EthCC 2: Adam Dossa

good morning hey morning welcome to the defi track I want to start by saying thank you to the FCC and alpha teams for hosting the event so I'm Adam dosa I'm the head of technology at polymath and I'm also one of the ERC 1,400 authors so very briefly polymath is building and has deployed a main net a unchain protocol to allow anyone to issue and manage regulatory compliant security tokens I checked the stats last night we've had 80 and as of last night we've got 80 organizations gonna come through and generate security tokens through the platform since we went live so today I'm going to talk a little bit about what it means to model Security's on public block chains like aetherium where security tokens sort of fit into that modeling picture and then the role of security tokens within the kind of decent decentralized or deafie world and what some of the challenges are in that process and why the opportunity is so big and why it's so important to kind of win in this space okay so in your kind of previous life before I fell down the crypto rabbit-hole a few years ago I spent the first half of my career working at a large US institutional trading firm on the technology team and that role gave me a lot of opportunity to think about what it means to model securities what it means to value and assess the risk of securities and financial products so the way I think about securities and modeling security is going to fits into two somewhat distinct categories shut up here so one side is for the inventory or inventory management and that's kind of that encompasses all of the sort of record-keeping managing with an illegal ownership of securities how they can be traded and transferred and settled between different parties things like that kind of legal documentation and communication associated with owning securities so that's the sort of inventory side the other side which is valuation so if you're as an individual or an organization if you own some portfolio of assets you know for sure you're gonna be interested in understanding their value and their risk profile yeah how that value changes depending on different kind of market market movements market dynamics that process will depend a lot on what the asset is so maybe for a very liquid asset you can just go to an exchange you can get a price feed multiply three by your position and you're sort of done but for maybe for a more complex asset something that's either a liquid or maybe has optionality or some sort of path-dependent derivative you probably would have some model based valuation where you have a kind of black box model it takes in various market dynamics may be FX race or interest rate curves or fall services uses some other some complex formula or maybe simulation pricing spits out a value and risk so those are the kind of two the two areas that I I think that when I think about modeling securities security tokens very much addresses the first half the left-hand side of the picture the inventory side you know inventory management is a my mind anyways a very natural fit for block chains particularly it block chains which were effective the kind of Ledger's are a natural fit for this type of record-keeping it gives you this or a single source of truth removes requirements new reconciliation obviously you know we've kind of programmable assets and smart contracts you can do things like instant or instant tear settlement you can do atomic swaps you know settlement in return for the payment and so on says it's a security token its benefits the left hand the picture is pretty natural fit on the valuation side is less obvious to me how you would leverage a blockchain directly evaluations tend to be evaluation model or risk models tend to be private proprietary so transparency here is not necessarily like something that people are looking for often they're very compute a V which you know the kind of current generation of block chains could be can be a bottleneck or be problematic so evaluation is going to kind of less obvious is there's a couple of categories which is sort of in the middle which somewhat sit between the two areas which I'll just touch on briefly so the quiddity is kind of interesting so the quiddity I guess traditionally you would think about it's being not some sort of like market feature right so you would go to if you wanted to understand the liquidity of a stock you would go to an exchange or look at the order book look at the depth of the order but maybe lift the spread how that's changed over time and that would give you an idea of what the kind of the quality of the the stock was you know in in the in the defi world there being some really interesting innovations recently things like Union swap where you know which if introduces kind of idea of like an equality for decentralized the quiddity or staking pool which adds or then acts as an automated market maker for a stock and even things like Stella where they know Stella blockchain is like a base layer on there one has integrated an order book into their blockchain so some of these kind of defi approaches have started maybe it sort of shift the way that people think about liquidity and moved it more towards being a kind of characteristic of the assets rather than something that's sort of very distinct liquidity is kind of interesting sits between the two cash flows is another area so cash flows by cash flows I mean things like future payments of cash flows things like dividends for an equity or coupon payments for a bond or you know interest rate payments for an interest rate swap or whatever it is so generally with cash flows the kind of calculation of the amount that you're going to pay is likely to be done off chain if it's an equity maybe it depends on the performance of the company and you know whatever are the factors going to that and or maybe on some calculation if it's a structured product so the amount is likely to be calculated or change obviously the payment itself could easily be settled on chain and the kind of record-keeping for that could happen on chain so so cash flow has new quiz to kind of sit in between so for the rest of the talk I'm gonna focus on security tokens so mainly the left-hand side of the picture which i think is kind of the most maybe that the lowest hanging fruit in terms of block chains and securities okay so I want to spend a few minutes kind of giving my perspective on why I think security tokens are so relevant so important you know decentralized finance is being it's going to stand out success story for aetherium over the last 12 months maybe more there are some stats I have with we're probably here repeated a little bit this week so 2% of ether is locked up in make it down for CDP's of collateral for CDP's generate die these stats I think I looked at last night's it might be start dates to 20,000 ether is locked up and you know swap for the quiddity pools 28 28,000 ether is locked up in the compound protocol for lending stable coins have a total market cap of two and a half billion dollars and you can you know stable coins I know that's obviously not just dye that that's all stable coins and there's obviously some some parts that may be kind of controversial but but still it's a massive market cap and then last but not least in something which is maybe sometimes for the underappreciated is that when you look across all public block chains there are daily millions of peer-to-peer transit transfers of value you have individuals transaction value in a peer-to-peer fashion which in my mind is definitely part of the kind of decentralized finance space so you know there's there's often like a lot of talk in a theory I mean these kind of conferences around you know how do we drive adoption for block chains or for a theory in particular and to my mind yeah people think about a lot about you know what's the perfect product that for blockchain what's what's the best kind of product fit to my mind decentralized finance is kind of the answer right so it's something that you can only do with public blockchains doesn't really make sense outside of outside the public block chains there are immediate and obvious benefits to to people to use decentralized financial products things like you know being able to act as your own bank and borrow against your own collateral as as we make it down and so on so you know sort of standout success where there are some limitations or issues is that today defi is it's a little bit isolated in this a little bit integer so it's very good at dealing with assets with on chain assets at the moment that's primarily things like protocol tokens like ether or utility tokens obviously dies out there as well as kind of synthetic sort of algorithmic stable coin but there's not really be much incorporation of like real-world assets into decentralized finance so we're I think security tokens sort of sit in this picture is they can act as a bridge between traditional finance and traditional financial assets and and decentralized finance yeah and why is this you know why is this good so we can kind of think through some of the stakeholders so if you're an advocate of public blockchains in general then yeah having a real-world assets sit alongside your protocol Typhoon's utility tokens attracts the right kind of attention from regulators it potentially attracts investment in capital from a traditional world for issuers of these assets if you're issuing a security token or security on chain it gives you access to these new forms liquidity which is we talked about but something I'm sort of super excited about there's been a huge amount of innovation in the quiddity space so unis what we taught about things like dart checks which introduced sort of--and base mechanics with liquidity you know things like zero access swap loop ring you know the various other Dex's which decentralization and the quiddity process and there's been a huge amount of innovation and some sort of super excited about what the next 12 months is going to bring so yeah there's an issue it gives you access these sort of new innovative liquidity approaches also you can reduce costs improve accessibility improve your kind of reach in terms of capital or gives you access to maybe finance you didn't used to have for investors are these assets of people who own these assets again it's fairly easy fairly clear kind of benefits you can you know if you have a unchain security you can take that security and use it in decentralized financial protocols maybe you can add it to a multi collateral CDP and borrow against it if you have short-term cash flow requirements or you can act as an automated marking make it through something like you know swap so you have you know gives you or you know or lend it out on compound or whatever it is it gives you all this other kind of feature sets that you get from the on the decentralized financial side you can you can use with your two real word assets and then last but not least it's really importantly what two regulators get from it so regulators get this unprecedented transparency this immutable blockchain with well crafted security tokens a security token itself embeds all the rules and regulations that pertain to that security token so you have these kind of self-enforcing smart regulations so if we regulator's that reduces its kind of needed need to do after the fact auditing an investigation to check whether security has been correctly traded because the rules are enforced by the security itself so so yes so there's a hidden behind the image here this is an image of the Golden Gate Bridge and that's just meant to emphasize this idea that security tokens are a bridge between traditional finance and decentralized finance so a good question to ask when thinking about security tokens is why we wouldn't just use er C 20 so er C 20 is pretty picketers it's well understood that probably thousands of implementations it's been around we go for its 2014 maybe or 2015 and most def e protocols and exchanges and so on compatible with ER c 20 and the answer is partially that we do right so every security token implementation I've seen whether it's polymaths or any of the other ones I've seen out there always start with er C 20 is a base and then they're on additional functionality so all these implementations are kind of backwards compatible with the RC 20 which gives some some advantages but having said that you know er C 20 which is great for utility tokens there's some very kind of clear gaps where it doesn't cleanly model the types of characteristics which are native to security so these kind of gaps between what he asked C 20 can do and really what we need to be able to cleanly model Security's and be able to interoperate with them in a kind of consistent way I'm gonna go through some of those gaps in a moment and these gaps are really you know forming on the basis of what the ERC 1400 this kind of library of security token standards is I talked more about that at the end so the first one is verifying transfers so er C 20 has this kind of basic assumption that if you have if you have within a sufficient balance of ER C 20 tokens you will be able to transfer them to another address with securities this assumption just doesn't hold so there's been a lot of whole host or transfer restrictions that apply to securities you know to give you a kind of flavor of what some of those arts and the ones we've implemented polymath so we have is from the basic one that every investor must go through some sort of kyc AML verification some securities have a cap on the total number of investors maybe you're only allowed to have a thousand investors in total some securities cap the individual that the maximum individual percentage of ownership that are sing an investor can have so the maximum that a single investor can own of the asset they're almost certainly securities have some sort of lockup period which restrict secondary trading and there are small kind of sophisticated transfer restrictions so some securities have rolling volume restrictions so you're only allowed to trade either individually or an aggregate a certain amount of volumes a rolling 90 days or something there's a whole host of reasons why it may not be possible to either purchase or transfer securities at you own so what 1,400 d that does what the RC 1400 does is it gives a kind of clean interface to be able to check whether a transfer is or isn't valid and importantly if it's not valid give you some sort indication or you know status code as to why that transfer is not valid and for that last bit we leverage ERC 1066 which is a ERC or IP which introduces etherium status codes or error status codes which we leverage for that bit okay okay so the next section is the next gap is issuance from and redemption to issuance redemption broadly maps to the concepts of minting and burning probably more commonly used with the RC 20 °c are C 20 doesn't really have a lot to say about the way that tokens are created and destroyed you know typically the IC o---- contract was have you know we'd have some rules in it around how takings a minted and maybe the token front travel to have some rules in it around how tokens can be burnt or sometimes people burn tokens just by sending them to us a dead address or something for securities obviously issuance Redemption in a kind of first-class economic activities so it's important to have clear semantics around them and 14-hundred introduced is relatively simple but kind of clear semantics around issuance and redemption was the issuance it's fairly obvious redemption so for example if you have a fund and you have a totalized fun perhaps you allow owners of your token to redeem them or burn them in return for some proportional value of the fund at the point when the tokens are burnt I know the clear semantics means that things like block explorers or wallets or exchanges could not officer you can a scan scan through the event and get a very clear picture waking up with a picture or when the security is being created or issued and destroyed okay so the next section is partition balances so ERC 20 is models fungible tokens so you know my ERC 22 feeling should be the same as everyone else's ERC 20 token and that's true for securities as well right so if I have an Apple stock that should be equivalent in value and kind of use to somebody else's Apple stock where that breaks down a little bit is my ownership or transfer restrictions on my shares or securities are not necessarily fungible so to give a kind of concrete example suppose that I bought 20 shares of a particular company during the primary issuance or the sto process and those shares unlocked say for 12 months for secondary trading purposes and then bought an additional 30 shares of the same company on a secondary market perhaps in a different jurisdiction so and those those shares are unlocked so I now have a total balance of 50 shares of which 20 are locked and 30 are unlocked so the way 14-hundred deals with this is it introduces a kind of first-order concept partitions so your balance of 50 is now partitioned into two sort of sub balances 120 130 and 1400 kind of gives like an interface for how you you know query get the list of the partitions of your balance how you can query the balance of your rotation by partition and operate on your taken taken partitions directly so it gives a lot more kind of transparency and control and understand they will break down of your of your balance and the transfer registrations that applied to it relative to ER c20 okay so this is controller operations it's kind of an interesting one it's one you know in general with security tokens has often a little bit tension between I guess kind of blockchain centric decentralized ethos and maybe the more pragmatic or real-world or kind of regulatory orientated approach that has to underpin securities and this probably one area that that particular shows that up so securities are generally not bearer instruments right so if I owned a security and I lose my private key or there's some sort of fraud or perhaps if I die and that you know one of those assets to be inherited or passed down but I haven't you know I haven't passed my private key down then there has to be some way with dealing with that situation right so with the utility tokens generally there isn't right and the internet already or whatever I it's littered with instances or people effectively losing their utility tokens by sending to the wrong address or losing their private key or some sort of fraud type activity and that doesn't really can't really happen with securities so the way 14-hundred addresses this is we introduce this concept of there being a controller actor or controller entity that controller entity can have all sorts of actually a Maltese it could have whatever governance around that you want there to be but can effectively you know arbitrarily transfer tokens between addresses can't issue new tokens to combat quarantine tokens but it can you know keeping the total supply the same it can make arbitrary taking transfers so you know definitely that that is a centralized point of control so what 14-hundred introduces concept it means you know even though you have this centralized control you still have transparency so you as a you know investor or whatever in the security you can see exactly whether this power has been used under what circumstances has been used 14-hundred also has the ability for an issuer to kind of disavow this permission so it's a permanently disavow it so if you want to if it's not appropriate for your particular use case or you want to have this sort of more centralized more decentralized approach you can you know set a switch which permanently and irrevocably revokes is this actor will remove this actor so real-world data is another another interesting one so we talked a lot about the fact that Security's often have these very complex transfer restrictions maybe depend on very kind of complex business logic and data and state and you know different entities interacting and whilst it is possible to model a lot of that on chain using on chain smart contracts or logic on chain data and so on and so forth it may be quite burdensome burdensome to model all of that on chains you know kind of simple example which illustrates that is if you're supposed to an exchange and you've on-boarded uky sitting on board a new investor and that investor wants to buy some security in order to purchase that security the exchange will typically have to make two transactions I'll have to send one transaction to add the investor to a whitelist and then the second transaction to actually transfer securities to that investor you know that that kind of leads you're pretty bad UX and you have to submit two transactions obviously there's actually gas cost you have to manage those transactions there's a sort of speed impact and so on so what what RC 1400 aims to do is turn a future-proof itself and for the transfer issuance and redemption functions in the RC 1400 we introduces a new parameter which is just a it's like a bytes date of Erebor so sort of data blob that we passed a long side to transfer issuance or redemption and typically that date blob would contain something like a signed authorization or signed authorization from an authorized entity so in the exchange case we just talked about run they're needing to be two separate transactions the exchange could make one single transfer transaction but passed along that transfer you know some sign kyc data for the investor and in that single transaction the investor could be white this did and receive that their tokens obviously to do that the exchange would have to be like an authorized signer given given the permission or ability to do that by the issuer and there's all sorts of other use cases for its particularly exchanges and brofist and so on if you're a broker you want to give someone permission to transact a particularly security rather than doing that on chain you can instead just give them off chain you know assigned bit of data maybe with an expiry date or something which the investor can then self submit when they when they get to purchase those tokens so you know it's really no upfront cost to introduce and these for the data blobs through the through the spec but we think it does a lot in terms of future proofing and kind of keeping options open and for future use cases okay the last one is document management so this is probably the least sexy of the other six but securities come with all sorts of legal documentation that associated with them and needs to be attached to them 1400 has very simple kind of structure for attaching updating notarizing and communicating document based updates to the security token should say fairly evenly obviously the documentation itself is not stored on chain so you store like a URI to the to the document which could be either a pointer to a web page or it could be something like ipfs and you can optionally can a notarized document so you can include a hash of the content if you want to it's optional and then that that would obviously give you some notarization ability and every time a document it's attached to updated certain events or fires which you could use as a kind of backbone or to trigger you know off chain communications emails or and so on and so forth so those are the kind of six the six or the major gaps we see between ERC 20 and what's needed for securities and it those are the gaps effectively which which ERC 1,400 aims to address as of today so when I talk a little bit on a meta level about PRC 1,400 and become a process and approach and the way we've approached analysis and the iteration involved so the you know the first thing to say is that we've tried since the the process of crafting RC 1400 has been this huge collaborative effort so it's not it's not just like a polymath effort there's been you know countless companies and organizations individuals involved it's been a long-running process has been very iterative process and you know every stage we've tried to be you know it's transparent and it's collaborative and consensus driven as possible so before making any kind of changes or updates to the spec we try to achieve this rough consensus in practice the things we dance we've run to security token rings atheria magician councils here and in paris start hearing in berlin rather at prague rather at DEFCON we've done community calls all of the kind of all of the online discussion happens in open channels that we use the theory magicians for github obviously to the you know the issue on github or the main issue has well over 100 comments there's a telegram channel there's a web page we obviously try and put out medium articles explaining changes and so on and obviously do talks like this so there's been it's been a big focus around transparency and collaboration which makes sense for a standard because you know has to be a kind of industry wide consensus otherwise there's not that much point second thing to mention is that so er C 1400 is a little unusual in that it's a library of standard so there's a kind of core core security taking standard which every 1400 token would implement would need to implement and then there's a series of like additional sub standards which are all interoperable with the core standard and all interoperable with each other so you can kind of flexibly compose them to meet whatever the your specific use case based on your particular asset or jurisdiction and yeah the reason for that and I came out a lot of common came out of a lot of conversation with the community the reason for that was it's a decent balance between needing a good guru a good degree of consistency across different security tokens and also given people the flexibility to not have to implement a whole bunch of stuff that doesn't make sense for them and kind of craft exactly what they need for their particular use case so those are the last thing I guess is that we try to be as unappreciated as possible in areas that weren't related to security so they're you know the 1,400 standards are all kind of laser focused purely on you purely on the interface and not the implementation so try to be is gonna I mean opinionated as possible about the implementation like an example of this is that you can use ERC 1400 with either an ER C 20 token or an ER C 777 token as as the base and I think what an implementation I think the consensus implementation actually uses ERC 777 and other implementations use er C 20 so we try to have this kind of interface first an opinion approach and then I guess one last thing that's worth just maybe restating is that wire stand is so important in particularly for decentralized finance where if you centralize finance protocols generally resolved there being some smart contract or series of smart contracts that have to interoperate with with assets and do clever things whether it's make a Dow or Union swap or whatever in order to do that with real world securities you know you have to these securities have to conform to some consistent standard otherwise you end up needing like five different copies of the make it Dow smart contracts to deal with different types of of security taken so standards you know and in some sense doesn't matter yeah like the details of the standard can be can be argued about with you yeah well function has one name or another name it's not so important but having a consistent standard is important and helps kind of drive your helps us our interoperability with decentralized finance which i think is this is kind of a win-win situation so it's just a quick slice there's a whole bunch of people working on 1,400 implementations and these are just some of them so there's a reference implementation which is on the EIP spec get up I think which is obviously open source and anyone can in take and use or build on top of it cetera et cetera there's a polymath company I work for has an implementation which is just about to go for audit it's also 3.0 release at the protocol consensus has an implementation which you can see their deeper tech is working on a quite novel kind of approach to implementing ERC 1,400 and there's a bunch of other organizations and companies you know in various different places across the world working on implementation so you know so exactly the same CRC 20 that you know the expectation is not that there's some you know there's like a single implementation the expectation is that you have a single standard and multiple implementations that can conform to that standard okay so this is the last slice this is I wants to just talk about a few areas which may be a little bit thought-provoking and are not covered by the 1400 spec as it exists today and there's no the 1400 is it's like a library of standards the expectations that over time new to the features or sub standards are added to that library there's a few areas here we talked a little bit about liquidity and capital distribution already some other interesting areas oh so confidential transfers is something that comes up so we spend a lot of time polymath talking to you know people like institutional investors and trading desks and so on confidential transactions is something that comes up so obviously like the flip side of Trant the transparency of a blockchain is that if you're a large institutional investor you're you want to make some very large trade or something you may not want that you may not want the price you paid for it to be entirely transparent so you might want all the convenience and benefits of a blockchain in terms of instant settlement and that and that type of thing but without necessarily every bit of data about the the transfer being in public so confidential transfers which typically use you know some performance with zero knowledge proof or or and or homomorphic encryption are really interesting area kinda cryptographically and you know scenario there's a whole bunch of companies organizations working on in the etherium space and outside of etherium and obviously allow you to obfuscate certain details of the transfer I want to give a shout out there's a company called Aztec I think presenting some time this week who deployed on main deck and a proof of concept confidential wrapper and we put through actually a polymath token through there and a confidential wrapper and did some did some confidential transfers of a security token through their wrapper and they published a couple of IPs reason these that's that's worth checking out and then the other area that's kind of interesting which is not covered by 1400 is pooled wallet so pooled wallets where you take you know assets from a whole bunch of investors and you pull them together into a single smart contract so you see this happening in some Dex's you see it happening in often in centralized exchanges you also see it for plasma contracts for the entry and exit main yet contract for plasma and it it has some issues with security tokens so some of the issues are it kind of impacts governance and capital distributions so if you've pulled everyone's assets and you want to distribute dividend that dividend goes to the smart contract that holds those assets not to the kind of underlying beneficial owners and in the reverse direction if you're let's say you're holding some governance vote it's technically the smart contract that holds that all of the investors assets that has the ability to vote rather than the underlying beneficial owners so it breaks from a capital distribution and governance and there's one other issue which is kind of related to control operations which is that if a controller force transfer some assets out of a pooled wallet then it effectively that pooled well it becomes insolvent or partially insolvent or like a fractional reserve and you would probably have some surveys - exit type problem which would love to be problematic so exactly how pulled wallets and securities sort of need to interact or interoperate it's something yeah well there's there's all bunch of kind of interesting conversations going on online so yeah I'll end there and I just wanted to encourage anyone who's interested in the area to hop online on the next slide there's a web page which has links to has links to the telegram has list the github has Donuts to everything you're gonna need to kind of get involved in the conversation and start contributing and I'm sure there were lots of other areas as well which people want to talk about and and get involved with so thank you very much and I don't know if we have time for questions or [Applause] thanks and thanks very much those very informative just would like to get some further thoughts from you on the confidential transactions or the confidentiality piece how much other blocker do you think it is for you know full adoption of you know tokens on public law chains it seems to me especially from an institutional perspective that this is something I would be very that would that is very important and so I'm just curious to see how you really see that progressing given the Nason see of some of the privacy technologies and techniques yeah I mean I think I mean so it's a super interesting area confidential trans person it's something you know which is it's exciting that we can now do confidential transfers on the etherion main net obviously it mean things like Z cash and stuff around for a while kind of I'm yeah and other other ones as well in terms of how much of a blocker it is you know the impression I get is that for is that it's not the main blocker at the moment if you like so it is primarily an issue where you have large institutional trading firms and I guess some of the reasons for that is that I mean as of today right with utility token trading where there's basically no confidential trading doesn't seem to bother you probably most people trading utility tokens like individuals right it doesn't really people bother people because you have you already have some confidentiality anyway you have pseudo anonymous addresses and things of that nature yeah you can potentially split your tokens across multiple addresses and so on but I think if you're going to look forward to where security tokens are widely adopted and being used by large institutional firms they're unlikely the CD and the liberty of addresses is it's probably gonna be quite easy to break because it through things like chain analysis and stuff like that and they're yeah they're also much more susceptible if you know your if your Goldman Sachs right and you know Morgan Stanley's trading position as an advert if you want to be adversarial you should probably put pressure on them you could kind of exploit that knowledge one way or another and so those sort of firms were very defensive around that so I think it's a blocker to get to like large blocker to get to adopt by these larger institutions but it's probably not the most immediate blocker if you talk about smaller private placements and stuff like that where we're investors it had to be more like an individual's than the larger firms yes thank you very much for your presentation I was wondering like exchanges like Nasdaq and other exchanges have really extensive ways to make sure that they will be around for at least the next 10 years or so those currently do not exists in public blockchains well I hope at least all the people in this room think a theory and will be around in the next 10 years but I bet you a lot of investors don't believe that how do you look at this so you mean the kind of charity of organizations working in the in the blockchain space you mean or yeah well more a rather longevity of of the chain itself yeah I mean it's definitely true that you're working on a public blockchain has pros and cons right so I'm obviously a huge fan of etherium and probably block chains in general but you know some of the concerns when we talk again these concerns tend to come from the large may be more risk adverse conservative sort of companies you know forking is definitely something that gets raised Lots right yeah if you have a contentious fork of some sort which it probably silly to rule out given that it's clearly happened in the past right yeah there's obviously some some chance that can happen if you have a contentious for then obviously you have this um something to deal with right because the company itself doesn't fork right so there you'd have to have people so choosing one side or the other which comes it becomes like a political or technical statement and probably companies don't companies you want to issue security tokens that's not really what they're they're in it for right is to weigh in some political debate about a blockchain for so that's forking is definitely an issue as you say like things like longevity but maybe a chain you know block chains haven't been around that long I think there's a ten year anniversary a Bitcoin last year I think and theorems obviously much younger than that these are definitely all kinds to get raised at the same time and you know particularly for larger risk-adverse firms you know I guess my kind of comment on on those is I mean it's an emerging area it's an emerging technology we're all sort of still learning as a community about how to deal with these sorts of things and how to have better covenant and all these sorts of things you know ultimately it is possible to move securities between block chains let's say the block chain you choose your security on blew up for some reason right or had some issue like that you could in a sort of centralized fashion move your securities to a different block chain if you wanted to that potentially be a kind of complex operational process to do that B I mean they're they're definitely valid valid concerns it we do we do here hello are you are working with traditional Korean firms right now are they giving you a lot of pushback with these standards so like apex clearing have you contacted them to see if they can help out with the process are they kind of just shutting it down and I mean taking almost kind of standard size yeah I mean I mean most of the companies we're working with we have talked to like larger more traditional companies there it's been more like a educational exercise I guess you could say that I was trying to educate them on why we think standards are important you know sort of what the standard encompasses and so on as opposed to you like a more interactive thing but we have taken some of their people a particular profile we have taken some of their feedback and incorporated it but most of the companies and organizations and individuals working actively you could say probably more like companies like polymath and our competitors on the on the issuance side or kyc providers transfer agents exchanges blockchain or exchanges working in the kind of in the crypto world and companies of that you know and we and we also have had lots of discussions with regulators and lawyers and stuff like that but yeah I mean I like a technical level we probably had the most detailed collaboration with with people who are more familiar with the space and the other conversation is said to be a bit more one-way I don't know if I'm pushing it so where do the documents live or if you've got something like you know the shareholder details obviously that's not on chain and plain text format where does that live so the way document management works in 1400 is that you store on chain a URI it's like a like a that could be either a URL like a web page or it could be like an IPA fast location or something of that nature so you're not storing the document on chain right you're destroying the location of it and you cannot also opportunity store a hash of the content of the document if you want to kind of formally like notarize it on the blockchain okay great things hey how's it going thanks for assignment I was just wondering if you curious as to who are the main competitors or alternatives as to 1,400 as a single standard yeah that's a good question so there are there are definitely you know you can go you know there are there are other standards trying to cover in a similar area I'm not going to try to remember all the numbers now but I mean there are a bunch out there and you can have a look and some people to Stefan Gosselin I'm not sure if he's in the room or not but I know he's talking later on today is Darden I feel a lot of analysis between them front of different standards and you know I guess the yeah I mean so throughout there are other ones out there I don't want to stand here and say well alright but take a look at the office you make me yeah make your own minds up and they say that the approach 1,400 always is always try to be relatively general some of the other standards are maybe more use case specific some of them have some features but not other features and so on and so forth but yeah understood Thanks yeah so just going side tracking from the technical bits something I see regulators really need to be educated on this technology and that is something which i think is a lacking right now so what efforts is polymath doing to sort of combat that and bring regulators whether it's the SEC or the SCA or wherever jurisdiction is on board early to understand the technology happening here and then given the nod to larger institution as a Goldman Sachs etc to adopt this because otherwise it's a great exercise in time-wasting yeah I mean it's a good point I think you know as you say that regulators are the key stakeholder in this area right I mean what we're doing a poly master with there's a few like consortium industry groups is a group of dasa da/sa who are presenting to regulators think later on this month and that's a contortion right since like ten members of which or maybe more than our of which we're one we talk to the Canadian regulators directly so polymath is a Canadian company I've talked to the UK regulators I mean these kind of discussions they tend to be more educational than anything else right it regulator's regulated I'm but and but yeah they're not known for their very fast decision-making so you know the feelings that's mainly around education it's mainly about so chipping away trying to explain yeah something I feel strongly is that this type of technology has a huge benefit to regulators I think I feel like there's an uphill battle and you know if you like the ico kind of excite them in that happen in 2017 and 2018 probably put everyone put regulators on the back first a little bit because you had all this unregulated activity for better or worse but you know putting that aside I think a security token should be a massive benefit for regulators probably a blockchain should be something they do embrace I think I think they will get their new regulators obviously not single entity there's different voices but we hear plenty of positive plenty of ambitious thinking coming out of regulators along with notes of caution yet particularly on the consumer protection side where there's a lot of caution you know probably rightly so given all the kind of inherent dangers and risks involved in crypto and I think would be much more you know nice talk a one question so next two years now like it's more from your perspective it's we're talking about security tokens or about the tokenized securities which you know better for you so I think security tokens are like the thin end of the wedge right I think security tokens make a ton of sense as a great use case it's something we can tackle today with current like scalability and things are available on public block chains today in like two years or five years ten years right I feel like this huge amount of additional stuff you do on blockchains whether it's you know exciting innovative decentralized derivative type contracts where everything is automated on chain where you can do a lot of cool and kind of crazy stuff like that I think yeah I think once you get kind of snowball effect going you'll see a lot of this innovate and we're already seeing a lot of this innovation happening today right but I think there's this kind of innovation is going to continue to grow and grow hopefully there's more more people get attracted to the space and where there's captain investment of people and so on so in the longer term yeah I think there's all sorts of crazy cool stuff you can happen but security tokens is definitely the say it's like the thin end of the wedge is what we can do today it makes sense it kind of allows us to start moving real world assets and decentralized financial protocols which i think is useful yeah I'm not sure of that thank you okay so we'd have to move on as we are later on the schedule thank you very much [Applause]