Dinari: Exploring Securities-Backed Tokens

Leading cryptocurrency trading platform Coinstore announced to list stUSD+,AAPL.d and COIN.d, reflections of US stocks, issued by Dinari. Founded in 2020, Coinstore has served over 700 project teams and listed over 750 trading pairs. Trusted by more than 5 million users and 175 countries, Coinstore provides a series of products, including spot trading, futures trading, Launchpad, earn, and wallet.

1. What are Dinari securities backed tokens?

Founded in 2021, Dinari’s flagship product, Dinari Securities Backed Tokens, or dShares, allow investors outside the US a way to use cryptocurrencies to buy shares of some of the largest US companies and exchange-traded funds, including Tesla Inc., Walt Disney Co. and Nvidia Corp. The platform, which went live earlier this month, is offered under Regulation S, a set of rules that allows for SEC-compliant sales of securities to overseas investors.

The Dinari dShares protocol defines a standard for tokens backed 1-to-1 by existing publicly traded securities and order processor smart contracts that process primary purchases and sales of those tokens. A set of automated operators maintain the 1-to-1 backing while filling those orders. As orders are submitted to Dinari, order processor operators automatically rebalance the underlying securities vault accounts, working with multiple clearing services, to maintain at least 100% backing of the outstanding token issuance.

Dinari dShares are redeemable through sell orders for the current value of the underlying shares held in the vault accounts. Add: Dinari holders are eligible to dividends should the underlying asset issue them.

2. dShares tokens

Dinari dShares is designed to maximize interoperability with decentralized finance while maintaining security. This enables users to submit and manage orders manually and programmatically, as well as for developers to build composable solutions using tokenized stocks, ETFs, and more in web2 applications via API, or via smart contract

2.1 Transfer restrictions

Dinari dShares have a transfer blacklist feature for enforcing OFAC, AML, and other account security requirements. A blacklisted account will not be able to send or receive tokens. Dinari dShares deploys one TransferRestrictor per issuing jurisdiction. All tokens backed by assets issued in one jurisdiction share a transfer restrictor. Tokens backed by assets issued in another jurisdiction may have different security requirements.

2.2 Voting

In order for the Dinari dShares to trade freely without more onerous transfer restrictions, Dinari holds back shareholder voting rights from tokenholders. Since the underlying securities are held by Dinari in vault accounts, the total amount of shares would need to vote together. In order to prevent unknown actors from accumulating voting power, tokenholders would register in order to cast their vote. We expect that for any shareholder vote, a small percentage of the overall token supply would register, complete a KYC process, and participate in voting. This would result in a small amount of tokens directing a potentially large block of voting power. For the time being, we have decided not to have token holders direct the Vault’s shareholder voting decisions.

2.3 Dividends and distributions

Dinari dShares holders earn dividends from the underlying asset if that asset issues dividends. When dividends are announced for the underlying security, token holdings are snapshot at the block corresponding to the announced distribution time. Distributions are deposited into a claim contract in USDC where they are availabe for accounts to withdraw up to their distribution amount for period of time.

2.4 Proof of reserves

Dinari dShares maintains 1-to-1 backing in real time by determining if any security purchases are necessary and executing those purchases for every order request. When a request is received, if the current reserves are not sufficient to maintain at least 100% backing, purchases of the the underlying security are initiated. Dinari publishes the latest order activity in real time and current vault balances at regular intervals. Dinari vault accounts are held by a custodian and audited by a to verify the integrity of accounting and reporting.

3. Fundrasing

Dinari has finished a $10million seed funding round,adding about $2.5 million to the previous total. Before, Dinari had raised $7.5 million investment from investors including SPEILLLP, which is a Susquehanna International Group company, venture-capital firm 500 Global, former Coinbase chief technology officer Balaji Srinivasan and VC investor Sancus Ventures.

Dinari became a registered SEC transfer agent in 2022 and is pursuing other licenses to expand their offering in a compliant manner. Dinari is focused on becoming the trusted standard for real-world securities backed tokens.

4. Risk and challenge

Minting and burning of dShare tokens is not available outside of US trading time. Navigating securities laws around the world will also be a challenge. Dinari faces “complex regulatory landscapes across jurisdictions.” The end game of Dinari is to use the licenses to be able to have an operating exchange where these securities can be traded.

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Coinstore Media Contact

Pei Shan, Marketing Executive | peishan@coinstore.com

Jennifer Lu, Brand Ambassador | Jennifer.lu@coinstore.com