We are back after the summer break and busy again, in fact we were quite busy over the summer holidays with many new exciting developments both on the technical and business side.
The DigiShares platform is being expanded all the time, mostly based on customer demands. Currently we are working on custodian integration, transparent wallet setup and integration, and atomic transfers.
Custodians and Wallet Setup
DigiShares believes that the security token ecosystem will increasingly move towards custodied wallets, rather than self-managed wallets. The standard blockchain mentality is biased towards self-managed wallets since you are then 100% in control of your tokens (“not your private keys, not your bitcoin”), but in fact a majority of crypto users do not currently hold their private keys. Rather their crypto is deposited with an exchange, a DeFi provider, or a custodian. Many leading exchanges and DeFi providers deposit their customers’ crypto with custodians. Custodians provide insured wallets and accounts such that you are protected against any loss or failure on the service provider or custodian’s side. However, increasingly custodians also give you highly flexible and user-friendly wallets such that a custodied wallet has almost the same flexibility and functionality as a self-managed wallet.
Investors in the security token ecosystem with large holdings and institutional investors will not accept self-managed wallets but will always demand custodied wallets. We believe this requirement will gradually extend to accredited and retail investors as well.
Our white-label partners will be able to offer their users custodied wallets that are transparently created and managed by the DigiShares platform, as well as self-managed wallets, that the users create and manage on their own.
An atomic transfer is defined as a purchase or trade where all transactions either succeed or fail. It is the essential component of decentralized exchanges where users have to be 100% sure that if they purchase some crypto and provide payment, that they also receive the desired crypto. Technically an atomic transfer is implemented as a smart contract that acts as a safe or an escrow. The buyer transfers their payment to this smart contract, and the seller transfers the tokens to be sold. Once both parties have transferred, the smart contract will release the payment to the seller and the purchased tokens to the buyer. If the contract fails for some reason, the payment will revert to the buyer and the tokens to be sold will revert to the seller.
The atomic transfer removes any counter-party risk and is unique for blockchain applications in that it can happen in a peer-to-peer fashion. Without blockchain, a trusted central party would be required to facilitate the transactions, such as a lawyer providing an escrow account at a high price.
DigiShares is now implementing atomic transfers to support both the purchasing and trading functions on the platform, such that for instance when a number of tokenized shares in a real estate project are purchased, and the payment is made in crypto or stablecoins.
Next week we will be back with a newsletter describing a new white-label client in the real estate industry.