Coinbase Launches Tokenized Stocks on Base | Jesse Pollak

**David Hoffman** (0:02)
Coinbase tokenized stocks, that's a pretty big announcement. Jesse, welcome back to the podcast.

**Jesse Pollak** (0:07)
Thanks for having me. Excited to be here.

**David Hoffman** (0:09)
Tell me about this announcement. You guys are putting stocks on base, and what are the details?

**Jesse Pollak** (0:12)
Yeah, so I think we think the whole world is going to move on chain, and we're building base to be the blockchain for global finance. And so when you look at the world's assets, one of the biggest asset classes in the world is stocks, equities, and that's what we're doing. We're taking those stocks and equities, we're tokenizing them, we're putting them on base, that makes them 24-7, 365, it makes them globally available, and it makes them instant, fast, cheap to do anything with. And I think the first thing that people are going to start doing is trading.
Now you can trade them in any app, anywhere. But I think that that's really just the beginning. What comes next is people are going to be building, borrowing lending experiences around them, they're going to be building ways for people to build yield, they're going to be issuing meme coins paired with them. We're basically just plugging this massive asset class into the programmable economy that is base and making it so that the world's innovators can now basically build anything with equities. And so I'm super fired up about it. And I think we're going to see a lot of adoption and innovation coming coming along.

**David Hoffman** (1:13)
The product's name is Coinbase, tokenized stocks, pretty straightforward. So there's a token on base, there's a share of a company somewhere, just legally speaking, because we need to brush our teeth, make our bed, do our homework, get the basics out of the way. How are these two things connected, like legally speaking? What's the legal structure here?

**Jesse Pollak** (1:33)
Yeah, well, one of the things that we've really focused on is making it so that these are real one-to-one stocks. And so every tokenized stock has a one-to-one representation that users have a direct claim on. We've done this in collaboration with Abu Dhabi and Alpaca, and we think it's the best model for tokenizing equities. We think that this is going to lead to them being more widely adopted, more trusted by consumers and institutions, and just give better properties to the people who actually hold them. And so this, I would say, is the Coinbase way of doing things.
I was talking with someone and they said, I feel like Coinbase is the Navy. Sometimes we move a little bit slow because you have to get boats around the world to get there, but we're always going to come. And when we come, we're going to come in force, and we're going to be the people that people can always count on to bring the best version, the most trusted version to market. And so that's what we've done with these tokenized stocks.
Super excited to see what people build around them and how that trust leads to more adoption and growth.

**David Hoffman** (2:32)
What about all the nuances of owning a share of a company? So there's like governance rights, investor rights, there's dividends. How are the nuances handled around these things?

**Jesse Pollak** (2:45)
Yeah, absolutely. So on this, you're going to have dividends. You're going to have a direct claim to those.
You're going to have governance rights. So these are going to again be one to one with US stocks. And I think that that is, yeah, that's what we focused on unlocking with this. And I think again, it's going to be a real differentiator for the product in the market.

**David Hoffman** (3:03)
So say I own a dividend paying stock, how do I actually receive the dividend? Does it get like USC gets sent to my wallet or mechanically, how does this work?

**Jesse Pollak** (3:12)
Yeah, so these are, they're set up to be rebasing. And so that basically means that when the dividend comes, it'll basically get credited to the stock token, and the balance will increase basically of how much of the stock it holds. And then there's a multiplier directly in the token, so that if you're kind of a builder who's building a brokerage on top of it, you can show users, hey, you know, you just got this kind of increment that came in and show the like direct one-to-one share, but also the value that your user is having from the dividend.

**David Hoffman** (3:42)
Okay, cool. So that's a slight difference than like your traditional brokerage, where your traditional brokerage would show you like, 75 cents from this dividend from this quarter or whatever. What you guys do is you just take the cash dividends, you buy the Coinbase tokenized stocks, and that gets allocated, everyone's balances get allocated upwards just a little bit.