The securities pass platform market seems to have a new influx of participants every week. Although there are not many securities passes available for trading in the market, we already have more than 50 platforms that are expected to be the future of encrypted securities. In theory, most platforms look very similar, adding a lot of noise to the market. In order to distinguish signals from noise, the securities pass platform must develop its technical capabilities to support more complex products. We don't need to start from scratch; the Ethereum ecosystem provides a rich set of protocols that can be used to easily improve the feature set of the next-generation securities pass platform. This article explores some of the key protocols that are well suited to building some of the key blocks of the securities pass infrastructure.
The goal of this article is not to focus on future features, but to focus on the capabilities of the current generation of use cases and protocols that have some focus and maturity.
- What key functions are necessary to create a securities pass network?
- Local maximal paradox: Is the securities pass permit chain not feasible?
- Broken value creation chain: the value leakage of the securities pass agreement
- Is speed really important for securities-type trading?
- How is practical programmability implemented in the securities pass?
- Securities Pass 2.0 Agreement: Hybrid Securities Pass
So far, the securities pass platform has been working to address two basic issues: compliance and post-issuance management. While these features are important, they are far from adequate to support complex securities issuance (STO). The new STO urgently needs new infrastructure features that are missing in the current securities pass platform ecosystem.
The biggest competitor of the securities pass platform
The current state of the crypto-stock market presents a strange dynamic in which the securities-passport platform does not really compete with itself, but rather competes with custom issuance. Recently, we have seen Provenance and Blockstack's STO announcements, both of which may be built-in (customized) rather than relying on existing platforms. You can of course prove that these are examples, but I think they are a common manifestation of the dynamics of the early application-driven technology market.
The technology market can be divided into two broad categories: infrastructure-driven and application-driven. In an infrastructure-driven market (eg, software-defined networks, quantum computing…), industry development is fundamentally dependent on breakthroughs in infrastructure. On the other hand, for the application-driven market (mobile applications, networks…), the industry's development is not only based on infrastructure breakthroughs, but also based on the development of specific domain use cases. When the infrastructure that supports these use cases is not growing fast enough, it will motivate the market to offer customized solutions to solve the use cases that are not possible with mainstream platforms. In a healthy and competitive application-driven technology market, the value proposition of the platform should eventually catch up with and surpass the early customization platform, but this path is not always clear in the early days.
Another interesting development in the application-driven technology market is that, in most cases, applications tend to drive infrastructure improvements.
For securities passes, the infrastructure provided by the current generation of platforms is still relatively basic. However, in the current state of the crypto-stock market, we have seen that some of the major challenges facing the industry can translate into the immediate function of the next wave of securities pass-through platforms.
Privacy : The current securities pass model in the Ethereum blockchain lacks the access control and privacy levels required for certain securities products.
Identity : Securities Pass requires an interoperable and sounder way to represent the identity of investors and issuers.
Data Access : Querying and accessing relevant encrypted securities data is critical to reporting and compliance requirements.
· Disclosure : Being able to publish and obtain relevant material information is the key to making the securities pass market fair.
· Chain legal agreement : Implement a securities pass agreement on the chain.
Five agreements that help improve the securities pass on the platform in the short term
To avoid confusion, the author lists five protocols for a single feature. This does not mean that these are the only agreements that solve the problem. In fact, they are the simplest ones.
The identity concept in the securities pass-through platform needs to evolve from a simple output of KYC checkpoints to a protocol that supports authentication and access control policies. Blockchain identity is an emerging area of research in the Ethereum community, but there are already some interesting protocols that can be easily adapted to the securities pass:
uPort: uPort has been steadily building a set of protocols and solutions for managing identities in decentralized applications. The current stack is compatible with Ethereum Smart Contracts and can be used in license chain applications
According to regulatory restrictions, securities passes are subject to various privacy requirements. To a certain extent, privacy can be seen as one of the main obstacles to the adoption of securities passes by mainstream people. In the current Ethereum ecosystem, there are a number of agreements that are addressing this challenge:
AZTEC: Aztec provides a zero-knowledge privacy model for Ethereum trading. Aztec combines techniques such as homomorphic encryption and range proving to perform calculations on top of encrypted transactions.
Accessing data generated by the Securities Pass is critical to achieving industry-specific reporting and compliance functions. However, querying smart contract data remains one of the biggest challenges in the blockchain ecosystem. Here are some protocols that might be useful:
· The Graph: It provides a model for querying smart contract information using GraphQL. This feature allows any third-party application to interact with the data generated by smart contracts in a programmable way without having to build any blockchain-specific artifacts.
Securities Pass requires chained data to ensure correct behavior and fair trade. The oracle is part of the blockchain platform and can be connected to data sources on the chain and under the chain. There are currently several agreements focused on implementing oracles in the Ethereum blockchain:
Rhombus: The Rhombus protocol provides a very friendly and flexible programming model for the implementation of the Ethereum oracle. Rhombus can perform oracles on a scheduled or on-demand basis.
Chain legal contract
The premise of implementing a securities pass under the chain remains one of the biggest challenges in the field. The sub-chain and chain dichotomy is still one of the most common obstacles for mainstream people to adopt securities certificates. There are some interesting things in the Ethereum community to address this challenge:
OpenLaw: The OpenLaw protocol provides the foundation for building legally enforceable smart contracts with flexible, programmable models. Many of OpenLaw's building blocks can be immediately applied to securities passes.