Why use Stellar consensus protocol for tokenization
Stellar is a blockchain platform that is primarily focused on integrating distributed ledger technology into existing financial infrastructure. The Stellar consensus protocol is an open-source protocol for exchanging money. Stellar connects Banks, payment systems and people around the world. Smart contracts combine protocols with user interfaces to formalize and secure relationships over computer networks. Objectives and principles for the design of these systems are derived from legal principles, economic theory, and theories of reliable and secure protocols.
Liquidity, performance, security, and ease of use make Stellar an ideal protocol for tokenization. Stellar provides a built-in exchange which does not require the use of listing to a 3rd party exchange. Often listing on these 3rd party exchanges can be very costly with million dollar listing fees and maintenance fees that can run 500k pr. Month or more. By utilizing the built-in exchange, investors benefit directly by having those funds distributed back to token holders in the form of Dividends.
Token issuers can customize smart contract features to satisfy securities laws. Consumer protection and KYC/AML requirements are added using its built-in compliance protocol feature, providing for a self-regulating ecosystem. Using this feature the system can filter sanctioned countries and allow an accredited investor to trade with another accredited investor. Other programmable features include Dividend distribution. The transparency of the public ledger allows for ease of auditing while keeping investors information secure and private. Tokens created on the stellar consensus network can also be listed on 3rd party exchanges like Bitterex and Binance in the same way as ERC20 tokens. Another important factor is performance. Stellar remittance fees are cheaper and faster than ERC20, and the stellar network can handle more transaction simultaneously while not being susceptible to the scalability issues of the ERC20 protocol. The ease of use and simple programming of the stellar protocol is also a security feature as it prevents complicated and exploitable codes to be programmed into its network. Offline storage and ledger wallets allow users to keep tokens offline, where they can not be stolen or subject to internet breach. Another security feature is authorization revocable which allows the remitter to flag and disable tokens to be spent, that has been lost or stolen. For investors who wish to use BTC and ETH, do not worry USrealcoin will be able to accept those too!
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