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Glossary

ERC-884

November 21, 2023 - Around 2 mins mins to read

Understanding ERC-884

ERC-884 is a unique token that represents a specific share in a Delaware company, following the standard set by David Sag. This standard is specifically designed for equity transactions, and in order to possess the token, one must be approved through the smart contract. Additionally, issuers of ERC-884 tokens need to establish an off-chain private database to comply with securities legislation.

Thanks to recent laws, companies in Delaware can now utilize blockchain technology to manage share registrations. ERC-884 aims to take advantage of this technology by designating each token as a share of a corporation formed in Delaware.

ERC-884 incorporates several features to ensure compliance with regulations:

  • Token holders must undergo verification and approval.

There is no separate crowdsale contract for token owner approval; instead, ERC-884 requires approval for all token owners. However, crowdsale contracts can use the approval list to verify eligibility, making it an essential element of the token contract.

  • The corporation can generate a list of shareholders.

According to regulatory requirements, the corporation must be able to generate the shareholder list mandated by Sections 219 and 220 of The Act. Additionally, regulators require information recording and record share transfers.

  • Tokens can only have their full value, no partial value.

Each ERC-884 coin must represent a fully paid, unique, and indivisible share. Partially paid shares do not need to be tracked, and the token does not need to be linked to a specific amount of shares. Knowing that a shareholder holds a certain amount of ERC-884 tokens is sufficient, and individually numbered shares are no longer necessary.

  • Shareholders who have lost their private keys or tokens must transfer them to a new address.

A system must be in place to allow shareholders who have misplaced their private keys or lost access to their tokens to have their address revoked and their tokens re-issued to a new address.

  • Implementing ERC-884 requires the use of an off-chain database to meet “Know Your Customer” (KYC) criteria.

The implementer should be able to extract the identity and physical address of any ETH address, hash that information, and match the generated hash to the hash contained in the contract using a cryptographic hash function. This ensures the integrity of the data.

Since ERC-884 tokens are compatible with ERC-20, they can be traded on any cryptocurrency exchange that supports ERC-20 tokens, eliminating the need for a traditional mechanism.

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Coincu

Glossary

ERC-884

Understanding ERC-884

ERC-884 is a unique token that represents a specific share in a Delaware company, following the standard set by David Sag. This standard is specifically designed for equity transactions, and in order to possess the token, one must be approved through the smart contract. Additionally, issuers of ERC-884 tokens need to establish an off-chain private database to comply with securities legislation.

Thanks to recent laws, companies in Delaware can now utilize blockchain technology to manage share registrations. ERC-884 aims to take advantage of this technology by designating each token as a share of a corporation formed in Delaware.

ERC-884 incorporates several features to ensure compliance with regulations:

  • Token holders must undergo verification and approval.

There is no separate crowdsale contract for token owner approval; instead, ERC-884 requires approval for all token owners. However, crowdsale contracts can use the approval list to verify eligibility, making it an essential element of the token contract.

  • The corporation can generate a list of shareholders.

According to regulatory requirements, the corporation must be able to generate the shareholder list mandated by Sections 219 and 220 of The Act. Additionally, regulators require information recording and record share transfers.

  • Tokens can only have their full value, no partial value.

Each ERC-884 coin must represent a fully paid, unique, and indivisible share. Partially paid shares do not need to be tracked, and the token does not need to be linked to a specific amount of shares. Knowing that a shareholder holds a certain amount of ERC-884 tokens is sufficient, and individually numbered shares are no longer necessary.

  • Shareholders who have lost their private keys or tokens must transfer them to a new address.

A system must be in place to allow shareholders who have misplaced their private keys or lost access to their tokens to have their address revoked and their tokens re-issued to a new address.

  • Implementing ERC-884 requires the use of an off-chain database to meet “Know Your Customer” (KYC) criteria.

The implementer should be able to extract the identity and physical address of any ETH address, hash that information, and match the generated hash to the hash contained in the contract using a cryptographic hash function. This ensures the integrity of the data.

Since ERC-884 tokens are compatible with ERC-20, they can be traded on any cryptocurrency exchange that supports ERC-20 tokens, eliminating the need for a traditional mechanism.

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