Kraken Lets Users Earn DeFi Yield on Nvidia and ETF xStocks

Kraken has launched on-chain yield vaults for three tokenised securities, enabling qualified clients to earn variable rewards from their tokenised positions in Nvidia and two major US ETFs.

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The product, available from September 14, initially supports NVDAx, SPYx and QQQx. These tokens provide economic exposure to Nvidia, the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust, respectively.

Investors gain market exposure by holding the tokens. However, by allocating them to the new vaults, they get access to passive income through an on-chain lending strategy.

Your xStocks can now earn rewards. @xStocksFi Vaults are live on Kraken.Holding xStocks of the S&P500, Nasdaq-100, or NVIDIA? Deposit in a vault and earn up to 2% APY, while you stay fully invested.Explore Vaults → https://t.co/bkLaKumVvX pic.twitter.com/mSxoTyoMXu

The service is available to eligible customers in the European Economic Area and other supported markets. It excludes the UAE, UK, US, Canada, Australia and sanctioned jurisdictions, according to Kraken’s support documentation.

How the xStocks Vaults Work

Clients can allocate at least 0.001 of an eligible xStock through Kraken or Kraken Pro. The asset is then moved to an embedded self-custodial wallet and placed into a Veda vault, with Sentora managing the strategy and risk parameters.

The vault uses the xStocks as collateral in lending markets, borrows stablecoins against them and deploys those stablecoins into DeFi strategies. Returns are converted back into the same xStock, so a client allocating SPYx earns additional SPYx rather than cash or stablecoins.

Clients can request withdrawals at any time, although Kraken applies a three-day waiting period. The displayed APY normally reflects a trailing seven-day average and varies with borrowing demand.

During the launch period, Kraken is showing fixed estimates of 2% after fees for SPYx and QQQx and 1.8% for NVDAx. A 25% performance fee applies at the protocol level.

The platform does not charge allocation or deallocation fees, and deposits and withdrawals on Ink do not incur gas fees.

Yield Comes with Additional Risks

The structure adds risks that do not apply when simply holding an xStock. Borrowing stablecoins against the tokens introduces leverage and the possibility of liquidation if collateral values fall sharply or liquidity conditions deteriorate.

Withdrawals may also be delayed during periods of market stress. Smart-contract failures, bad debt, cross-chain execution problems and exposure to wrapped assets or stablecoins could reduce the vault balance, including the original allocation.

Any resulting losses would be distributed proportionally among users. Rewards are variable and not guaranteed, and the vaults are not covered by government deposit or bank protection schemes.

xStocks are tokenised representations rather than conventional shares and do not provide direct shareholder ownership or voting rights.