Tokenized stock and perps glossary

This glossary defines the tokenized stock terms and perps jargon you need to read an on-chain equity venue’s documentation without guessing. Forty three entries, alphabetical, each one short. Where a term is used differently by different venues, the entry says so rather than pretending there is one standard.

Terms are defined generally, with Arcus used as a worked example where its documentation is specific. Nothing here is financial advice, and where leverage appears, remember that leveraged positions can be liquidated.

A

Attestation

A statement by an independent third party that reserves or holdings exist as claimed, usually an accounting firm checking balances against liabilities on a stated date. An attestation is weaker than a full audit. A promise of future attestation is not an attestation at all.

Auto-deleveraging

A protocol closing profitable traders’ positions to absorb a loss that a liquidation could not cover on its own, usually after the insurance fund is exhausted. Often shortened to ADL. It protects the system’s solvency at the expense of traders who were on the right side. Arcus documents an ADL policy, covered on our liquidations page.

B

Bridge

Infrastructure that moves value between blockchains, typically by locking an asset on one chain and issuing a representation on another. Bridges add a trust assumption and a fee, and they have historically been the most exploited part of crypto infrastructure. Deposits onto a layer 2 almost always involve one.

C

Central limit order book (CLOB)

A matching engine where every resting bid and offer sits in one visible queue, matched by price and then by time. It is the model traditional exchanges use, and Arcus uses it for perpetual futures while quoting spot Stock Tokens through a request-for-quote system instead.

Collateral

The assets backing a leveraged position, which the venue can seize if the position moves far enough against you. Arcus takes USDG as collateral and also allows Stock Tokens, which stacks two risks, because the collateral can fall in value while the position is losing.

Cross margin

A margin mode where all your positions draw on one shared pool of collateral. It uses capital efficiently and it means a loss in one market can liquidate a position in an unrelated one. The alternative is isolated margin.

Custodian

The regulated institution holding the real securities behind a tokenized equity. Backed’s documentation describes its underlying securities as held with regulated custodians under a bankruptcy-remote structure in segregated accounts. Arcus Stock Tokens are issued by Bitstamp Global Ltd, which holds the underlying securities.

D

Dividend

A cash distribution from a company to its shareholders. Tokenized equity holders are not shareholders, so treatment varies: Backed reinvests dividends into additional units of the same asset so balances rise, while Arcus says its Stock Tokens carry no dividend claim as such. Check the issuer’s policy specifically.

E

Embedded wallet

A self-custodial wallet created inside an application, with keys secured by the provider’s infrastructure rather than a seed phrase the user writes down. Arcus onboards through Privy embedded wallets using email or social login. The convenience is real and so is the dependency on the provider.

F

Funding rate

A recurring payment between long and short holders of a perpetual future that keeps the contract price near the index price. Longs pay shorts when the perp trades above the index, and the reverse below it. On equity perps it also absorbs cost of carry, so holding costs compound.

G

Gas

The fee paid to a blockchain for executing a transaction. On Robinhood Chain gas is paid in ETH, which you must bridge in separately from your trading collateral. Running out of gas is the most common reason a transaction fails, as our troubleshooting page explains.

I

Index price

A reference price for an asset, aggregated from outside markets by an oracle rather than produced by the venue’s own order book. It anchors the funding rate and feeds the mark price. A thin or manipulable index is a direct risk to everyone trading against it.

Insurance fund

A protocol-managed reserve that pays counterparties for liquidations which would otherwise leave a shortfall. Arcus describes one without publishing its size. An insurance fund sits between an underwater liquidation and auto-deleveraging, so an undisclosed size means an undisclosed buffer.

Isolated margin

A margin mode where each position has its own ring-fenced collateral, so a liquidation cannot spread to your other positions. The trade-off is that an isolated position is liquidated sooner because it cannot draw on the rest of your balance. Arcus shipped isolated positions on 9 September 2026.

L

Layer 2

A blockchain that processes transactions itself and posts results to a base chain, usually Ethereum, which provides settlement security. Fees are lower and throughput higher than the base chain. Robinhood Chain is an Arbitrum-based Ethereum layer 2, described on our Robinhood Chain page.

Leverage

Trading a position larger than your collateral, expressed as a multiple. Arcus allows up to 50x on perps depending on the market. At 50x, a 2% adverse move wipes out the margin behind the position. Leveraged positions can be liquidated and most leveraged traders lose money.

Liquidation

The forced closure of a leveraged position when its collateral no longer covers losses, triggered on the mark price. You keep the loss and usually pay a fee on top. It is the defining risk of perps trading and it does not apply to a spot token held plainly.

M

Maker

A trader whose order rests in the book and is filled by someone else, adding liquidity. Venues charge makers less than takers, or pay them. Arcus set perps maker fees to zero for tiers 0 to 4 for the duration of beta, which is explicitly temporary.

Mark price

The venue’s own fair value for a contract, normally derived from the index price with smoothing applied. It is what triggers liquidations, stop-losses and take-profits, which is why it matters more than the last traded price. Arcus triggers stop and take-profit orders on mark price.

Market maker

A firm that quotes both a bid and an offer continuously, profiting from the spread while carrying inventory risk. In a request-for-quote system, market makers compete to fill each order. Their quotes widen when hedging is harder, which is why spreads on stock tokens worsen outside exchange hours.

MEV

Value extracted by whoever orders transactions in a block, through front-running, sandwiching or reordering. Short for maximal extractable value. It is a hidden cost on any public blockchain trade. Arcus documents an anti-MEV mechanism, discussed on our security page.

O

OCO order

A pair of linked orders where filling one cancels the other, typically a take-profit above and a stop-loss below an open position. Short for one cancels the other. Arcus does not publish OCO support in its documented order types, so treat it as unconfirmed.

Open interest

The total value of contracts currently open in a market, counting each contract once rather than summing trades. It measures how much capital is actually committed, where volume measures churn. Rising price with flat open interest suggests positions closing rather than new conviction.

Oracle

A service that brings outside data onto a blockchain, most importantly prices. Every stock perp and every tokenized equity peg depends on one. Chainlink was integrated on Robinhood Chain from day one. An oracle failure or manipulation can liquidate positions that were never actually wrong.

P

Perpetual future

A derivative tracking an asset’s price with no expiry date, held open indefinitely and kept near the index price by funding payments. You own a contract rather than the asset. Our comparison of stock perps and spot tokens sets out what that changes.

Proof of reserves

Published evidence that an issuer or venue holds the assets backing what it has issued, ideally verified by a named third party on a stated cadence. Backed publishes proof of reserves through its own portal. Arcus describes reserves as intended to be publicly attestable, with no attestor or link published.

R

Reduce-only

An order flag meaning the order can only shrink an existing position, never open or increase one. If a fill would add exposure, the venue trims or cancels it. Reduce-only is among the order types Arcus documents at launch, listed on our order types page.

Request for quote (RFQ)

A trading model where you ask market makers for a price on a specific size and they compete to fill it, rather than taking whatever sits in an order book. Arcus quotes spot Stock Tokens this way and charges no exchange fee, putting the cost in the quote and the spread.

Rollup

A layer 2 design that batches many transactions, executes them off the base chain and posts compressed data or proofs back to it. Optimistic rollups assume validity and allow a challenge window. Arbitrum-based chains, including Robinhood Chain, use the optimistic model.

RWA

Real-world asset. Any off-chain asset represented on a blockchain: equities, bonds, commodities, property, credit. A stock perp referencing an equity index counts as an RWA market even though no share is held. Arcus listed 35 RWA perps alongside 95 Stock Tokens at launch.

S

Self-custody

Holding your own private keys, so no venue can freeze, lend or lose your assets. Arcus says it never holds your funds or keys. The cost is that mistakes are final: a wrong address or a lost key has no support queue behind it.

Slippage

The difference between the price you expected and the price you got, caused by the book moving or being too thin for your size. It widens with order size and with illiquidity. Stock token slippage grows outside US market hours, as Arcus states for its own spot market.

Socialised loss

A mechanism spreading an unrecoverable liquidation shortfall across profitable traders in a market once the insurance fund cannot absorb it. It is the final backstop in a perps system. Arcus documents a socialised-loss policy alongside auto-deleveraging.

Spread

The gap between the best bid and the best offer, which is the immediate cost of entering and leaving a position. On a zero-fee venue the spread is where the cost lives. Our fees page treats spread and gas as the real cost of 0% spot trading.

Stablecoin

A token designed to hold a fixed value, usually one US dollar, backed by reserves or by a mechanism. On-chain equity venues quote and settle in stablecoins so that profit and loss is not also a bet on crypto. USDG is the one Arcus uses.

Stop-loss

An order that triggers a market or limit order once price reaches a chosen level, intended to cap a loss. Arcus triggers stop-losses on mark price. A stop does not guarantee a fill at the level: in a fast move it can execute materially worse.

T

Take-profit

An order that closes a position once price reaches a chosen favourable level, so the exit does not depend on you watching. Arcus documents take-profit orders triggered on mark price, alongside stop-loss, stop-market, stop-limit, market, limit and reduce-only.

Taker

A trader who fills an order already resting in the book, removing liquidity and paying the higher fee tier. Arcus perps taker fees start at 0.045% at the base tier, halved to 0.0225% for the duration of beta, falling through six volume tiers.

Tokenized equity

A blockchain token representing a share that an issuer holds through a custodian. The SEC staff statement of January 2026 reiterated that securities laws apply whether a security is recorded traditionally or on-chain. Our tokenized stocks explainer covers the structure and its failure modes.

Transfer agent

The entity maintaining the official register of a company’s shareholders, handling share issuance, transfers and corporate actions. Tokenized equity holders do not appear on it. That absence is the precise reason a token carries no voting rights and no direct dividend claim.

TWAP

An execution strategy slicing a large order into pieces over a set period to approach the time-weighted average price and reduce market impact. Short for time-weighted average price. Arcus does not publish TWAP support in its documented order types, so treat it as unconfirmed.

U

USDG

The Paxos Labs stablecoin used by Arcus as the quote currency and as perps collateral, following a partnership announced on 21 July 2026. Every funding route into Arcus converts to USDG. Holding it means holding exposure to Paxos Labs’ reserve management, which is a counterparty risk like any other.

V

Voting rights

A shareholder’s right to vote on company matters. Tokenized equities almost never carry them: Backed’s documentation says its tokens do not convey shareholder rights such as voting rights, and Arcus says the same about Stock Tokens. If voting matters to you, hold the share through a broker.

Using this list

Most arguments about on-chain equity trading dissolve once the terms are pinned down. A perp and a tokenized stock both track Nvidia and share almost nothing else. A 0% fee and a cheap trade are different claims. An intention to attest reserves is not an attestation.

For the longer explanations, see what Arcus is, how its fees work, what its Stock Tokens actually are and the alternatives if your country is blocked.