
The Security Token Ecosystem Study Summarized #1
Last week we published our study all about digital securities and the companies that work in their surroundings together with the Frankfurt School Blockchain Center. Today marks the start of a daily, one-week series of blog posts coming out to elaborate on our findings. Months of research went into the comprehensive results with a lot more challenges & headache-inducing data points on the way than one might anticipate. A personal conclusion of the ecosystem BlockState operates in.
What we think — Infrastructure providers
“In the end, issuers want to be blockchain-agnostic and they are looking at a wide variety of infrastructure to solve this problem.” Samuel Brack, our CTO, said. This statement has definitely proven to be true. Nowhere else in the ecosystem are we looking at companies this advanced with their product as with the infrastructure providers. Most companies accommodate between 51–200 employees, have a, for blockchain-measures, long company history and most of them have proven their concept. Nevertheless, once you combine these findings with further data we gathered, it looks a bit different.

In alignment with our previous study about STOs, Ethereum is being used far more frequently than any other infrastructure. Even though data regarding the technological framework for issuance providers proved to be fairly scarce, the ones we did identify preferred the everlasting token-pioneer. Stellar had quite a few notable mentions and poses as the runner up but from 3rd place on it becomes a single-digit percentage game. At least for public solutions.
Disassociated from the public ledgers that partly still have Proof of Work deployed and face scaling issues en masse, private protocols are on the rise. This was of no surprise to us, we work with one of the pacesetters in the private sector, r3 Corda and the developments do appear logical. Privacy, scalability & decentralisation. Those are the main aspects of DLT and it’s broadly accepted that you can deploy only two of these at a time. Now corporate clients really need scalability to run company operations and even more do they need privacy. Hence decentralisation has to be cut back, resulting in private protocols with their very own consensus algorithms. The type of demand might result in a paradigm shift for infrastructure providers but only time will tell.

The research process
Infrastructure providers presented us with the most straight-forward research we could expect. Due to the advanced state of the companies technology in nearly all cases, the information we gathered was relatively easy to access and the state of operability wasn’t a tremendously well-guarded secret as with other categories companies but more on that in the coming days.
If there was anything that confronted us with a little bit of uncertainty in this category then it was the consensus algorithms. While platforms like Ethereum made it easy, r3 corda, for example, doesn’t have a definite name for their solution so especially with the private solutions we had to go over many whitepapers to define the correct type of algorithms the projects used.
Conclusion
Overall infrastructure providers didn’t confront us with anything too unexpected as most of them already established their own reputation. However it is great to see that even though Ethereum inhabits a near monopoly-like position in the ecosystem, smaller projects are actively trying to add value by applying their own solutions to a proprietary framework. The following years will shed light on whether their chances to gain their own market share will increase or if Ethereum will reign victorious over the competition.
If this article made you curious make sure to check out the full study and stay tuned for more blog posts like this onecoming the next days!


