuer Backed Finance and its work with Nasdaq on blockchain-based securities infrastructure.

U.S. customers remain excluded from the vaults

Kraken has made the vaults available in the European Economic Area and other supported jurisdictions, excluding the United Arab Emirates. Residents of the United States, United Kingdom, Canada, and Australia cannot use the product, while sanctioned countries are also excluded.

American investors, therefore, cannot deposit SPYx, QQQx, or NVDAx into the vaults even though each token follows a security listed in the United States. Kraken’s original xStocks rollout similarly targeted eligible clients outside the U.S., and the company said the products were not registered with local securities regulators.

Eligible customers who enter a vault retain exposure to the market price of the relevant token during the three-day redemption process. Kraken says funds generally continue generating rewards while they remain in the vault and await sufficient liquidity for withdrawal.