Are Security Tokens the future of Ethereum and Stellar?
In the recent past, Security Tokens have risen immensely in stature in the crypto investment space in comparison to utility tokens. This is because security tokens are regulated in most countries, have a real value and are also instantly tradable.
Unlike, the initial coin offerings (ICOs) which were mostly fraud, unreliable and did not have a minimum viable product (MVP), Security token offerings (STOs) provide a real value proposition and investment protection to the investors.
Investors owning security tokens during STOs are given tangible benefits in the form of dividends, interest rates, or share of the company’s profits by the fundraising company.
Rise of Security Tokens
Well, the majority of popular companies like Science Blockchain (SCI) in the past have decided to conduct ERC-20 security token offerings. This is because the Ethereum public blockchain provides extreme flexibility when it comes to the creation of smart contracts or custom tokens, mostly ERC20 tokens, enabling high security in STOs.
Companies organizing STOs in the past have also put their faith in ERC-20 standard due to its popularity, proven track record, and the fact that first-time investors would not take the risk to test any new public blockchain and its native tokens.
Although, one public blockchain that has been extremely bullish about the security token space include Stellar.
Stellar operates as a non-profit organization called Stellar.org that is aiming to simplify the cross-border payments and connect financial entities in order to enable faster, low-cost cross-asset transfers of value, including payments. Stellar charges a minimal network mining fee of 0.00001 lumens for each transaction.
Security Tokens Stellar Vs Ethereum
Security Tokens: Stellar Vs Ethereum
Now if we compare both Stellar and Ethereum in terms of their effectiveness in STOs, then you would be amazed that Stellar has a leading hand over the Ethereum public blockchain in recent times.
Stellar offers high liquidity to investors as it offers a decentralized exchange as the out of the box feature due to which its native tokens can be listed and traded from day one.
On the other hand, ERC-20 security tokens can also be traded immediately, but the high network congestion in Ethereum due to its popularity is a major issue leading to poor liquidity.
Stellar also has an easy-to-use built-in token issuance system, which doesn’t require the creation of smart contracts for STOs every time. Stellar, in terms of security, is also no less than Ethereum as it offers various authentication constraints and encryptions like multi-signature authorization and batching.
Stellar, in terms of security, is also no less than Ethereum as it offers various authentication constraints and encryptions like multi-signature authorization and batching.
In terms of KYC compliance, which is vital in STOs, Stellar holds an advantage over Ethereum as it supports KYC verification whereas its counterpart Ethereum does not.
If we talk about transaction cost and speed, then Stellar has a transaction settlement time of 5 seconds with a minimal network fee of 0.00001 lumens. On the other hand, Ethereum has an average speed of 3.5 minutes per transaction, which is very poor when compared to Stellar.
Therefore, it is clearly evident that Stellar holds a significant advantage over Ethereum when it comes to security tokens or STOs, thanks to its heft features such as a decentralized exchange, low-cost, high liquidity, and scalability.
Seeing such benefits of Stellar, many startups and large blockchain firms are now using XLM (shorthand for Stellar lumens) standards for STOs and token development.
Upcoming STOs based on XLM Standards
Upcoming STOs based on XLM Standards
DCI is one such upcoming unique cross-asset investment ecosystem that is going to organize its STO based on the XLM standards.
The use of Stellar public blockchain along with Haskell programming language allows DCI to provide a safe, secure and trustworthy trading environment to everyone, including investors/service providers/STO firms, who are part of the ecosystem.
To gain investors’ trust, DCI will conduct STO, support local KYC/AML procedures, provide investment protection as well as offers custodian services to investors. To unlock more secrets about DCI, read this blog.
To unlock more secrets about DCI, please visit the DCI Ecosystem and register on the website: Register Here
Originally published on: DCI Ecosystem Blog
