New Open Source Release: micobo’s Security Token Standard
micobo is building the infrastructure for the future of finance, improving capital markets capabilities with innovative technology.
We believe in the disruptive power of blockchain, and particularly of Ethereum, so we want to keep supporting the adoption of this technology for capital markets.
To contribute to a strong foundation for these new ecosystems that enhance the financial industry, we are open-sourcing our Ethereum Security Token standard.
For us, it is clear that collaborative development through the open-source process can accelerate innovation. With this contribution, we aim to ensure a compliant and secure way of tokenizing financial instruments, encouraging all actors to heighten the benefits brought up with it.
The micobo Security Token is an ERC20– and ERC1400-compatible, constrainable Ethereum token, compliant with German/European financial securities regulations and developed by micobo GmbH.
Our smart contracts have been thoroughly audited by NVISO. They are the backbone of micobo tokenization solutions and have been used to tokenize about 250 million euros worth of shares and assets.
We created a standard that automatically enforces specific conditions related to legal and regulatory requirements applicable to securities in various jurisdictions. Hence, it allows for automated compliance of the tokenized asset with pre-defined requirements built in the code. With a modular architecture, the Security Token offers features that ensure its dynamism while being compliant, making it an agnostic tool to tokenize any type of asset.
The following modules are the spine of the Security Token. However, we aim to incentivize further improvement, so new constraint modules can easily be written and included in the token flow. For us, making our Security Token agnostic, not only give us more flexibility to reach our clients requirements but also allows us to continuously grow and improve leading the
Dynamic Role Management
Our granular role system can be expanded even after token deployment. With it, we are able to distribute responsibilities between issuers, regulators, and other authorized third parties.
This means that while for example the issuer has control over minting and locking tokens, a regulator could have the power to pause the token contract or force a transfer in case of fraud. If needed these features can also be turned off forever at a later point.
With this, we envisioned a token as flexible as possible to handle all future compliance requirements.
ERC20 and ERC1400 compatibility
To enable widespread adoption, we made sure our tokens can be transferred according to the popular ERC20 standard. Newer functionalities like transferWithData and the use of partitions are also possible with the inclusion of the ERC1400 interface. All popular wallets and DeFi protocols are therefore within the realm of possibility for your token.
Customizable Transfer Constraint Modules
The most important part of issuing a security token is to make it only accessible to KYC-ed investors. We achieved this by including a whitelist module. With this base module, other transfer restrictions may also apply. These can vary from lock-up periods to user-specific daily spending limits.
To make all of this possible, our security token takes a modular approach. Any number of constraints modules can be activated for each partition. In these modules, each transaction is analyzed according to the module’s policy and green-lit for execution if it passes.
For checks that are too expensive to do on-chain, a trusted party can approve the transaction off-chain and the signature will automatically be checked on-chain.
Upgradeable Logic
Our contracts implement the popular proxy/logic pattern. This means that it is possible (with explicit action by the token owner) to upgrade the underlying logic of the token to a new version published by micobo. With this, developers can include more functionality and will always remain optional by default.
GSN Capable: Free Transactions
The Security Token has a Gas Station Network integration, enabling tokens to receive special meta-transaction where a third party pays for a user’s transaction fees. This can prove extremely useful for adoption and takes a burden off of users.
With an exciting year ahead of us, we are delighted to share our developments with the industry. Thanks to the confirmed benefits of DLT, and the regulatory awareness that it has gained over the years, we are confident that tokenization will boost growth across many industries, and we are thrilled about the future of finance.
Simon Dosch, micobo’s Blockchain Engineer, who led the development of the Security Token, stated, “building a security token that is ready for all compliance requirements while also being open to the amazing Ethereum ecosystem is a tough challenge. We have made great progress and are proud to share our new standard with the world!”
Certainly, a further step continuing our mission of revolutionizing the financial industry through technological improvement and innovation.
Learn more about micobo Security Token and access to the open-source repo.
micobo is committed to delivering the best technological solutions for the new era of digital capital markets.
Reach out to learn what tokenization is on blockchain and how it can benefit your business.
About micobo
micobo GmbH is a leading European software company for Security Token Offerings and Blockchain Software Development (DLT). micobo provides fully compliant software solutions for Security Token Offerings and advises on structuring DLT- and Blockchain-based Securities.
Author
Luisa Blandon (lb@micobo.com).
