# S4 Token-to-Share Transitions — How the Probity Institute Handles Them
*Public explainer. Descriptive only — not advice, not a valuation opinion.*
## What is an S4 transition?
An S4 transition is when a governance token's holders vote to convert their tokens into shares of a real corporate entity — equity in a company, rather than a claim enforced by smart contracts. When the conversion executes, the token is exchanged out of existence: the governance rights the token represented end, because the referent (the token contract and its powers) is gone.
Two live precedents show the range of structures:
- **Across (ACX, 2026):** holders chose between shares in a Delaware corporation or a cash buyout at a fixed premium over the recent market price — an exit at a stated, priced floor.
- **Centrifuge (CFG, 2026, voted):** a 1:1 conversion into private-company equity with no cash alternative — the only exit is the (illiquid) equity itself.
## The transition states, as the feed reports them
| State | Meaning | What happens to the determination |
|---|---|---|
| `S4-pending` | A conversion has passed governance but has not begun executing (no redemption portal, no exchange of tokens). | The determination is frozen at its last verified state. The DAO is not re-scored mid-exit. |
| `structure-s4-consummated` | The conversion is executing: tokens are actively being exchanged for equity. | The determination is frozen and flagged `S4_CONSUMMATED` with the date the token rights referent ended. Retained for historical reference. |
| Archived row | The above, after the quarterly recheck processes it. | Removed from tier rankings and the MVI (index), kept in the full matrix marked archived. |
## Why determinations stop rather than score to zero
A GSA determination is a verified statement that specific governance rights are enforced by a specific smart contract at a specific block. Once tokens are being exchanged out of existence, there is no future block at which those rights can be exercised — the statement has no referent left to describe. Freezing preserves the last true statement; scoring to zero would replace a fact about the past with a fiction about the present.
## Why rankings drop the entity
Tier rankings and the index are forward-looking: they answer "what could a holder do next quarter?" A token mid-extinguishment cannot do anything next quarter. Keeping it in a forward-looking table would misstate both the ranking and the remaining universe. The row stays visible in the matrix — archived, with its frozen determination — so historical comparisons and citation hashes remain stable.
## How to use this when reading the feed
- **`S4-pending` in flags** → the determination is current but frozen; expect no re-score until execution begins or fails. Project forward by checking the proposal's own execution timeline, not the feed.
- **`S4_CONSUMMATED`** → do not use the record for forward-looking decisions; cite it as historical. The entity has left the rankings as of the recheck that processed it.
- **Index integrity** → the feed's `source_dataset.sha256` changes when any of this happens. Pipelines watching the hash pick up the revision automatically.
*Methodology v0.1-frozen governs all verdicts. Scores are free, CC-BY-4.0, descriptive statements about contract-enforced rights — not ratings, not advice.*
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