How to Earn on Tokenized Shares of IT Corporations
Microsoft, Tesla, Nvidia, Apple, Meta — a short list of tech giants known worldwide. Every trader would have loved to buy at least a few shares in these companies at launch. But you can't turn back time, so you have to look for ways to make money today.
In this article, we break down how tokenized stocks work, when to buy them, and what pitfalls potential investors need to be aware of.
How xStocks Work on Crypto Exchanges
xStocks are tokenized versions of publicly traded company shares. The first such products appeared a few years ago, but only became more widely accessible this summer after launching on Gate, Bybit, Mexc, and other European crypto exchanges.
The concept behind the instrument is straightforward — give traders the ability to trade assets without brokers or traditional stock markets. Positions can be opened around the clock, with no need to wait for classic markets to open.
How it works technically:
- A liquidity provider purchases shares on the stock market.
- The exchange issues tokens: 1 token = ≈1 share.
- A market maker synchronizes the token price with the share price and minimizes the spread.
- Users buy and sell tokens like cryptocurrency via USDT.
- The token balance is displayed in the user's account, though the token does not confer shareholder rights.
- The exchange controls token reserves and liquidity, ensuring coverage by real shares.
In addition to spot buying, tokenized stocks can also be traded on futures. This means traders can hedge their portfolio and profit from price swings driven by news flow.
From the outside, the xStocks model looks ideal — but there are pitfalls. Trading volume in tokenized stocks is typically lower than on traditional exchanges, making it harder to buy or sell large positions without significantly moving the price.
On top of that, traders' fortunes are in the hands of the liquidity provider. If reserves aren't replenished on time or a default occurs, tokens could lose their peg to the price of the underlying shares.
Can You Actually Make Money on Tokenized Stocks?
Demand for tokenized stocks is growing not only among crypto enthusiasts but also among professional traders. That said, it's worth remembering that in a regulatory "grey zone," profit always comes hand in hand with risk. The uncertain legal status of these instruments means an exchange can freeze trading at any moment, leaving an investor holding tokens they can't sell.
One of the most reliable strategies involves news-driven trading. For example, when the public feud between Trump and Musk played out on social media, Tesla shares dropped as much as 14% in a single day. It was a smart move to buy the dip, as the situation stabilized within a week.
Buying tokenized stocks for a long hold can generate profit, but it's highly situational. Currently, Gate, Bybit, Kraken, and other exchanges offer a fairly broad selection for traders — with several dozen tokens available for trading.
As for price stability in tokenized stocks, things aren't as clean as exchanges would have you believe. Almost immediately after xStocks launched, insiders were able to artificially pump the price of HOODX and make hundreds of thousands of dollars.
On Bybit, empty order books allowed traders to pump the price of both stocks and futures. Some users did walk away with significant profits thanks to the spread and insufficient liquidity. But many traders had their deposits wiped out through liquidation.
Overall, tokenized stocks are an interesting instrument. Previously, buying shares in global giants meant paying broker commissions, going through complex verification processes, and in some countries — even filing tax reports. On crypto exchanges, all you need is to complete KYC and top up your account in USDT.
For now, xStocks look more like an experiment than a mature segment of the crypto market. Their strength lies in accessibility, speed, and integration with stablecoins. Their weakness — in a legal vacuum and the absence of guarantees.
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