A new feature on Solana’s leading DEX aggregator promises access to tokenized shares of private companies like SpaceX and OpenAI, but doubts remain over whether these tokens will accurately track the underlying companies.
Jupiter, a decentralized exchange (DEX) aggregator on Solana, has rolled out a product that enables users to trade tokenized shares of pre-IPO companies through a partnership with PreStocks, a platform offering tokens tied to private firms.
On Aug. 7, Jupiter said users can trade the world’s “top private companies” like SpaceX, OpenAI, Anthropic, and more.
According to PreStocks, the platform gives tokenholders the right to request redemptions for Circle’s USDC stablecoin, thus providing “indirect economic exposure to the underlying company.”
How it Works
Each PreStocks token is priced to reflect a company’s implied valuation. For example, a token priced at $100 corresponds to a $100 billion valuation.
PreStocks explained in an X post that during an initial liquidity bootstrapping phase, 80% of the token supply is distributed at a fixed starting price, after which trading moves to a concentrated range to allow natural price discovery.
The starting price, as noted by PreStocks, factors in broker fees, management fees, carry, acquisition costs, and a 20% liquidity buffer.
Criticism
Some in the crypto community question the legitimacy of the tokenized shares and the actual ownership they represent. Alex Thorn, managing director at Galaxy Digital, noted that “none of these are authorized by the issuers,” adding that the tokens don’t offer “clean share ownership.”
In its FAQ page, PreStocks acknowledges that it doesn’t “confer any ownership, voting, dividend, information, or other legal rights.” The firm also reiterated that the tokens aren’t offered or sold in the U.S. and are not available to U.S. investors.
Some users also expressed confusion about how the tokens could hold value when the underlying private companies are still raising funds and many key markets are restricted.
0xSoju, the team lead at Meteora, which provides liquidity for PreStocks, explained in an X post that “KYC-ed institutions” can buy tokens that are trading at a discount and redeem them for actual shares to manage these risks.
A spokesperson for PreStocks told The Defiant that redemptions work as follows: users must first meet minimum size requirements, pay a processing fee, and complete KYC verification, then submit their wallet address, the amount to redeem, a minimum acceptable price, and a maximum timeframe.
The balance is then frozen while PreStocks makes a “commercially reasonable effort to liquidate the underlying positions.”
“Any successfully redeemed PreStocks are burned, and you receive the net USDC proceeds to your whitelisted wallet; any unredeemed PreStocks are returned to you. Smaller holders will most likely achieve better outcomes via on-chain secondary markets, while redemptions are designed for larger exits. Ability to redeem can be affected by KYC/AML status, jurisdiction, investor status, off-chain secondary market liquidity, and the size, minimum price, and timeframe specified in the redemption request,” the spokesperson said.
Managing Counterparty Risks
PreStocks explained that the mint/redeem mechanism creates an arbitrage link to the underlying assets, causing on-chain and off-chain prices to naturally converge. They said a single approved minter or redeemer can close significant price gaps by minting and selling when the token price exceeds the underlying value, or by buying and redeeming when it falls below.
The spokesperson added that because this arbitrage exists and “no one is forced to trade at posted on-chain prices, sustained price distortion cannot be imposed by liquidity providers.”
PreStocks also said the platform is starting with a small, carefully vetted group of minters to minimize counterparty risk, and that the group “will expand over time, further strengthening the arbitrage channel and overall market resilience.”
PreStocks claims on its FAQ page that the tokens are “fully backed by holding companies that are directly or indirectly invested in the underlying company,” though it didn’t name those holding companies.
The spokesperson explained that counterparty legal names “are not disclosed because they require contractual confidentiality to avoid unwanted solicitation, reputational targeting, and potential adverse actions from issuers or intermediaries.”
“Preserving this confidentiality is often a precondition for participation; without it, institutions are materially less willing to tokenize positions, which would reduce available inventory and ultimately harm tokenholder liquidity,” the spokesperson added.
PreStocks is jumping on the tokenized pre-IPO bandwagon just as other crypto exchanges and brokers dive into tokenized shares, even though it’s still unclear if these ventures will have staying power.
In early July, U.S. brokerage giant Robinhood rolled out 200 tokenized U.S. stocks and ETFs for select European users, including private shares of OpenAI and SpaceX. But just two days later, OpenAI slammed the brakes, writing in an X post that the tokens “are not OpenAI equity.” The company said it never partnered with Robinhood or approved any transfers and warned people to “be careful.”
Source: https://thedefiant.io/news/defi/jupiter-s-pre-ipo-token-launch-raises-questions-over-real-ownership