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Glossary

ERC-884

November 21, 2023 - Around 3 mins mins to read

ERC-884 is a unique token standard in the blockchain world that is specifically designed for equity transactions. This standard follows the guidelines set by David Sag and is commonly used to represent a specific share in a Delaware company. By utilizing ERC-884, companies in Delaware can leverage blockchain technology to manage share registrations and comply with securities legislation.

To possess ERC-884 tokens, individuals must be approved through a smart contract. This approval process ensures that only eligible token holders can participate in equity transactions. Unlike other token standards, such as ERC-20, there is no separate crowdsale contract for token owner approval. Instead, ERC-884 requires approval for all token owners. However, crowdsale contracts can still use the approval list to verify eligibility, making it an essential element of the token contract.

In order to comply with regulatory requirements, corporations issuing ERC-884 tokens must establish an off-chain private database. This database is used to generate a shareholder list, as mandated by Sections 219 and 220 of The Act. It also records information related to share transfers, ensuring transparency and regulatory compliance.

One of the unique features of ERC-884 tokens is that each token represents a fully paid, unique, and indivisible share. Unlike traditional shares, there is no need to track partially paid shares, and the token does not need to be linked to a specific amount of shares. The ownership of ERC-884 tokens by a shareholder is sufficient information, eliminating the need for individually numbered shares.

In the event that a shareholder loses their private keys or tokens, ERC-884 provides a mechanism for them to transfer their tokens to a new address. This ensures that shareholders can still access their shares even if they face technical difficulties or misplace their credentials. This feature adds an extra layer of security and convenience for token holders.

Another important aspect of implementing ERC-884 is the use of an off-chain database to meet “Know Your Customer” (KYC) criteria. KYC requirements are designed to prevent fraud and ensure that participants in equity transactions are verified individuals. The implementer of ERC-884 must be able to extract the identity and physical address of any Ethereum address, hash that information, and match the generated hash to the hash contained in the contract using a cryptographic hash function. This process ensures the integrity and privacy of the data.

ERC-884 tokens are compatible with ERC-20, which means they can be traded on any cryptocurrency exchange that supports ERC-20 tokens. This compatibility eliminates the need for a separate and specialized trading mechanism, making ERC-884 tokens more accessible and liquid in the market.

In summary, ERC-884 is a token standard specifically designed for equity transactions in Delaware. It provides a secure and efficient way to manage share registrations, comply with securities legislation, and ensure transparency in shareholder ownership. By utilizing an off-chain database and integrating KYC requirements, ERC-884 tokens offer an enhanced level of security and compliance. Furthermore, the compatibility with ERC-20 ensures that ERC-884 tokens can be easily traded on existing cryptocurrency exchanges. Overall, ERC-884 plays a crucial role in bringing the benefits of blockchain technology to the world of equity transactions.

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Coincu

Glossary

ERC-884

ERC-884 is a unique token standard in the blockchain world that is specifically designed for equity transactions. This standard follows the guidelines set by David Sag and is commonly used to represent a specific share in a Delaware company. By utilizing ERC-884, companies in Delaware can leverage blockchain technology to manage share registrations and comply with securities legislation.

To possess ERC-884 tokens, individuals must be approved through a smart contract. This approval process ensures that only eligible token holders can participate in equity transactions. Unlike other token standards, such as ERC-20, there is no separate crowdsale contract for token owner approval. Instead, ERC-884 requires approval for all token owners. However, crowdsale contracts can still use the approval list to verify eligibility, making it an essential element of the token contract.

In order to comply with regulatory requirements, corporations issuing ERC-884 tokens must establish an off-chain private database. This database is used to generate a shareholder list, as mandated by Sections 219 and 220 of The Act. It also records information related to share transfers, ensuring transparency and regulatory compliance.

One of the unique features of ERC-884 tokens is that each token represents a fully paid, unique, and indivisible share. Unlike traditional shares, there is no need to track partially paid shares, and the token does not need to be linked to a specific amount of shares. The ownership of ERC-884 tokens by a shareholder is sufficient information, eliminating the need for individually numbered shares.

In the event that a shareholder loses their private keys or tokens, ERC-884 provides a mechanism for them to transfer their tokens to a new address. This ensures that shareholders can still access their shares even if they face technical difficulties or misplace their credentials. This feature adds an extra layer of security and convenience for token holders.

Another important aspect of implementing ERC-884 is the use of an off-chain database to meet “Know Your Customer” (KYC) criteria. KYC requirements are designed to prevent fraud and ensure that participants in equity transactions are verified individuals. The implementer of ERC-884 must be able to extract the identity and physical address of any Ethereum address, hash that information, and match the generated hash to the hash contained in the contract using a cryptographic hash function. This process ensures the integrity and privacy of the data.

ERC-884 tokens are compatible with ERC-20, which means they can be traded on any cryptocurrency exchange that supports ERC-20 tokens. This compatibility eliminates the need for a separate and specialized trading mechanism, making ERC-884 tokens more accessible and liquid in the market.

In summary, ERC-884 is a token standard specifically designed for equity transactions in Delaware. It provides a secure and efficient way to manage share registrations, comply with securities legislation, and ensure transparency in shareholder ownership. By utilizing an off-chain database and integrating KYC requirements, ERC-884 tokens offer an enhanced level of security and compliance. Furthermore, the compatibility with ERC-20 ensures that ERC-884 tokens can be easily traded on existing cryptocurrency exchanges. Overall, ERC-884 plays a crucial role in bringing the benefits of blockchain technology to the world of equity transactions.

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