Total cost of the wrapper over your hold
The premium is a one-time give-back if the token converges to NAV; the fee accrues the whole time you hold. Together they are how much the underlying share must rise just for the token to match owning the real share. A discount flips the premium line in your favour.
| Cost component | % | On your position |
|---|
Premium sensitivity — what you pay at each entry gap
The same fee drag with different entry premiums. Buying nearer NAV (or at a discount) is most of the battle; the wrapper fee is the small, steady part.
| Entry premium | In band? | Total wrapper cost |
|---|
Tokenized stock vs owning the real share
A tokenized equity buys you three conveniences — 24/7 trading, on-chain settlement, and fractional size — in exchange for three costs. You pay whatever premium the token carries when you buy, you bleed a small continuous wrapper fee, and you take on wrapper risk the real share never has: the issuer and custodian standing behind it, the smart contract holding it, and the venue's liquidity when you try to exit. The premium and fee are what this tool prices; the arbitrage band tells you whether the premium is normal noise or a real dislocation. What it cannot price is the tail: if the issuer or custodian fails, or the token's liquidity evaporates in a sell-off, the discount can blow far past anything mint/redeem would allow — which is the one scenario where a tokenized share behaves nothing like the share it tracks. Treat it as a convenience wrapper, size it accordingly, and prefer buying near or below NAV. See also RWA tokenized treasury yield for the same wrapper-risk lens on T-bill tokens.
The math behind the premium and the drag
Fair value is simple: the token should be worth the real share times the backing ratio, NAV = share × ratio. The premium is how far the token trades from that, (token − NAV) ÷ NAV — positive is a premium you overpay, negative is a discount you underpay. Because authorized participants can mint by delivering a share and redeem by returning one, each for the mint/redeem fee, fair value sits inside an arbitrage band of ± that fee. A premium inside the band is ordinary 24/7-vs-market-hours drift; a premium outside it is either a genuine dislocation that should converge as arbitrageurs step in, or a warning that minting is paused, the venue is illiquid, or the underlying gapped after the token's last print.
The cost of holding has two parts. The premium is a one-time cost: if the token converges to NAV while you hold, you hand back exactly the premium you paid, so it counts once at your position size. The wrapper fee is a flow cost that accrues with time, fee% × days ÷ 365 over your horizon. Add them for the total drag — the hurdle the underlying share must clear before the token position breaks even against simply owning the share. Buy at a discount and the first term is negative, a small edge that the fee slowly eats. None of this includes dividends, which some issuers reflect in the token price and others handle differently, nor the counterparty and contract risks that sit outside any pricing formula.