Kraken has expanded its xStocks offering with three vaults designed to generate variable on-chain yields from tokenized versions of Nvidia shares and two U.S.-listed exchange-traded funds. Eligible customers can deposit SPYx, QQQx or NVDAx, retain exposure to the price of the corresponding token and receive rewards paid in the same xStock they originally deposited.
The initial estimated net annual percentage yields displayed by Kraken are 2% for SPYx and QQQx and 1.8% for NVDAx. SPYx tracks the SPDR S&P 500 ETF Trust, QQQx follows the Invesco QQQ Trust and NVDAx provides tokenized exposure to Nvidia shares. Those rates are variable rather than guaranteed, and Kraken says they depend on borrowing demand in the lending markets used by the strategy.
Rewards are automatically converted back into xStocks
The vaults are structured so that users do not need to claim rewards manually or decide when to redeploy them. Earnings accrue continuously, are converted into the same xStock deposited by the customer and are then reinvested into the vault balance.
A customer depositing SPYx therefore receives rewards in SPYx rather than in a separate asset. The same logic applies to QQQx and NVDAx. This automatic reinvestment allows the position to continue accumulating rewards without requiring repeated actions from the user.
Kraken charges a 25% performance fee on earnings generated by the vaults. The exchange says this fee has already been deducted from the estimated APY displayed to customers. Deposits and withdrawals do not carry additional Kraken platform fees or Ink network gas fees according to the documentation.
The quoted APYs remain estimates. Kraken calculates the regular APY using the previous seven days, and the rate can change as demand for stablecoin borrowing rises or falls.
The yield does not come directly from the tokenized stock
The structure behind the vaults is more complex than simply holding an xStock and receiving an additional return. Once an eligible token is deposited, Kraken routes the asset through several different pieces of on-chain infrastructure.
The xStock first moves into an embedded self-custody wallet on Ink, Kraken’s Ethereum layer-2 network. The system wraps the token for accounting purposes before placing it into infrastructure supplied by Veda.
Sentora, which designed the strategy and acts as its risk manager, then transfers the wrapped asset across chains to Solana. On Solana, the xStock enters the Kamino lending market and is used as collateral for a stablecoin loan.
The borrowed stablecoins are subsequently allocated to selected decentralized finance strategies. Returns produced by those positions are ultimately converted back into the same xStock originally deposited by the customer and added to the vault balance.
Multiple protocols sit between the customer and the final return
This architecture creates several operational layers. A deposited xStock passes through an Ink wallet, wrapping, Veda vault infrastructure, a cross-chain transfer, a Solana lending market and additional DeFi strategies involving the borrowed stablecoins.
Kraken provides users with access to the product, but the company says it does not manage the strategy itself or control the protocols that ultimately receive the assets. Sentora is responsible for risk management, while Veda administers the underlying vault infrastructure.
That separation is important because customers are not simply taking exposure to Kraken. They are also exposed to the operational performance of several external systems and protocols used by the strategy.
The structure allows tokenized equities to interact with decentralized finance, but it also introduces risks that would not exist if an investor simply held an xStock without placing it into a leveraged vault.
An embedded wallet removes the need for manual wallet setup
Customers do not need to create a separate external crypto wallet or write down a mnemonic phrase before using the product. Kraken automatically creates an embedded self-custody wallet after a user makes a first allocation through DeFi Earn.
Users can export the wallet’s private key through the platform’s Earn settings. Kraken warns, however, that exporting the private key is permanent and cannot be reversed.
This arrangement attempts to reduce some of the technical steps normally associated with interacting with decentralized finance. The customer accesses the vault from Kraken while the underlying assets move through on-chain infrastructure.
The simplified interface does not remove the risks of the underlying architecture. It mainly reduces the number of manual actions required from the customer.
Withdrawals come with a three-day waiting period
Kraken allows withdrawals at any time, but redemption is not immediate. After a withdrawal request, there is a three-day waiting period before the xStock returns to the customer’s Kraken balance.
During periods of unusually high demand or market stress, the process may take longer if the vault does not have enough immediately available liquidity. Kraken says customers generally continue earning rewards while their funds remain inside the vault during the redemption process.
Users also remain exposed to movements in the market price of the xStock during that period. A customer leaving an NVDAx vault, for example, can still experience changes in the value of NVDAx while waiting for the withdrawal to complete.
That combination of price exposure and delayed redemption is one of the important differences between holding the token in a readily accessible balance and allocating it to the vault strategy.
Leverage is central to how the strategy generates returns
The vaults do not simply lend the deposited xStock. Instead, the token is used as collateral for stablecoin borrowing, introducing leverage into the structure.
Leverage can increase the amount of capital deployed into yield-generating strategies, but it also increases sensitivity to falling collateral values and reduced liquidity. Kraken explicitly identifies the borrowing structure as leverage and warns that it can magnify losses as well as returns.
A sharp decline in SPYx, QQQx or NVDAx could force the strategy to close positions quickly. Heavy withdrawal demand could create similar pressure if collateral must be released while available liquidity is limited.
The risk is therefore connected both to the market price of the tokenized asset and to the health of the lending and DeFi systems used by the vault.
Liquidation losses can be shared among vault users
Kraken warns that losses caused by liquidation, bad debt or severe market movements are shared proportionally among participants in the affected vault.
Customers may lose part or all of their original deposit. Neither the principal nor the rewards are insured or guaranteed by a bank or government protection program.
This makes the advertised APY fundamentally different from a guaranteed interest rate. The potential yield exists alongside the possibility of losses that can exceed the rewards accumulated by the position.
The initial estimated rates of 2% or 1.8% therefore need to be considered together with the leverage and protocol risks involved in producing them.
Smart contracts add another layer of exposure
The strategy depends on several smart contracts across multiple platforms. Kraken notes that even audited or widely used contracts may contain bugs or be vulnerable to exploits.
A failure in one part of the system could affect assets farther along the strategy. The customer’s position depends not only on the xStock itself but also on the infrastructure used to wrap, transfer, lend and redeploy that asset.
Cross-chain transfers between Ink and Solana introduce an additional category of execution risk. Delays or technical faults during those transfers could prevent Sentora from changing positions quickly while market conditions are moving.
If collateral values were falling rapidly at the same time, such delays could make risk management more difficult.
Stablecoins and synthetic assets create indirect risks
A customer may deposit only one xStock, but the strategy interacts with additional assets. Wrapped tokens, synthetic assets and stablecoins can all appear in different stages of the vault’s operation.
Kraken warns that the failure of a stablecoin to maintain its peg could reduce a vault’s value. Problems involving a custodian can also affect the system.
This means that a customer depositing SPYx is not exposed exclusively to SPYx price movements. The vault’s result also depends on assets and infrastructure used after the token leaves the customer-facing part of Kraken.
The yield is therefore generated through a network of interconnected risks rather than directly from the referenced share or ETF.
xStock holders do not become shareholders
SPYx, QQQx and NVDAx track securities that trade in U.S. financial markets, but Kraken states clearly that xStocks are not equivalent to securities held through a traditional brokerage account.
Token holders receive economic exposure to the price of the referenced asset. They do not receive voting rights, dividend rights or a legal claim against the company or fund represented by the token.
An NVDAx holder, for example, does not receive the shareholder rights associated with conventional Nvidia stock ownership simply because the token tracks Nvidia’s price.
Kraken also says tax treatment may differ between holding an xStock and owning the corresponding security through a broker. The company advises customers to obtain independent guidance regarding the rules that apply in their jurisdiction.
xStocks have already expanded beyond simple tokenized trading
Kraken introduced xStocks in June 2025 for eligible customers outside the United States, offering tokenized versions of U.S. shares and ETFs.
The product line expanded further in March with xChange, an on-chain trading engine supporting more than 70 tokenized equities across Ethereum and Solana.
Figures cited at the time showed $3.5 billion in on-chain volume, $25 billion in total trading volume and more than 80,000 holders. Each xStock was described as fully collateralized by the corresponding security held in custody, despite the tokens not carrying traditional shareholder rights.
Kraken has also been working on broader tokenized-market infrastructure, including its planned acquisition of xStocks issuer Backed Finance and work with Nasdaq related to blockchain-based securities infrastructure.
The vaults turn tokenized exposure into DeFi collateral
The new product represents another step in that progression. xStocks initially offered tokenized price exposure to equities and ETFs. The vaults now make those tokens usable as collateral within lending and yield strategies.
That distinction is significant because the token is no longer being treated only as a representation designed for trading. It becomes an asset that can move through decentralized lending infrastructure, support borrowing and generate returns through additional DeFi positions.
The potential benefit is a variable yield while maintaining exposure to the original xStock. The tradeoff is that the customer accepts a much wider set of risks than simple token ownership.
U.S. investors cannot access the product
Despite tracking U.S.-listed securities, the vaults are not available to residents of the United States.
Kraken has opened them to eligible users in the European Economic Area and other supported jurisdictions, while excluding the United Arab Emirates. Residents of the United States, United Kingdom, Canada and Australia are also excluded, along with users in sanctioned countries.
That creates an unusual structure in which SPYx, QQQx and NVDAx reference well-known U.S. securities, but American customers cannot deposit those tokens into the yield vaults.
Kraken’s original xStocks rollout followed a similar approach, targeting eligible non-U.S. customers. The company said those products were not registered with local securities regulators.
The yield comes with a substantially different risk profile
Kraken’s xStocks vaults add a new use case for tokenized securities by connecting them directly with DeFi lending and leveraged strategies. Eligible users can deposit SPYx, QQQx or NVDAx, receive rewards in the same token and have those rewards automatically reinvested.
The initial estimated net rates of 2% for SPYx and QQQx and 1.8% for NVDAx may attract customers who want to maintain market exposure while attempting to earn additional returns. But those rates are variable and depend on stablecoin borrowing demand.
More importantly, the vault changes the nature of the position. A user is no longer only exposed to movements in the tokenized stock or ETF. The strategy adds borrowing, liquidations, liquidity constraints, smart contracts, cross-chain transfers, stablecoins, custodial dependencies and possible bad debt.
The product therefore demonstrates how tokenized equities can become part of a broader on-chain financial system, while also showing that additional yield is accompanied by additional layers of risk.
