What is ERC-884?

ERC-884 refers to the creation of tradable ERC-20 tokens. Each token determines a particular share in a Delaware company, following the standard of David Sag. The ERC-884 token is developed to represent equity issued by a public or private Delaware corporation.

As a result of the new regulations, organizations based in the US state of Delaware are now able to use blockchain technology to control share registrations.

Since ERC-884 tokens are ERC-20 compatible, they can be traded on any cryptocurrency exchange that manages the ERC-20 tokens exchanges. It also removes the need for the companies to employ an initial mechanism.

By using an ERC-884 token, a company may be able to raise capital, either through an IPO or a private equity sale, in accordance with Delaware Corporations Law, while avoiding the requirement for a customized share register.

There are quite a few regulations surrounding the ERC-884 token. For instance, tokens can’t have a partial value, only their full value. Meaning that every ERC-884 coin has to mirror a different uncountable share that has been paid for. Information on not fully paid shares doesn’t require tracking.

In addition, it is enough to be aware that a shareholder has a particular amount of tokens, referring that the ERC-884 token doesn’t have to be connected to a particular quantity of shares.

The identities of every token holder’ have to be verified, as well as whitelisted. Nevertheless, there is no additional crowdsale contract to safeguard the owner of the token whitelisting. Regardless, the ERC-884 needs whitelisting for every token holder.

Also, adopting ERC-884 requires the use of an off-chain database to satisfy the "Know Your Customer" criteria. The implementer must retrieve the identity and physical address of any ETH address, hash that data, and connect the produced hash to the hash stored in the contract using the hashing algorithm.

In other words, the implementer is making sure of the cohesion of their information. 

The organization can consolidate a list of shareholders. As for the regulatory regulations, it has to give permission for the organization to develop the shareholder list that is required. Recording the data and share trades is also required by regulators.

Finally, if shareholders lose their private keys or tokens, they must move them to a new address. This is a system requirement in order for their address to be revoked and their tokens to be re-issued to a new address.