Spout bets covered calls can make stock-backed loans interest-free as tokenized equities pile into DeFi

Solana-based Spout wants to remove the interest bill from borrowing against stocks, and it has raised $2 million to try, paying its lenders out of options premium instead of charging borrowers

The lending protocol announced the strategic round on October 15. In the days that followed, ex-CFTC chief Chris Giancarlo and Draper Dragon each made the public case for their investment, and The Block and other crypto outlets have covered the raise.

Draper Dragon and Giancarlo back a 0% credit model

In his announcement post, CEO Marc Ryan named eight institutional investors: Draper Dragon, Flow Traders, Anchorage Digital, Solayer, Taisu Ventures, Vessel Capital, 2Square Capital and Bering Waters Ventures. Solana Labs provided strategic backing, while its co-founders, Anatoly Yakovenko and Raj Gokal, joined Injective’s Eric Chen and Superstate’s Dean Swennumson on the angel list. Superteam USA has also described Spout as one of its portfolio companies.

Giancarlo, an angel investor who also advises the company, wrote on X that he was backing Spout to build “a tokenized credit market where capital stays put and compounds, as it does with mortgages and bonds in traditional finance.”

Draper Dragon’s investment write-up called stock-backed borrowing a privilege that has largely belonged to private banking clients. The firm said Spout’s appeal was that lenders are paid from option premium rather than token emissions, and placed the deal next to earlier tokenization bets on Centrifuge and OpenTrade.

Option premium replaces the interest rate

Spout’s mechanism flips the usual credit arrangement. A borrower deposits tokenized US stocks and draws USDC against up to half of their value. Once a week, Spout sells call options against the pooled shares, at strikes set comfortably above the current price, and hands the premium to the lenders who put up the USDC.

Because the lender is paid from the options, the borrower pays nothing, however long the position stays open. Ryan, a former HSBC banker, has framed the product as a way to give ordinary investors something wealthy clients already have.

“Borrowing against your own portfolio has always been a product for people who already had a private banker,” Ryan said in the company’s announcement.

Retail margin still costs around 12%

The comparison Spout leans on is the cost of a standard margin loan. Charles Schwab and Fidelity each list a 12.075% rate for margin balances under $25,000 on their rate tables, and both adjusted their base rates in September, two days after the Federal Reserve’s first hike since 2023.

Lower-cost options do exist, but only for bigger accounts. Schwab’s Pledged Asset Line, for instance, starts at $100,000 and was quoted at estimated APRs of roughly 6.3% to 8.3% in early October. Spout’s argument is that the gap between those two prices comes down to account size, not credit risk.

Tokenized stocks look for a reason to exist

The raise lands as tokenized equities move deeper into DeFi. Cryptopolitan reported last month that tokenized stocks deposited into DeFi protocols grew nearly 18-fold this year, from $14.66 million to $262.4 million, according to Token Terminal data. Separately, tokenized stock deposits on Solana lending protocols hit an all-time high of about $60 million in early September, according to SolanaFloor data.

Most of those markets still charge borrowers a variable rate. Spout is betting that a tokenized share becomes more useful when it can pay for its own loan, a feature a standard brokerage account cannot offer. Its website lists 11 supported tokenized stocks and ETFs, and access requires one-time identity verification.

Capped upside and an unfinished product

The 0% rate carries a trade-off. Covered calls cap the borrower’s gains: if a stock climbs past the strike price, the upside above that level goes to the option buyer. Lender returns also depend on options market conditions, so they will rise and fall with volatility.

Nor is the product finished. Spout operates only a devnet test version for now, and while the team says a private beta is near, it has not committed to a mainnet date. The new capital is earmarked for hiring and for lending infrastructure that wallets, exchanges and token issuers could embed in their own apps.