Security Tokens have come to stay in Cryptosphere as the vital infrastructure, that can stimulate its growth is gradually evolving. The development counts as a tremendous gain for the Tokenization progression, especially for tangible assets.
Security Tokens are real assets like real estate, companies, precious metals, venture capital, private equity, hedge fund and others that have been tokenized in a digitalized form. Consequently, its value can be traded and exchanged using its digital representation.
The sector is an immense regulatory labyrinth and navigating it with the Blockchain to make it open and transparent and much accessible to anyone without geographical and economic status is no mean a task. There are so many gaps that need bridging to make it substantial and transformational in the world of finance. One of the prominent projects reshaping the industry and bringing it to maturity is Openfinance (OFN).
Some experts think that referring to it as a Security Token Exchange is a gross oversimplification.
However, OFN is the first secondary market for trading digital alternative assets tokenized security. The goal is clearance and settlement processing of Security Tokens serving as the intermediary for transfer agents, custodians, issuers and other market players.
The platform allows trading by accredited and non-accredited investors in digital securities accessible by those in the US and outside. In the same vein, institutional and individual investors around the globe can also utilize the network for their benefit. OFN is regarded in this space as the pioneer since it has spearheaded most of the innovation and was the first to gain US SEC regulatory oversight. When it comes to regulation as an Alternative Trading System (ATS), it is only a level behind NASDAQ and the New York Stock Exchange.
According to the builders of the project, properties in the alternative asset industry worth $9.5 trillion have traditionally been challenging to buy and sell at fair prices because of a lack of trust, no uniform processes and market inefficiencies. Therefore, it aspires to grow into the one-stop-shop for investors seeking reliable and resolute entry into digital securities, especially to get proper knowledge of the dictates associated with unregulated ones.
They believe moving alternative assets to digital composition discharges multiple barriers of traditional investment, eliminating excessive paper-based methods implementing every applicable regulation automatically.
When you look at the operational settings, Openfinance Network possesses three principal elements made of the Ledger, token and the adaptors. These are the factors the protocol functions and gains its strength.
Ledger: The OFN system is on top of the Ethereum Blockchain, and it determines the key Smart Contracts for the fundamental actors in the security token model like the validators, entity, transactions and asset.
Token: The native token of OFN is the currency for all transactions in the network. Without it, you cannot navigate through the entire system.
Adaptors: It is the protocol which interacts with the off-chain participants in the transaction of Security Tokens.
The three elements are constructed in separate processes to allow several connected methods in security token buying and selling. The Openfinance holds a world registry of assets, which are designated by the security tokens including actors like broker-dealers, transfer agents, custodians or escrow agents that can be applied on many security token rules.
Technically, the Ledger digests its communications making use of Smart Contracts established at the entity and asset point. The asset Smart Contract is the nucleus contract that files data about assets on the platform, as well as their relationships, transactions and events.
On the part of the asset Smart Contract, it comprises of another three main information formations, named Relationships, Transactions and Activities. The latter embodies all activities that occur at the asset level, while, the Transactions take care of all the assets trading between entities.
When it comes to Relationships, its role is to define different types of connections between other assets and entities such as registrar, owner and validator. Then we have the Verifications and Transactions which comes under Entity Smart Contracts to keep track of the validated verifications and describe different types of relationships between assets and other entities, respectively.
Get To Know More About OFN
Openfinance is one of the significant projects expanding the frontiers of Blockchain technology. Kindly do a better job of learning about the project by joining its various communities below: Twitter, LinkedIn, Medium, Telegram & Youtube. Verify the source code if you are technically inclined and wants to explore how the configuration works on Github.