Written by: Vaidik Mandloi

Translated by: Chopper, Foresight News

Nowadays, buying stocks can be executed instantly, but the various rights and interests processes that follow, such as dividends and stock splits, remain chaotic and cumbersome.

When Netflix and Apple announce dividends, the funds do not go directly to investors' accounts. It goes through a decentralized process: the Depository Trust Company (DTC), brokers, and other intermediaries each rely on their internal ledgers to calculate dividends and later reconcile the data.

This type of operation is collectively referred to as corporate actions. The entire financial industry spends as much as 58 billion dollars each year managing related processes, with most costs consumed in multiple data reconciliations to ensure that independent ledger information is synchronized. This has been a persistent pain point in the industry for 40 years, which has not been automated. However, the new on-chain token standard holds the promise of fundamentally solving this problem at its root.

Why has the traditional system been unable to resolve this pain point?

I mentioned in a previous article that in 1968, the processing volume of paper stock certificates on Wall Street was completely overloaded, forcing exchanges to shut down every Wednesday. Subsequently, the DTC established a centralized custody system, transforming physical stocks into ledger-like records, thereby perfectly resolving the securities clearing and settlement dilemma.

However, there is a fundamental difference between corporate actions and settlement: settlement is a one-to-one transaction, where a single buy-sell deal only involves the two parties; whereas dividends and stock splits are corporate actions that involve one-to-many business, impacting all shareholders with a single announcement.

Due to the dispersion of equity registration across the complete chain of intermediaries, from transfer registration organizations to underlying brokers, each party has to calculate rights separately based on their independent databases, followed by repeated reconciliations, leading to conflicts.

Let us break down the existing process with an example. Suppose Apple declares a dividend of 0.25 dollars per share. The dividend funds do not go directly to retail investors; they are first allocated in full to the transfer registration agency (such as Computershare, the official shareholder registry custodian).

However, ordinary investors’ names do not appear on the official registry; all shares are uniformly registered under the DTC nominee Cede & Co. Therefore, the registration agency only pays dividends to the DTC. The DTC then splits the corresponding amounts according to its own ledger and allocates them to its custodian banks (such as Bank of New York Mellon); the custodian bank then splits the funds and distributes them to cooperating brokers; finally, your broker (like Fidelity) retrieves its own customer data to calculate how much dividend each person should receive and records it.

The entire process involves five independent institutions that each repeatedly compute the same distribution of dividends based on non-communicative databases.

Even more unreasonable is that the data updating among each party's ledger is not synchronous. The asset management firm performs corporate actions on the ex-dividend date, but custodians typically do not distribute until weeks later on payment dates. During this period, brokers may falsely display that you hold the corresponding stocks, and traders can even sell shares that have not actually been credited to their accounts.

There are about one million corporate action events worldwide each year, each having to navigate this fragmented chain, incurring a massive processing cost of 58 billion dollars. The high costs, in fact, create inertia in the industry, and parties lack the motivation for proactive optimization.

The roots of this systemic issue lie in the data format and the structure of interest distribution. After Apple issues a dividend announcement, it only submits documents to the US SEC and releases a press release externally, using a non-fixed format SWIFT text that machines cannot automatically recognize or process.

As of today in 2026, the stock market can clear tens of trillions of dollars' worth of transactions in seconds, but dividend and stock split announcements still circulate in non-machine-readable formats such as PDFs or copied and pasted texts.

There are indeed machine-readable data standards available, but the XBRL standardized messaging technology has been around for over a decade. However, the screening of chaotic announcements and extraction of standardized effective data has long been monopolized by Bloomberg and S&P. These two institutions employ hundreds of analysts to manually interpret vague announcement statements and organize standardized data for downstream institutions. S&P Global manually verifies and covers 1.4 million corporate action announcements across 170 countries each year. If publicly listed companies uniformly issued machine-readable standardized announcements, these data service providers would see a significant shrinkage in their core business. They have the greatest ability to drive reform in source data standards, yet they have become the largest obstacle instead.

On the other hand, companies like Apple do not bear any processing costs; they only need to submit documents without responsibility, with all costs borne by downstream intermediaries. Industry associations have proposed that issuers adopt standardized messages, but companies have clearly stated they would only comply if incentives are offered.

Financial infrastructure upgrades are rarely driven by the logic of "increasing efficiency"; major industry crises are usually required to break the inertia of existing systems and push for change. Unfortunately, corporate actions have never encountered systemic risks significant enough to compel the entire industry to reform. While related costs total substantial amounts, the allocation per institution is limited, and no single entity has the motivation to lead unified reform.

ERC-8056: A New On-Chain Token Standard

If the traditional system cannot resolve the problems internally, can we completely bypass the existing outdated chain using blockchain? The ERC-8056 new token standard provides a solution.

ERC-8056, introduced by Robinhood in collaboration with Chris Ridmann of Superstate, is a balance multiplier display standard adapted for ERC-20 tokens. The traditional model for stock splits requires minting a large number of new tokens; however, this standard only adjusts the display multiplier on the ledger without issuing new tokens. For example: if you hold 100 tokens and undergo a 4-for-1 stock split, your wallet automatically updates the displayed number of shares, and the contract itself does not mint any new tokens, preserving the original holdings and transaction history without the need for transfers or reconciliation.

With just one rule in a smart contract, the entire process of separate accounting and repeated reconciliation done by the five institutions in the traditional system can be replaced.

This programmable logic can be reused for all corporate actions that are difficult to automate in traditional systems. Dividends only need to invoke the contract once to uniformly distribute funds to all on-chain shareholders, eliminating the need for multi-tier distribution and staggered updates across ledgers; rights issues, shareholder proxy voting, and other services can also be encoded as on-chain rules, relying on a single authoritative equity register for automatic execution.

For forty years, corporate actions have always relied on manual processes, with the core issue being the repeated calculations and reconciliations of five independent databases. ERC-8056 simplifies the entire value chain into a programmable layer.

It is essential to distinguish between two types of tokenized stock models to avoid misconceptions; some tokenized products are merely digital mirrors of traditional stocks. For instance, Robinhood issues tokenized stocks for Apple and Tesla, where the underlying real stocks are stored in traditional broker accounts, and the tokens merely add a sixth layer of ledger above the original five layers of intermediaries, not solving the root reconciliation problem.

The xStocks on the Solana public chain adopts a similar architecture with more pronounced product design flaws. It holds a majority of the tokenized stock market share on Solana, but user dividends are forcibly reinvested and cannot be withdrawn as cash; the contract has a built-in permanent authorization feature that allows issuers to unilaterally transfer tokens from user wallets. Such so-called “decentralized” equity products provide issuers with control over assets that far exceeds those of traditional brokers.

Only a native on-chain issuance model can fundamentally resolve the problem, making blockchain itself the official shareholder ledger. Superstate is a representative company in this sector, having registered as a formal transfer registration agency with the US SEC, no longer maintaining an independent database that periodically reconciles with DTC; equity ownership is directly recorded on-chain.

Galaxy Digital recently announced that it will utilize Superstate's native issuance solution to tokenize all its equity on Solana. After the project is implemented, the information of all Galaxy Digital shareholders will be natively recorded on-chain, and dividends will not require passing through multiple intermediaries; the entire intermediary chain will vanish.

Ian Grigg posited the triple entry accounting theory in the early 21st century, aligning perfectly with the value of native on-chain issuance. He proposed that when both parties complete a transaction, a verifiable encrypted record is generated that is jointly manageable and not under the control of any single party, which is the third accounting entry.

Since Luca Pacioli established double-entry bookkeeping in 1494, it has been foundational to financial accounting globally. The triple-entry system is the first significant upgrade to this system since its inception, relying on a single authoritative shared ledger that completely eliminates the need for bilateral reconciliations.

The logic of the existing system is “handle the business first, then reconcile later,” concentrating all costs and risks in the reconciliation step. By realizing instant settlement based on a shared ledger, the reconciliation step will directly disappear, not merely reducing costs but fundamentally eliminating the parts that generate those costs.

The good news is that global regulators are rapidly adapting to this new model. The Depository Trust Company (DTCC) will issue a no objection letter by December 2025, clearing the barriers for tokenized securities to enter the existing clearing system; Nasdaq has also been approved to engage in tokenized securities business, and traditional exchanges have included native on-chain equity issuance in their long-term planning.

The opening of this article mentioned that corporate actions have stagnated for 40 years, solely because financial infrastructure reforms require significant crises to drive change. But this time, the industry may not need to wait for a crisis, as companies directly issue equity on-chain, with blockchain serving as the official transfer registration ledger without the cumbersome task of fixing the outdated five-layer database system.

The industry will directly build a new alternative solution, eliminating traditional processes that incite high reconciliation costs. The speed of this transformation will depend on the progress of regulatory completion in various countries and how many issuing companies are willing to make changes.