Delivery versus Delivery (DvD) Transfers

This month we take a look at the introduction of DvD (Delivery versus Delivery) transfers in our service offering.

As you know from our previous communications, the ERC3643 standard and our platforms already support simple transfers and conditional transfers. They allow an investor:

• In the case of simple transfers: to transfer a position from his wallet, on a peer-to-peer basis to another investor’s wallet, as long as this other investor is already white-listed and satisfies the eligibility rules defined by the issuer for the token considered and;
• In the case of conditional transfers: to transfer a position from his wallet to another (white-listed) investor wallet, upon prior approval of the transfer by the issuer (or his mandated agent).

We are now introducing and rolling out a DvD transfer functionality – secured by a specific blockchain smart contract – allowing an investor to transfer a position of an ERC3643-compatible token against a position in any ERC20-compatible token.

The sequence for performing a DvD transfer is as follows:

• Investor A to send a transfer request: Investor A instructs the delivery of a quantity of ERC3643-compatible security token Y from his wallet to Investor B’s wallet against a quantity of token Z;
• Investor B to approve (or reject) the request: Investor B receives a request for approval of the terms of the DvD transfer and validates (or rejects) it;
• Atomic settlement: Upon validation of the request by investor B, the DvD transfer is executed on the blockchain i.e. the two positions of tokens are exchanged between the wallets of investors A and B simultaneously and inter–dependantly to mitigate counterparty risk.

Although this functionality could be used in other contexts, DvD transfers have primarily been designed to allow the execution of trades agreed on a peer-to-peer basis between counterparties where a quantity of T-REX compatible security token is exchanged against a quantity of “cash token”, “stablecoin”, “settlement coin” or equivalent.

Providing the DvD transfer functionality to investors enables the transferability of assets, increasing liquidity.