When selecting a token technology, you should choose the technology that works best for your project. The ERC-1404 smart contract attempts to add some tools for issuers. Ravencoin does the same through Restricted Assets at a far lower cost while keeping features like IPFS, meta-data, memos, and unique names.
Cost to Transfer
The cost to transfer Ravencoin assets is considerably cheaper than ERC-1404. The cost varies by load on the Ethereum network, and the network is currently at a pretty high load because of the popularity of DeFi lending, trading, etc. The cost of transfer could vary dramatically depending on the at-the-time load on the Ethereum network. If your token needs this DeFi network for its value, then you may want to bear this cost. But if your token is not dependent on the DeFi network which is mostly on Ethereum (currently), then Ravencoin assets transfer for a much lower cost.
Unique Names — Anti-Spoofing
Having a unique name for your token is important for two reasons. The first is to prevent fraud and spoofing using identically named tokens. Just like we all know that IBM on NYSE market is a specific company. Imagine if there were 14 different stocks named IBM, and the only thing that distinguished the company formerly known as International Business Machines was a 40 character hex that looks like this: 0x04abeda201850ac0124161f037efd70c74ddc74d, but there are thirteen others that could look similar. It can lead to fraud as other contracts with a name of IBM masquerade as the real IBM.
Ravencoin takes the unique name to another level by using only uppercase letters, underscore, and . (dot), and then puts in some rules that the . (dot) and the underscore can’t be at the beginning or end of the token name, and you can’t include consecutive underscores, or dots. This is to reduce the incidences of fraudulent tokens. By using i (lowercase) and I (uppercase) in a token, you can make it look similar (with most fonts). For example: IBM looks similar to iBM or lBM. The lowercase letters are excluded from token names.
Unique Names — Branding
The second reason that a guaranteed unique name is valuable to token issuers is that the brand can be built using the name. Your name is included in Ravencoin asset browsers. Tokens that use Restricted Assets always begin with $, so you know that $ISLAND is a Restricted Asset and may be subject to restrictions by the issuer — usually for legal compliance.
Ravencoin asset issuance platform is purpose-built for asset issuance. So much so, that the core software that anyone can download for free has a built-in user interface for creating assets. The core software also has RPC calls to create and transfer assets so issuance and transfers can be programmed or scripted for full automation.
Ethereum, by contrast, runs a generic virtual machine, and the ERC-1404 contract is just a template smart contract (program) that can be used to issue and transfer assets. The name of this instance of the ERC-1404 contract is the 40 character name referenced above as the identifier of the token. The higher cost of operation is because the virtual machine of every computer runs the ERC-1404 contract to effect transfer. As more rules are added, the cost of GAS to call the contract goes up.
One challenge with assets is knowing the commitment or promise behind the token. This can lead to fraud if the promise of the token is separated from the token itself.
Ravencoin assets can be created with an IPFS content id that is embedded into the blockchain. Because of the way IPFS works to reference the file information with the hash (content id), it makes it impossible to edit the meta-data associate with the Ravencoin asset. This information is standardized and available through various Ravencoin asset explorers. The meta-data can be PDFs, movies, text files, or even entire folders or websites that convey the meaning and purpose of the issued asset.
Because Ethereum smart contracts are programs, it is possible to modify the contract to add meta-data in a non-standard way, and some non-standard contracts have done so. Since it isn’t in the standardized smart contract, it isn’t exposed via standard explorers.
Memos in Ravencoin are optional immutable IPFS data added to any transaction. This extra data can be used by the issuer to link initial issuances back to internal records, to publicly record cost-basis information, record ‘rule 144’ restrictions, include information about legal status, include details of rewards or dividends, or mark transactions as required.
This may or may not be helpful for every project, but there is additional tracking of assets in Ravencoin because it stores all UTXO (Unspent Transaction Outputs). Every transaction (issuance and transfer) is stored in its own digitally signed transaction. The sum of these UTXOs for an address is the address balance, and the sum of all UTXOs for all addresses for an asset will always match the issuance plus re-issuances and so all assets can be audited with an open-source script. All assets can be tracked back to issuance.
The Ravencoin Restricted assets are built for regulatory compliance or when you want, as an issuer, more control over the token you’ve issued. It provides the issuer, who ultimately redeems security tokens, the power to be compliant with a host of rules in varying jurisdictions.
Tags or Whitelist
Tags are the ability to assign a unique name to a Ravencoin address. This can be used to designate that KYC was done on the owner of the address, or that the owner of the address is ACCREDITED as defined by the SEC. Tags can also be used to designate addresses as being owned by a US person, or other criteria. These tags can then be used with token rules to determine whether a token can be transferred TO an address. Whitelisting is the Ethereum way of adding every address to the smart contract that can transact and increases GAS cost.
This is a built-in feature that can only be activated by the issuer of the token. It halts all transfers of the token until an unfreeze has been initiated.
Freeze Trading by Address
This allows the issuer to freeze a token into an address. This is for compliance or on a court order. Additional information about the reason can be included in the IPFS memo.
Ravencoin Restricted Assets can have rules like (KYC & ACCREDITED). With & (and) | (or) and ! (not) operators with parens for precedence. Rules can be changed for any Restricted Asset that remains reissuable. Rules can be changed only by the issuer retains the owner token.
Ravencoin Restricted Assets are objectively better for almost every use-case than ERC-1404 where interaction with DeFi isn’t necessary or desired. Ravencoin Restricted Assets have built-in compliance options. These are only active on Restricted Assets that start with a $. Other Ravencoin assets not beginning with $ remain unrestricted.