Equity holders have always faced a tough dilemma: liquidate positions and forfeit future gains, or keep capital locked away. 

While traditional securities-based lending offers a workaround, it comes bogged down by broker relationships, restrictive minimums, and strict business hours. Kamino’s xStocks Market brings this powerful financial mechanism onchain, operating 24/7, fully decentralized, and accessible to any wallet in the world.

Understanding xStocks: Wall Street Assets on Solana

xStocks, launched by Backed Finance, are tokenized representations of U.S. stocks and ETFs issued as SPL tokens on Solana. Each token is reportedly backed 1:1 by real shares held by custodians. 

Holders can move them between wallets, trade them at any hour, and use them in onchain protocols On July 14, 2025, Kamino integrated xStocks into Kamino Lend so users could borrow against tokenized stocks, becoming the first major protocol to accept them, with Chainlink serving as the official price feed provider.

How Borrowing Against Your Stocks Works

The process operates like any overcollateralized loan. Users deposit xStocks (such as SPYx or TSLAx) into the xStocks Market to establish a USDC borrowing limit based on the collateral's value and maximum loan-to-value (LTV) ratio. Borrowers can then draw USDC against that limit to use onchain or off-ramp.

Since rates on Kamino fluctuate with supply and demand, borrowers should check the live rate before opening a position. Nonetheless, these onchain stablecoin borrow rates compare favorably with standard retail brokerage margin loans. Additionally, borrowers enjoy full flexibility, with the ability to repay at any time without fixed terms or penalties.

Unlocking Cash While Retaining Market Upside

The central advantage of this structure is that the borrower keeps the stock. 

If SPYx rises by 10% while deposited as collateral, the position gains that 10% in value and expands the user's borrowing capacity accordingly. This allows the borrower to raise liquidity for expenses, other investments, or new strategies while their underlying equity position continues to track market gains.

Some users take this concept further: most activity in the market involves leveraged longs, where users deposit SPYx or QQQx, borrow USDC, and reinvest it back into the asset.

Understanding the Liquidation Safeguards

Every overcollateralized loan sets a maximum limit for how much you can borrow against your assets. To prevent protocol losses, positions that cross this safety line must be liquidated. 

On Kamino, this risk is measured by your Loan-to-Value (LTV) ratio: the total loan amount divided by the current value of your deposited stock. This means that if your stock's price falls, its value decreases, causing your LTV to rise. Once your LTV reaches the market's designated limit, the protocol marks your position for liquidation.

To protect borrowers, liquidations occur gradually in rounds capped at 20% of the total debt, with the liquidator bonus scaling up if the position continues to deteriorate.

For example, if you deposit $10,000 in SPYx and borrow $5,000 in USDC on a market with a 70% liquidation threshold, your initial Loan-to-Value (LTV) is 50%. Liquidation would only trigger if your SPYx collateral drops to approximately $7,140 (a loss of around 28.6%). You can increase this safety margin by borrowing less upfront, or restore it during market drops by depositing more collateral or paying down debt.

Direct Borrowing Compared With the Sentora xStocks Vault

Holders looking to put their xStocks to work can access the Kamino market through two distinct routes, depending on their goal. 

1. The first route is direct borrowing, which provides stablecoin liquidity for users to spend or deploy independently. 

2. The second route is the Sentora xStocks vault (available on Kraken, with risk curation by Sentora and infrastructure from Veda), which uses that same borrowing capacity to generate additional returns in the deposited asset automatically.

The vault operates through a structured process. Sentora’s vault strategy transfers the wrapped xStock to Solana, depositing it into the Kamino lending market as collateral for a stablecoin loan. These borrowed stablecoins are then invested in targeted onchain strategies, with generated yields converted back into the original xStock asset. This allows an SPYx depositor, for instance, to continuously accumulate more SPYx. Predefined exposure limits alongside real-time risk models actively monitor collateral status, liquidity, and oracle conditions. 

During its initial rollout, Kraken estimated net APYs of 2% for SPYx and QQQx, and 1.8% for NVDAx.

These two options serve different needs. Users who need cash for expenses, separate investments, or leverage should borrow directly, as the vault does not distribute stablecoins. On the other hand, users who want to grow their equity position without managing LTV ratios, oracle behavior around market closures, or onchain execution can delegate those tasks to the vault. Clients can allocate xStocks directly through Kraken's interface, with assets held in self-custodial wallets that remain verifiable onchain.

The risk profiles also differ. Direct borrowers manage and assume liquidation risk independently. In contrast, vault positions may close rapidly if collateral values drop significantly or withdrawal requests surge, with any resulting losses distributed proportionally among vault participants. Vault users also assume cross-chain execution risks and exposure to downstream yield strategies. At launch, the vaults are available in the European Economic Area and other supported regions, but excluded in the U.S., UK, Canada, Australia, UAE, and sanctioned countries.

Both options rely on Kamino’s infrastructure and Chainlink price feeds. The key difference lies in management and yield format, allowing holders to choose between direct, hands-on liquidity or managed, asset-denominated yield.

A New Paradigm for Equity-Backed Liquidity

Kamino’s xStocks ecosystem offers equity holders unprecedented flexibility and capital efficiency. Bridging traditional equities with Solana’s high-throughput onchain architecture fundamentally transforms static shareholdings into dynamic, productive collateral. 

Traditionally, asset holders needing liquidity had only two options: sell their position or leave it untouched. Kamino has now introduced a third alternative: depositing xStocks to borrow stablecoins, increasing exposure through leveraged positions, or supplying xStocks to lending markets to earn yield in the same asset while keeping their original equity position intact.

Running on Solana, these positions settle quickly and remain fully visible onchain, offering institutional users a transparent, 24/7 venue for equity-backed lending as tokenized real-world assets gain adoption.