Quote from: Lava community on April 21, 2020, 03:04:11 AM

PoC Project Lava Adopts Confidential Asset as STO Solution

STO is the inevitable process for the blockchain technology in pursuing and gaining wider recognition and legal compliance from the mainstream society.

Now STO is still in the early stage, it has a huge space for evolution. The most important thing for STO is compliance. But the regulatory policies on STO in various countries are still unclear, the whole market is lack of corresponding standards and restrictions. And because of the various types and standards of STO protocols, it will also increase the management complexity for Licensed investment banks to conduct audits and due diligence on the issuers and the underlying assets. Meanwhile, the seamless connection of cross-chain protocols between different assets requires high compatibility of the underlying system.

PoC's emerging project Lava is exploring adopts Confidential Asset (The following is replaced by CA) as a solution to issuing and trading on-chain STO assets to strengthen the connection between the crypto market and the real world. CA is an on-chain multi-asset issuance and trading scheme based on the UTXO model, whose reliability has been fully proven by the long-standing Bitcoin network.

CA solution provides on-chain assets excellent privacy and fungibility, which is superior to smart contract or dying/color solution. This privacy is completely selective and traceable. In contrast, Ethereums smart contract lacks privacy, and the ZCashs zkSNAKRS grants no traceability. Fungibility makes on-chain assets have more liquidity and tradability. By comparison, both the "colored coins and the smart contract solution destroy the fungibility, one of the most valued features required by an asset-issuing platform. In addition, the validation of the CA transaction requires endorsement by the consensus itself (i.e. the hash rate in PoW). This is different from the merely hash it and put onto the blockchain.

Lava is a Proof-of-Capacity backed global digital infrastructure where people can create, trade and manage real-world assets. The Lava main net was launched in August 2019. There is no ICO and no private sales when Lava was first established. Now, Lava is the second-largest PoC network in the world by capacity power in just about 6 months since its main net launch. Lava network is powered by its native token LV, LV now is available on HitBTC exchange and Bvnex exchange.

The PoC consensus adopted by Lava is a competitive consensus (like PoW), which provides extremely high security for the Lava network. Besides, the UTXO transaction model and Bitcoin codebase used by Lava provides long-term proven reliability and stability. PoC consensus is based on storage device mining. Storage devices are general-purpose devices and have stable economic value. The low power consumption of storage devices determines that PoC mining is difficult to produce geographical monopolies. In summary, PoC has extremely high decentralization characteristics, the expensive storage devices have an economic value, which provides trust endorsement for assets on-chain.

Lava provides its users and miners with complete facilities, including cross-platform (Win / Mac / iOS / Android) wallets, Plotting software, blockchain explorer, asset information platform, etc. All these facilities are developed and open-sourced by Lava, no relying on third-parties. Recently Lava launched the new PoC2+ plotting format. PoC2+ standard mathematically clarifies the ownership of the plot file, repairs the technical loopholes in the original standard. It has for the first time achieved a rigid attribution for the PoC capacity power and established foundation in the mechanism level for long-term development of PoC ecosystem.

Relying on the robustness of the PoC consensus, together with a comprehensive and self-developed product line-up, Lava is currently building a multi-faceted STO ecosystem under the regulatory framework to meet the demand from customers, issuers, investors and traders across the globe. Lava will provide a set of STO business solutions, covering the issuance, trading, and management of security tokens, which subject to the global mainstream regulatory framework.

With the deepening of SEC and other securities regulatory agencies' exploring the blockchain technology, the STO regulatory framework is advancing towards maturity. Lava is cooperating with an STO license holder to exploring specific solutions for issuing STOs on Lavas mainnet.

The challenge of the CA solution is how to ensure that the transaction can be verified and not double spent on the premise of having enough privacy. In Lava's view, finding the best application scenario in the real world, rather than making it technically feasible, is the key challenge of STO. The core developers from Lava said:

Just issuing and trading on-chain assets is never a problem in 2020, what we are considering now is adopting CA solution to further meet the regulatory requirements. As far as we are concerned, the best technical solutions are these which are available to more people and can be used by more people. And this is the most important part of our work this year.

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