What are the key challenges for Robinhood in advancing tokenized stocks?

Original: 《Robinhood’s Tokenized Stocks: The Good, The Bad, and The Fix》

Compiled by: Ken, Chaincatcher

Legendary investor Warren Buffett holds an almost religious, steadfast opposition to the concept of "stock splits."

The reason Berkshire Hathaway Class A shares trade at over $700,000 per share is that Buffett believes stock splits are merely a formalistic move that does not change the fundamental value of a business. In Buffett's world, if you cut a pizza into eight slices instead of four, you don't get more pizza. You just have more dishes to wash.

While stock splits may not be a "big deal" from a valuation perspective, they are a highly regulated activity overseen by the U.S. Securities and Exchange Commission and enforced by exchanges.

When a company announces a stock split, it must file an 8-K form and notify shareholders in advance before the change takes effect. This critical time window allows transfer agents to adjust share registries, brokers to update their internal systems, and data providers like Bloomberg to update their data feeds—so that a $500 stock doesn't appear to have crashed to $50 overnight after a 10-for-1 split.

Stock splits are not the only corporate actions requiring this high level of coordination. Dividend distributions bring similar complexities.

On the ex-dividend date, the stock price is adjusted downward by the dividend amount. Some funds, particularly high-yield income funds, take this practice to the extreme. They frequently distribute income, but a large portion of these distributions is classified as a return of capital, essentially returning investors' principal to them rather than paying out investment profits. While the number of shares remains unchanged, the fund's net asset value (NAV) is steadily eroded over time.

Tracking the performance of these funds requires a clear distinction between price return and total return.

Suppose you hold 100 shares of a high-yield ETF priced at $100 per share (an investment of $10,000). The fund distributes $5 per share monthly, with 90% classified as a return of capital. After 12 months, you've received $60 per share in cash (total $6,000), but the fund's NAV has dropped from $100 to $46. At this point, the total price return is negative $5,400, but the total return is $10,600 (remaining NAV of $4,600 plus the distributed $6,000), representing a positive 6% gain.

These are precisely the problems blockchain is supposed to solve.

A single, shared ledger that updates atomically and is visible to everyone simultaneously. If everyone reads from the same on-chain record, corporate actions like stock splits and dividends would propagate instantly across the entire system, eliminating the cumbersome and frantic reconciliation work currently performed between isolated intermediaries.

It was this promise that led to a warm market reception when Robinhood (@RobinhoodApp) CEO Vlad Tenev announced the tokenized stock strategy in June 2025.

Six months later, Robinhood's tokens are officially live, and data is flowing. Unfortunately, some issues have begun to surface.

The Good

Robinhood's announcement acted as a catalyst for the market.

Other issuers quickly moved to launch competing products. Backed Finance (acquired by Kraken) launched xStocks (@xStocksFi) on Solana, followed by Ondo Global Markets (@OndoFinance) launching its tokenized stock offerings.

RWA.xyz data as of January 23, 2026

Tokenized stocks have truly had a breakout year. In the second half of 2025 alone, this asset class grew by 128%, pushing the total asset value to nearly $1 billion.

RWA.xyz data as of January 23, 2026

Robinhood's tokenized U.S. stocks and ETFs are now available to European customers. Each token is issued on the Arbitrum network, fully backed by stocks held by Robinhood, and offers 24/5 trading with zero commissions. Relevant data is available on RWA.xyz.

However, accurately capturing the metrics for Robinhood's tokenized stocks has proven more complex than anticipated.

The Bad

Most blockchain data platforms, when indexing tokens, assume they follow standard conventions. For ERC-20 tokens, this means tracking mints and burns, accumulating supply from zero, and calculating market cap as supply multiplied by price.

This works well for thousands of tokens on Ethereum and other EVM networks. But ERC-20 was not originally designed for securities that undergo corporate actions. The standard does not natively support stock splits, reverse splits, or dividend-driven rebasing.

Consequently, Robinhood had to use custom contracts to properly handle these events and ensure the rights of its end-users. These tokens function correctly within the Robinhood App, but their mechanisms are opaque to external data platforms and incompatible with DeFi protocols—both of which assume they are dealing with standard ERC-20 tokens.

When we compare the token supply calculated using standard ERC-20 logic against the actual on-chain data, the discrepancies are too large to ignore. Some tokens are off by a factor of 10, others by as much as 100.

Almost all errors can be attributed to two categories: (1) NAV erosion from dividends and (2) reverse stock splits.

NAV Erosion from High-Yield ETF Dividends

Data as of January 23, 2026

These are high-yield option income ETFs that pay frequent distributions, with 90% or more classified as a "return of capital." Each distribution returns cash to investors, but this is primarily a return of principal rather than investment income. The number of shares remains constant, while the NAV steadily declines over time.

Robinhood's contracts address this by decoupling "shares" from "tokens." The holder's share count remains the same, but an internal multiplier adjusts the reported token supply downward as return-of-capital distributions accumulate, reflecting the shrinking underlying NAV.

However, data platforms following the standard ERC-20 model simply add up mints and burns. This approach fails to capture this rebasing adjustment, leading to an overestimation of the circulating token supply and, consequently, the reported market cap.

Reverse Stock Splits

Data as of January 23, 2026

The same issue arises with reverse stock splits. A reverse split increases the price per share by consolidating shares, often to meet exchange listing requirements. The number of shares is reduced proportionally, but the price per share increases proportionally, leaving the total value unchanged.

Again, Robinhood's contracts adjust the token supply to reflect the reverse split, while third-party platforms following the standard ERC-20 model overestimate the circulating supply and reported market cap.

Robinhood's Total Data Discrepancy

Data as of January 23, 2026

Among the 21 tokens we identified with data mismatches, the reported supply was overestimated by approximately 64,000 tokens, a discrepancy of 56%. NAV erosion from high-yield ETFs accounted for about 90% of this gap, with reverse stock splits explaining the remainder.

Any data platform relying on standard ERC-20 logic to calculate supply will severely overestimate the market cap of Robinhood's tokenized stocks, often by multiples.

The Fix

Tokenized Stock Taxonomy: Models & Infrastructure

Tokenized stock issuers have adopted different approaches to handling corporate actions. They can be broadly categorized into two groups.

Rebasing Models

Rebasing models maintain spot price parity: one token should always trade at a price close to one share of the underlying stock. When a corporate action occurs, token balances are automatically adjusted to maintain this relationship. Issuers using this method fall into two camps based on their relationship with the underlying asset issuer:

• Rebasing (Third-Party): The issuer operates independently of the company whose stock is being tokenized. Both xStocks (@xStocksFi, under Backed Finance / Kraken) and Robinhood (@RobinhoodApp) take this approach. Tokens are backed by custodied shares, but due to no direct relationship with the underlying issuer, they replicate economic exposure without conferring legal ownership.
• Rebasing (Direct): The issuer partners with the public company to tokenize its shares. Superstate's Opening Bell (@SuperstateInc) and Securitize (@Securitize) operate as SEC-registered transfer agents and serve as the official shareholder registry. Because tokens are issued in coordination with the company, they are the legal securities themselves, granting holders actual shareholder rights not available in the third-party model.

Both structures require multiplier infrastructure to reflect corporate actions on-chain.

Solana's Token-2022 standard natively provides a scaling UI amount extension. The issuer simply updates a multiplier, which adjusts the balance displayed in user interfaces without changing the raw token count. For example, a 2-for-1 stock split changes the multiplier from 1.0 to 2.0; wallets display double the balance while the underlying raw token count remains the same. Because the standard is native to Solana, data platforms can directly query multiplier changes.

EVM networks currently lack an equivalent standard. Issuers like xStocks and Robinhood have had to build their own multiplier mechanisms. While balance adjustments are correct and wallets can display prices consistent with the spot market, these implementations are bespoke. Third parties relying on standard ERC-20 calls cannot detect when a multiplier changes or query its current value. Therefore, each issuer's specific implementation must be understood separately.

This is precisely why Chris Ridmann of Superstate and Gilbert Shih of Robinhood co-authored ERC-8056, a draft proposal aiming to introduce a standardized "Scaling UI Amount Extension" for ERC-20 tokens. This would provide data platforms with a unified interface for tracking corporate actions across issuers.