The reserve

The reserve is the part of this system that lives in the regulated world. It holds real Robinhood Markets, Inc. stock in a real brokerage account, which brings real constraints. This page is explicit about them.

Custody model#

Shares are held in a segregated account in the name of the entity operating the reserve, with the position ring-fenced from operating funds. The vault contract is the on-chain record of how many of those shares back outstanding claims; the brokerage account is where the shares actually sit.

The account is not a smart contract and cannot be made into one. No amount of on-chain design changes the fact that US equity settles through intermediaries. What on-chain design can do is make the accounting public and make discrepancies detectable.

The brokerage partner#

Orders are placed through a licensed broker-dealer. The broker’s role is narrow: execute market orders in a single listed symbol during regular hours and provide statements. The broker does not custody ETH, does not touch the contracts, and has no discretion over when the reserve buys.

The adapter’s settlement destination is fixed at deployment, so rotating brokers is a timelocked governance action rather than an operational convenience. That is deliberate: a mutable settlement destination would make every other guarantee on this page meaningless.

Fractional shares#

A batch rarely converts to a whole number of shares, and an individual holder’s pro-rata slice is almost never whole. The reserve therefore accounts in fractions to eighteen decimals internally while the broker holds whole and fractional positions supported by its own fractional facility.

Rounding always favours the reserve rather than the claimant, by one wei of share. This prevents a dust-claim attack from extracting more than was purchased, at the cost of an economically irrelevant remainder that stays in the pool for the next distribution.

// Entitlement rounds down; the remainder stays with the reserve.
uint256 owed = (accIndex - userIndex[msg.sender]) * balanceOf(msg.sender) / ACC_PRECISION;
require(owed <= vault.unallocatedShares(), "over-allocation");

Proof of reserve#

Two figures should always agree: the share count the vault claims backs outstanding entitlements, and the share count actually held at the broker. The protocol publishes both.

• On-chain. The vault’s share supply and full fill history are readable at any block, with no reliance on a reporting schedule.
• Off-chain. A periodic attestation from an independent accountant confirming the position at the broker, published with the block height it corresponds to.
• Discrepancy handling. Any gap between the two pauses new purchases automatically and is disclosed before it is explained.

What holders own, legally#

This is the most important paragraph in the docs. A claimed entitlement is a contractual claim on shares held by the reserve. It is not registered ownership of Robinhood Markets, Inc. stock. Specifically:

• You are not a shareholder of record.
• You have no voting rights and receive no proxy materials.
• You have no entitlement to dividends. Robinhood Markets, Inc. does not currently pay one, and the protocol makes no commitment about what would happen if that changed.
• You have no direct relationship with the broker and no account there.

BANK itself confers none of the above either, and confers no claim on protocol revenue. It is a memecoin.

Redemption#

Claimed entitlements are transferable on-chain, which means the practical exit for most holders is a secondary sale rather than a redemption. A redemption path — surrendering the claim in exchange for the underlying position being transferred to a brokerage account you control — requires identity verification, because that step crosses into the regulated world.

Redemption is therefore permissioned even though the claim is not. This is an honest asymmetry rather than a hidden one: anyone can hold or trade a claim, and only a verified person can convert one into stock in their own name.

Queueing#

Redemptions settle in the order received and are constrained by settlement cycles at the broker. A redemption requested while the market is closed settles after the next open, like every other equity transaction.

Corporate actions#

A delisting is the terminal case: the reserve cannot buy a security that does not trade. The protocol would stop purchasing, publish the position, and settle outstanding entitlements against whatever the position became.