> For the complete documentation index, see [llms.txt](https://docs.selcier.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.selcier.xyz/start-here/tokenized-equity-explained.md).

# Tokenized equity, explained

How equity gets represented on-chain in three different ways, which stock token conventions Robinhood Chain has settled on, and how Selcier Share Tokens relate to both.

Any on-chain token with a value linked to a company's equity can be called a stock token. That label hides instruments that differ widely, above all in what a holder really owns. Below are the three usual models, the conventions stock tokens follow on Robinhood Chain, and the way Selcier extends those conventions.

## Three kinds of stock token

| Model                      | Ownership                                                                     | Company's part       | Rights                                                                                                  |
| -------------------------- | ----------------------------------------------------------------------------- | -------------------- | ------------------------------------------------------------------------------------------------------- |
| **Third-party token**      | A claim against whoever issued the token, valued by following a stock's price | None                 | Exposure to price alone, with no voting, information or direct economic rights in the company           |
| **Vehicle token**          | A stake in a vehicle that owns actual shares                                  | Occasional           | Rights arrive indirectly: economics flow through the vehicle, and its manager generally does the voting |
| **Issuer-sponsored token** | The company's own share, issued by the company                                | Required, every time | Whatever the share class grants: economic, information and voting rights as defined for that class      |

### How third-party tokens work

An outside party purchases or hedges exposure to a stock, then issues a token following the price. Trading may be unrestricted, yet the holder's claim is against that outside party and not the company. Private companies face an added difficulty here. They never opted in, they cannot influence who ends up with the exposure, and they may object to the way the product is marketed.

### How vehicle tokens work

Typically a fund or special-purpose entity serves as the vehicle. It acquires shares in a company and issues tokens for interests in itself. That brings holders nearer to the underlying economics, but a layer remains between them and the company: fees accumulate, the vehicle manager filters information, and word of transfers often reaches the company only indirectly.

### How issuer-sponsored tokens work

Here the company itself issues the token to represent its own shares, and the balance on the token is the record of ownership. Which wallets may hold it, and on what conditions, are settings the company controls. Dividends, splits, votes and other corporate actions run through the token.

**Selcier issues issuer-sponsored tokens and nothing else.** If the company a token represents is not its issuer, the token is not a Selcier token.

## How stock tokens behave on Robinhood Chain

On Robinhood Chain, the reference implementation of a stock token is the Robinhood Stock Token. Wallets, DEXs, lending markets and oracles there already support the conventions that design introduced.

**A separate ERC-20 for each asset.** Every stock maps to one underlying security through a dedicated contract, an ERC-20 with 18 decimals.

**A multiplier in place of rebasing.** Balances do not rebase for splits or dividends. Tokens implement ERC-8056 (Scaled UI Amount Extension) and expose `uiMultiplier()`, and when that multiplier moves, each token stands for a different number of shares while raw balances stay untouched. Since nothing inside an AMM pool or lending position has shifted, those positions carry on working through the corporate action.

**A price feed per asset.** Stock tokens each have a dedicated Chainlink feed. It factors in the multiplier and honors the token contract's pause flag, keeping the last good value for as long as the pause lasts.

**A primary market with restricted access.** Only authorized parties can create tokens. Secondary venues are where end users get them.

**A status check before trading.** Before executing, an application looks up whether the asset can currently be traded.

## Where Selcier tokens fit

Each of those conventions applies to the [Selcier Share Token](/fundamentals/tokenized-share-classes.md), so integrations written for Robinhood Stock Tokens read a Selcier token identically.

| Property             | Selcier Share Tokens                                                  | Robinhood Stock Tokens          |
| -------------------- | --------------------------------------------------------------------- | ------------------------------- |
| Standard             | ERC-3643-compatible ERC-20, with 18 decimals                          | ERC-20 with 18 decimals         |
| Contract scope       | A contract per share class of a company                               | A contract per stock            |
| Splits and dividends | ERC-8056 `uiMultiplier()`, with changes scheduled through a timelock  | ERC-8056 `uiMultiplier()`       |
| Pricing source       | `ValuationOracle` per class, compatible with Chainlink `AggregatorV3` | Chainlink feed per asset        |
| Pausing              | `pause(reason)`, publishing the reason on-chain                       | Pause flag held on the contract |
| Issuance             | Offerings the company runs through `OfferingVault`                    | Authorized participants         |
| Checking tradability | `canTransfer(from, to, amount)`, which gives a reason code            | Lookup of trading status        |

On top of that base, Selcier supplies what a company's own shares require and a third-party token can do without.

**Transfers gated by identity.** On-chain identities holding signed claims are linked to all holder wallets. For a transfer to settle, both sides must be verified and each rule the company has switched on must pass. [Verified holders](/fundamentals/verified-holders.md) and [Compliance modules](/fundamentals/compliance-modules.md) go through this.

**Governance by the issuer.** Configuration sits under a timelocked multi-sig controlled by the company, and holders of the token can cast votes on-chain. Read [Shareholder voting](/fundamentals/shareholder-voting.md) for more.

**A dated valuation, not a live quote.** Continuous market prices do not exist for private companies. What Selcier publishes instead is a [Reference Valuation](/fundamentals/valuation-publishing.md), always labeled with its source and date, and never shown as if it were a live market price.

**Liquidity under company control.** Secondary trading takes place in [Liquidity Windows](/markets-and-capital/scheduled-windows.md), through [RFQ trading](/markets-and-capital/quote-based-trading.md) and in [permissioned pools](/markets-and-capital/gated-pools.md), and the company must explicitly enable each one.

{% hint style="info" %}
Selcier Share Tokens are permissioned, so sending one to an unverified wallet with a plain ERC-20 `transfer` will revert. Have your integration call `canTransfer` beforehand. Details are in [Supporting Selcier tokens](/build-on-selcier/supporting-selcier-tokens.md).
{% endhint %}


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