Reflection Stock Tokens

Reflection is a platform where you can purchase and redeem stock tokens. A stock token is a crypto token that represents a share of stock in a publicly traded company. The price at which a stock token can be bought or sold on our site will always match the price of the associated stock, within a small margin (defined later). Stock tokens are purchased using stablecoin, and likewise, when sold, they are redeemed for stablecoin; they cannot be purchased with or redeemed for cash.

Holding a stock token is similar to holding a share of stock; in both cases, the holder stands to make a profit or lose money as the price of the stock goes up or down. However, the holder of a stock token does not actually own the stock and therefore does not have any of the rights of stock ownership, such as voting rights. The only right of the token holder is the right to redeem the token for stablecoin on our site at a price which is at or near the current market price of the underlying stock.

This type of system is known as asset tokenization. The most important question about this platform or any other platform which tokenizes an asset, is: after a user has purchased some tokens, how can he or she be assured that when they come back to the platform in two weeks, two months, or two years, Reflection will be able to buy back the tokens at the then-current stock price? After all, the stock price may have doubled, tripled, or gone up ten-fold by then. Where is that money coming from to buy back the tokens?

The answer is: when you purchase a stock token on Reflection, Reflection will, at that moment, purchase the underlying stock and hold it in our brokerage account until such time as you decide to redeem your token. The order to purchase the stock is submitted electronically and automatically. If we can’t purchase the stock at the time of your transaction, the transaction is aborted. In this way, all stock tokens that we issue will be backed one-to-one by shares of the underlying stock. So, the stock price can go up or down by any amount--it has no effect on our ability to redeem your stock token. When you come to redeem, we will sell the stock and use the sale proceeds to buy back the token.