How-it-works: Confidential Security Tokens (XSC)
By Mels Dees

Oct 22, 2020

The Dusk Network is a privacy-enabled blockchain specifically designed for the compliant tokenization of securities. In this blog we talk about the Confidential Security Contract Standard (or XSC, for short), its importance in the future of the financial industry, and how Dusk Network achieves this standard.

Watch the video here:

Everything you need to know about XSC

Dusk Network is a public, and permissionless blockchain powered by the Phoenix transaction model. We created Phoenix because existing transaction models are incapable of extending privacy to public outputs associated with smart contract operations, such as gas payments or refunds.

We use Phoenix to power Zedger. Zedger is the first transaction model in the financial industry that supports a standard for decentralized issuance, offering, exchange and handling of securitized assets. This standard is XSC - the Confidential Security Contract Standard.

The XSC standard provides a wide range of functions needed to comply with security regulations. For instance, the XSC standard prevents pre-approved users from owning more than one account; it supports dividend distribution and shareholder voting; it even handles capped transfers, where users are unable to exceed the ownership threshold for an asset.

Companies or platforms seeking to raise capital benefit from XSC in multiple ways:

1. Security Tokens are programmable, thus reducing cost by automation.

2. They allow for easy integration by industry parties.

3. They are efficient for performing corporate actions, such as dividend payments or calling a vote.

4. They enable automated audit trails to reduce overhead.

Although its use with securities is one of the most promising applications of our Token Standards, many kinds of XSCs are possible.

We have recently shared that we are working on a Bond equivalent as well, dubbed 'XSC-B'. We’re even capable of standardizing more complex financial structures, as with the Vertical Funding example for the Next Generation Capital use-case.

In these structures, we could program vesting and milestone financing, thereby automating the growth process of bundled start-ups.


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Learn more about Dusk Staking and Staker Anonymity and join Tech lead Emanuele Francioni for a closer look at the key building blocks of our Segregated Byzantine Agreement.

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