Dividends, Splits and Corporate Actions

For tokens in your wallet, dividends, splits, mergers and other corporate actions are handled by each token's issuer, under its own terms. Collateral that has joined a pool is held as real shares in Spout's brokerage account, so the rules in the section below apply to it.

How issuers usually reflect them

Dividends

Some issuers pay dividends out; others reinvest them by raising how much of the share each token represents. Withholding tax may apply, depending on the issuer and where you live.

Splits

The issuer adjusts balances, or how much of the share each token represents, so your economic position is unchanged.

Mergers and delistings

The issuer decides how tokens are converted or redeemed.

What this means for collateral on Spout

• Pooled collateral is affected together. Whatever happens to the shares or tokens behind a pool applies to the whole pool, and every position shares the result in proportion to its size.
• Collateral is valued on the real share. Where an issuer changes how much of the share each token represents, Spout values your collateral using the issuer's current ratio.
• An asset can be paused. Around a corporate action, or if an issuer pauses its token, Spout can stop new deposits and borrowing on that asset. Existing positions stay in place, and you can still repay unless repayments are paused (see Circuit Breakers and Pauses).
• Dividends on your collateral are passed to you. Dividends paid on the shares behind a pool are received in Spout's brokerage account and credited to the borrowers in that pool, in proportion to each position. Withholding tax may apply.

If you hold a token in your own wallet rather than as collateral, the issuer's terms apply to you directly.