Dividends & Stock Splits Technical Overview

High-Level Technical Overview: Rebasing Tokens for xStocks

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xStocks tokens are fully collateralized security tokens. Each token represents an onchain claim to the value of an underlying security, which is held by a regulated securities custodian as collateral for the token.

The underlying security is subject to standard corporate actions (see: ISO 15022 Reference), such as:

• Dividends (DVCA)

• Stock Splits (SPLF)

• Reverse Splits (SPLR)

These events can change the denomination or effective amount of the underlying security:

• Dividends (post-tax) are reinvested into the underlying security, increasing the effective claim per token.

• Splits and reverse splits directly change the unit denomination (e.g., 1 share becomes 2, or vice versa).

As a result, while the token is initially issued with a 1:1 correspondence to the underlying (e.g., 1 AAPLx = 1 AAPL), it must dynamically track the correct collateral amount over time as these events occur.

Shares Model with Dynamic Multiplier

To achieve this, the token implements a shares model with two core parameters:

• Multiplier

• Activation Time (always set in the future at the time of publication)

The multiplier starts at 1.0 on deployment. For each relevant corporate event, the issuer (Backed) publishes a multiplier update that specifies:

• The future activation UNIX timestamp (with second-level resolution)

• The new multiplier value

This defines the ratio between token units and underlying security units, effective from the specified activation time.

Example:

Suppose there is a 1:2 split event scheduled for June 1, 2030. The issuer would publish a multiplier update ahead of the event, specifying an activation timestamp for June 1, 2030, and a new multiplier value of 2.00.

Before the activation, each token represents one unit.

After activation, each token represents two units of the underlying security.

User Balances and UI Expectations

Important behavior:

1. The number of tokens held by each user does not change across the event.

2. The collateralization (i.e., the actual claim per token) is adjusted by the new multiplier from the activation timestamp onward.

3. For Solana-based xStocks, this mechanism utilizes the Scaled UI Amount (scaledUI) feature from the SPL2022 token extensions.

4. Protocol/UI/wallet/dApp: Should always use the multiplier to present the correct exposure and value to the user.

5. Transaction construction and signing: Should always use the raw value (not the scaledUI value).

Synchronization and Transaction Safety

To prevent unexpected outcomes from transactions occurring precisely during a multiplier update activation, we recommend that trading venues and protocols pause all interactions with the token for a brief window (e.g., several minutes) before and after each activation timestamp.

Multiplier Data Access and Integration

For xStocks on Solana, current multiplier information can be obtained:

• Directly from the chain, using the getAccountInfo RPC call.

• Through Solana explorers (see the ScaledUI extension data).

• Via the Backed API:

https://api.backed.fi/api/v1/token/UNHx/multiplierUpdates?network=Solana

Replace UNHx with the relevant xStock ticker symbol.

References and documentation

Corporate actions standard - ISO 15022 Solana Token2022 program - Token-2022 Program | Solana Program Library Docs Scaled UI extension - Scaled UI Amount