Kraken Launches xStocks Vault for Tokenized Stock Collateral with Up to 2% APY

Kraken has launched the xStocks vault, enabling users to earn income by borrowing stablecoins against tokenized stock collateral. According to Kraken's support documentation, initial displayed APY rates are 2.0% for SPYx and QQQx, and 1.8% for NVDAx.

Kraken explains that users move SPYx, QQQx, and NVDAx into the Ink Network's embedded wallet, wrap them, and deposit them into Veda Vaults. The tokenized stocks are then used as collateral in a lending protocol, with borrowed stablecoins deployed into decentralized finance strategies for returns reinvested in the same tokenized stocks.

Kraken notes that a 25% performance fee is applied at the protocol level on vault earnings. Risks include smart contract vulnerabilities, liquidity issues, default risks, liquidation events, cross-chain execution challenges, and leverage exposure. Withdrawals also require a three-day waiting period.