Delving into ERC-884 Tokens: Delaware Shares on Ethereum
ERC-884 is a protocol that facilitates the creation of tradable ERC-20 tokens, each symbolizing a numberless stock issued by a Delaware corporation.
What is ERC-884?
Each ERC-884 token represents a specific stake in a Delaware company, as required by the David Saga standard. The standard was created for stock transactions, and the owner of the token must be whitelisted, which is a method built into the smart contract. ERC-884 issuers, on the other hand, must create an off-chain private database to comply with securities laws.
Thanks to new laws, companies in the U.S. state of Delaware can now use blockchain technology to manage stock registrations. ERC-884 is aimed at its use, where each token will be designated as a stock of a corporation created in the state of Delaware.
ERC 884 additionally includes the following to meet regulatory requirements:
- There is no separate crowdsale contract to provide whitelisting for token holders, rather ERC-884 requires whitelisting for all token holders. While crowdsale contracts can use whitelisting to verify eligibility, whitelisting is still an important element of a token contract.
- In accordance with the regulations, it must enable the corporation to create the shareholder list required by Sections 219 and 220 of the Act. In addition, it is required by regulators to record information about the transfer of shares.
- Each ERC-884 coin must reflect a unique unaccountable share that has been fully paid up. Data on shares that are not fully paid is not required to be tracked. Similarly, an ERC-884 token does not need to be tied to a specific number of shares. It is sufficient to know that a shareholder owns a certain number of shares. In this case, individually numbered shares are no longer required.
- A system must be implemented that allows shareholders who have lost their private key or lost access to their tokens to cancel their address and reissue the tokens to a new address.
- The implementer must 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 hash function to ensure data integrity.
Since ERC-884 tokens are compatible with ERC-20, they can be exchanged on any cryptocurrency exchange that supports ERC-20 token trading, allowing the firm to avoid using the traditional mechanism.