September 10, 2018 8:53 PM
The Ethereum Request for Comment, posted today, emphasizes "partially-fungible" tokens.
Today, developer Stephane Gosselin posted a new proposal for a security token standard, titled ERC1400[1], on GitHub. The purpose of this new token standard is to better enable regulatory compliance for parties offering securities on the Ethereum network.
The standard was written by Gosselin, Adam Dossa, Pablo Ruiz, and Fabian Vogelsteller. Gosselin and Dossa work for Polymath, a "decentralized protocol that makes it easier to raise capital and create security tokens," while Ruiz has a background in international business and finance, and Dossa is an Ethereum developer and web designer.
The authors specify that the ERC1400 should be ERC20[2] and ERC777[3] compliant, but that security tokens differ considerably from utility tokens and require more complex interactions between on-chain and off-chain actors and therefore require their own standard.
The requirements laid out in the EIP include that such a standard must have the ability to force transfers "for legal action or fund recovery." The authors explain that "it may be that regulations require an issuer or a trusted third party to retain the power to transfer tokens on behalf of investors."
The tokens must also be non-fungible[4] (or at least "partially-fungible") so they can allow for the attachment of modifiable metadata specifying unique conditions for transfer. In other words, ERC1400 tokens must allow parties offering securities to grant or deny transactions based on a set of conditions.
Partial-fungibility is a primary component of the ERC1400 token standard. That means one ERC1400 token issued by the same entity could be non-exchangeable with another ERC1400 token, because the tokens could have different properties. The most popular non-fungible tokens are, of course, CryptoKitties, which are based on
