How PARE works.

[01]The split

Robinhood Chain Stock Tokens don't pay cash dividends. When the underlying pays one, it is auto-reinvested and the token's on-chain multiplier (uiMultiplier, ERC-8056) rises — your raw balance never changes, but each token represents more shares. That growth is a yield stream, and PARE splits it off.

Deposit a Stock Token and PARE mints two ERC-20s, one series at a time (asset × maturity date):

• PT (pAAPL-MAR27) — the stock with the dividends removed. Trades under spot; redeems the full baseline position at maturity. A zero-coupon bond wearing an equity.
• YT (yAAPL-MAR27) — every dividend the position earns before maturity, and nothing else. Costs a fraction of the share price; no leverage, no margin, no liquidation — worst case it decays to the drip actually paid.

Merge is the anchor: PT + YT always recombines into the underlying token, in full, for free, at any time — before and after maturity. That exit is what keeps PT priced honestly.

[02]Where this comes from

PARE is not a new financial idea — it is a tokenized rebuild of structures that have traded on Wall Street for four decades. Separating an asset from its income stream is one of the oldest, most proven trades in fixed income and equities.

• Treasury STRIPS (1985–today). The US Treasury lets dealers separate a bond into its principal and its individual coupons; each piece trades on its own. The principal-only STRIP trades at a discount and redeems at par — a multi-trillion-dollar market that runs to this day. PT is the direct analog: the asset with the income removed, priced under spot, redeeming the full baseline at maturity.
• PRIMES & SCORES (1983–1992). The closest ancestor, and it was equities. The Americus Trusts accepted blue-chip shares — AT&T, Exxon, GM, Coca-Cola — and issued two AMEX-listed claims against them: the PRIME carried the dividends, the SCORE carried price appreciation, and the pair could be recombined into the share. The Tax Reform Act of 1986 made new trusts uneconomic and the existing ones ran off by 1992. The structure died of tax law, not of market failure.
• Dividend futures & swaps (2008–today). Index and single-stock dividend futures trade on Eurex and CME, with dividend swaps OTC — a deep institutional market in exactly what YT holds: the realized dividend stream over a fixed term. It sits behind ISDA agreements and broker minimums; retail has never had access. YT is that instrument as an ERC-20.

What PARE changes is the rails, not the idea: the claims are ERC-20s over tokenized stocks, the split is self-service, the accounting is on-chain through the token's own ERC-8056 multiplier — and unlike the Americus Trusts, which only recombined round lots through the trust, PT + YT merges back to the underlying at par, free, at any time.

[03]The math

The accountant tracks a dividend index d that grows only with dividend reinvestments (stock splits move a separate factor and change nothing here). Let d0 = the index when the series opened and dT = the index at maturity.

Because PT + YT redeem to exactly what was deposited, the vault is always fully collateralized by construction — it holds precisely the raw tokens deposited, and a stock split scales everyone's share exposure through the token's own multiplier without touching d0 or dT.

[04]Fees

One line: thin fee in the door, thin slice of the yield. Nothing on exit, nothing on price exposure.

[05]Dividends vs stock splits

The multiplier rises for both dividend reinvestments (adds value → belongs to YT) and stock splits (value-neutral — the share price offsets). Telling them apart is the protocol's one hard problem, and it is enforced on-chain:

• A change classifies as a dividend only when the growth is small: 0 < r−1 ≤ 3%.
• A change classifies as a split only when it is a clean small-integer ratio (2:1, 3:2, 1:10…) at least 20% from 1.
• The two bands cannot overlap, so a keeper can rob neither side — misclassification attempts revert.
• Anything in between — special dividends, composites — resolves only through a guardian behind a 2-day public timelock, with free merge as everyone's exit in the meantime.

Every classified event is public — the terminal's ledger shows each one with its ratio and date.

[06]Lifecycle

A series runs ACTIVE → MATURED → SETTLED. While active: split, merge, trade. At the maturity timestamp the series is matured; anyone may then call settle() — it is permissionless, but it refuses to run until every multiplier change is classified, freezing dT honestly. Once settled, PT and YT redeem at the amounts above. Merge keeps working through all three states.

[07]Risks, plainly

• Unaudited, capped. The launch vault holds at most a hard-capped amount of stock tokens (shown in the terminal), bounding the blast radius until the audit completes. The adversarial test suite is public in the repo.
• Issuer trust. The multiplier is set by Robinhood Assets (Jersey) Ltd. YT is a claim on the issuer's declared dividend reinvestment, not a raw claim on the underlying equity.
• Classification edge cases. Gap-band events settle at guardian discretion behind the timelock. If you dispute a pending resolution, merge out — it is always free.
• Liquidity. Early pools are thin. Merge and redemption never depend on pools.

[08]Contracts

Contract source will be verified on the block explorer at the addresses above.