TPL — A Framework for Secure Peer-to-Peer Exchange

Blockchain technology empowers the individual, holding the promise of an open financial system. While it has steadily matured over the last few years, significant challenges remain, in particular towards integration with the traditional financial system. If performed wisely, this integration could lead to a new system in which the usual power relations are inverted, and individuals are in control.

This process, however, might put financial innovations at risk if exclusively driven by institutions that will tend to favor the status quo. To be successful, the integration must be led from within the community, proposing clear guidelines on how to onboard institutional players.

TPL (Transaction Permission Layer) is a first step in this direction, providing a self-regulatory frameworkto support formal decentralized economies while preserving users’ freedom to innovate.

In TPL, participants are validated via Know Your Customer (KYC), Anti Money Laundering (AML), and investor accreditation processes, inspired by the ICANN process for domain validation which the internet industry is already familiar with.

When issuing a token, a project can demand its buyers to meet certain validation requirements, which are introduced within the token smart contract code itself. The protocol then validates that participants meet these requirements, and approves transactions automatically if they are met.

An immediate consequence is that TPL allows any project to guarantee regulatory compliance in every single exchange between participants, beyond just the initial offering.

Today we are publishing a framework proposal and a proof of concept for smart contracts implementing TPL. Feel free to comment, send us feedback, and submit contributions.

A community-driven framework

TPL is a community effort, sponsored and initially led by Zeppelin.

At Zeppelin, we believe an open economy is critical to enable economic freedom in the world. We plan to support TPL as the core framework to achieve this vision. We’ll make use of our experience building a standard framework for smart contract development (OpenZeppelin), developing an operating system for smart contract applications (ZeppelinOS), and performing security audits to 70+ projects in the blockchain space.

Next steps

As many of Zeppelin’s clients and community members expressed their support for TPL to guarantee regulatory compliance with their token holders, we will include support for TPL-compatible tokens within OpenZeppelin. This will allow any project to easily implement TPL to automate their regulatory compliance.

We will also develop a simple Dapp to interact with the proof of concept smart contracts, as an example implementation for how participant validation and transaction approval works within TPL.

If you are interested in supporting or collaborating in the project, we invite:

  • Entrepreneurs to get in touch to learn how your project can stay compliant using TPL.
  • Developers to head over to our GitHub repo, and contribute to the proof of concept for the smart contracts implementing TPL.
  • Regulators and lawyers to get in touch to explore how you can introduce TPL within your practice.

To learn more about TPL, please visit tplprotocol.org.