Article by: Vaidik Mandloi
Compiled by: Chopper, Foresight News
Today, buying stocks can be executed instantly, but subsequent corporate actions such as dividends and stock splits remain disorganized and cumbersome.
When Netflix or Apple announce dividends, the funds are not deposited directly into investors' accounts. Instead, they go through a decentralized process: multiple intermediaries such as the Depository Trust Company (DTC) and brokerages each use their own internal ledgers to calculate dividends, then reconcile and synchronize the data afterward.
These activities are collectively known as corporate actions. The entire financial industry spends as much as $58 billion annually processing these procedures, with the majority of costs consumed by multi-party data reconciliation to ensure synchronization across independent ledgers. This has been a persistent industry pain point for 40 years that has never been fully automated. Now, a new on-chain token standard holds the potential to fundamentally resolve this issue at its root.
Why has the traditional system never been able to solve this pain point?
As I mentioned in my previous article, in 1968, the volume of paper stock certificates processed on Wall Street became completely overwhelmed, forcing exchanges to close every Wednesday. Subsequently, the Depository Trust Company (DTC) established a centralized custody system, converting physical stocks into book-entry registration, perfectly resolving the challenges of securities clearing and settlement.
However, corporate actions and settlement differ fundamentally: settlement is a one-to-one transaction, where a single trade involves only the buyer and seller; whereas corporate actions such as dividends and stock splits are one-to-many processes, where a single announcement simultaneously affects all shareholders.
Because equity registration is scattered across the entire intermediary chain—from the transfer agent down to the underlying brokers—each party must independently calculate entitlements based on their own separate databases, followed by repeated reconciliations, leading to discrepancies.
We will fully break down the existing process with an example. Suppose Apple announces a dividend of $0.25 per share. The dividend funds will not be distributed directly to retail investors; instead, the full amount is first transferred to the transfer agent (such as Computershare, the official shareholder registry keeper).
However, the official register does not list individual investor names; all shares are uniformly registered under DTC’s nominee entity, Cede & Co. Therefore, the transfer agent will only distribute dividends to DTC. DTC then splits the corresponding amounts based on its internal records and transfers them to its custodian banks (such as BNY Mellon); the custodian banks further allocate the funds to their partner brokerages; finally, your brokerage (such as Fidelity) independently retrieves its own client data, calculates each individual’s dividend entitlement, and credits the amount to their account.
The entire process involves five independent institutions, each independently calculating the same dividend distribution based on separate, non-interconnected databases.
Even more unreasonable is the lack of synchronization in ledger updates across parties. The asset manager will execute corporate actions on the ex-dividend date, but the custodian actually only makes distributions weeks later on the payment date. During this period, the broker’s records falsely show you holding the corresponding shares, allowing traders to even sell shares that have not actually been credited to their accounts.
Globally, there are approximately one million corporate actions events each year, each requiring completion of this fragmented process, generating $58 billion in massive processing costs. The high costs instead foster industry inertia, leaving all parties with little incentive to proactively optimize.
The root of this system's problem lies in the data format and the distribution of interests. After Apple issued its dividend announcement, it only submitted documents to the U.S. SEC and released a press statement; the announcement used an unstructured SWIFT text format, which machines cannot automatically recognize or parse, and thus cannot be integrated into systems for automated processing.
As of 2026, stock markets can settle trillions of dollars in daily trading within seconds, yet dividend and stock split announcements still circulate as non-automatically-parseable PDFs and copy-pasted text.
The industry has not lacked machine-readable data standards—XBRL standardized messaging technology has been around for over a decade. However, the business of filtering through chaotic announcements and extracting standardized, actionable data has long been monopolized by Bloomberg and S&P. These two firms employ hundreds of analysts to manually interpret ambiguous disclosures and organize standardized data for downstream institutions. S&P Global alone manually verifies 1.4 million corporate action announcements across 170 countries each year. If listed companies uniformly published machine-readable standardized disclosures, the core business of such data providers would shrink dramatically. Despite having the greatest capacity to drive reform of data standards at the source, they have instead become the biggest obstacles.
On the other hand, issuers like Apple bear no processing costs whatsoever and are only required to complete document filing, shifting all costs to downstream intermediaries. The industry association once proposed that issuers adopt standardized messages, but companies clearly stated they would only comply if accompanied by corresponding incentives.
Financial infrastructure rarely evolves driven by the logic of "improving efficiency"; only major industry crises can break the inertia of existing systems and drive change. Unfortunately, corporate behavioral activities have never generated systemic risks severe enough to force industry-wide reform. Although the total cost is substantial, when distributed across individual institutions, the burden on each is limited, leaving no single entity motivated to lead unified reform efforts.
ERC-8056: A New On-Chain Token Standard
Since the traditional system cannot solve the problem internally, can blockchain completely bypass the existing outdated infrastructure? The ERC-8056 novel token standard provides a solution.
ERC-8056, introduced by Robinhood in collaboration with Superstate’s Chris Ridmann, is a balance multiplier display standard compatible with ERC-20 tokens. Traditional stock splits require minting large quantities of new tokens; this standard only adjusts the displayed balance multiplier without issuing additional tokens. For example: if you hold 100 tokens and undergo a 4-for-1 split, your wallet will automatically update the displayed balance, while the contract itself mints no new tokens—your original holdings and transaction history remain fully intact, with no need for transfers or reconciliation.
A single smart contract rule can replace the entire process of five separate institutions performing independent accounting and repeated reconciliations in traditional systems.
This programmable logic can be reused for all corporate actions that are difficult to automate in traditional systems. Dividends require only a single contract call to distribute funds uniformly to all on-chain shareholders, eliminating the need for multi-tiered distribution and staggered ledger updates. Rights issues, shareholder proxy voting, and other processes can be encoded as on-chain rules and automatically executed using the single authoritative share register.
For forty years, company operations have relied on manual processing, with the core root cause being five independent databases performing redundant accounting and post-hoc reconciliation. ERC-8056 simplifies the entire value chain into a single programmable layer.
Here, it is important to distinguish between two types of tokenized stock models to avoid misconceptions: some tokenized products are merely digital replicas of traditional stocks. For example, Robinhood issues tokenized shares of Apple and Tesla, where the underlying assets are actual stocks held in traditional brokerage accounts; the tokens merely add a sixth layer of ledger on top of the existing five-layer intermediary system, without resolving the fundamental reconciliation issue.
xStocks on the Solana blockchain uses a similar architecture, with more pronounced product design flaws. It dominates the majority of the tokenized stock market share on Solana, but user dividends are forcibly reinvested and cannot be withdrawn as cash; the contract includes a permanent authorization feature allowing issuers to unilaterally transfer tokens from users’ wallets at will. Such so-called “decentralized” equity products grant issuers far greater control over assets than traditional brokerages.
Only the native chain-based issuance model can solve the problem at its root, making the blockchain itself the official shareholder register. Superstate is a representative company in this space; it has registered as a legitimate transfer agent with the U.S. SEC and no longer maintains separate databases for periodic reconciliation with DTC—share ownership is recorded directly on-chain.
Galaxy Digital recently announced that it will tokenize all of its equity on Solana using Superstate’s native issuance solution. Once implemented, all Galaxy Digital shareholder information will be natively on-chain, dividends will no longer require multiple intermediaries, and the entire intermediary chain will be eliminated.
Ian Grigg proposed the triple-entry accounting theory in the early 21st century, perfectly aligning with natively on-chain issued value. He proposed that when two parties complete a transaction, they generate a cryptographically verified record that is mutually verifiable and not controlled by either party alone—the third entry.
Since Luca Pacioli established double-entry bookkeeping in 1494, it has remained the foundation of global financial accounting. Triple-entry bookkeeping represents the first major upgrade to this system, eliminating the need for bilateral reconciliation by relying on a single authoritative shared ledger.
The current system logic is “process business first, then reconcile later,” with all costs and risks concentrated in the reconciliation process. By enabling real-time settlement through a shared ledger, the reconciliation step will be eliminated entirely—not merely reducing costs, but removing the source of those costs at its root.
The good news is that global regulators are rapidly adapting to this new model. The Depository Trust Company (DTC) issued a no-action letter in December 2025, removing barriers to integrating tokenized securities into existing clearing systems; Nasdaq has also been approved to offer tokenized securities, and traditional exchanges have incorporated native on-chain equity issuance into their long-term plans.
The article opens by noting that corporate behavior has stagnated for 40 years, as financial infrastructure reform has traditionally required a major crisis to drive change. But this time, the industry may not need to wait for a crisis—companies can directly issue equity natively on-chain, with blockchain serving as the official transfer registry, eliminating the need to painstakingly overhaul outdated five-layer database systems.
The industry will directly build entirely new alternatives to eliminate traditional processes that generate high reconciliation costs. The speed of this transformation depends on the pace of regulatory development in various countries and how many issuing entities are willing to make changes.