Ship or Die at Accelerate 2025: Compliant Onchain Products

In a groundbreaking presentation at Accelerate 2025, Taylor Johnson, founding partner of Exo Technologies, unveils the intricacies of building compliant on-chain products on Solana. This deep dive into tokenization and compliance strategies offers a glimpse into the future of blockchain-based financial applications, particularly for real-world assets (RWAs).

Summary

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Taylor Johnson's presentation at Accelerate 2025 provides a comprehensive overview of building compliant on-chain products on the Solana blockchain. With his background in fraud and compliance infrastructure for centralized exchanges and experience in building financial applications on Solana since 2020, Johnson offers valuable insights into the tokenization process and compliance mechanisms.

The talk begins by explaining the two existing token programs on Solana: the original token program and Token 2022. Johnson highlights the differences between these programs, emphasizing the flexibility and extensibility of Token 2022, which allows for customized transfer logic and metadata.

A significant portion of the presentation focuses on on-chain compliance, discussing robust access control, KYC implementation methods, and asset seizure capabilities. Johnson also introduces the concept of composable compliance through a Solana attestation service, potentially revolutionizing how KYC data is managed and shared across DeFi protocols.

The presentation concludes with real-world examples of compliant products built on Solana, showcasing how different teams have implemented these concepts to create US and Singapore-registered tokenization platforms for real-world assets.

Key Points:

Tokenization on Solana

Solana's tokenization process is unique compared to other blockchain ecosystems. Unlike platforms that require contract deployment for token creation, Solana allows tokens to be launched by simply calling an instruction. This streamlined process is facilitated by two existing token programs: the original token program and Token 2022.

The original token program boasts full ecosystem support, meaning all DeFi protocols can interact with tokens created using this program. However, it lacks flexibility in terms of customization and is immutable, preventing future upgrades.

Token 2022, on the other hand, offers extensible token logic and is mutable and upgradable. This program allows for the addition of custom logic to transfer instructions and supports various token extensions. These extensions serve as composable building blocks, enabling developers to implement pre-existing logic safely and efficiently when creating new products on Solana.

On-Chain Compliance

On-chain compliance is a critical aspect of building financial products on blockchain networks, especially when dealing with real-world assets. Johnson emphasizes the importance of robust access control in tokenization strategies. This involves ensuring that only authorized individuals can perform specific actions, such as updating KYC information or moving liquidity.

Implementing granular and flexible access control reduces risk by limiting exposure to critical infrastructure. This approach is particularly crucial for products that need to adhere to strict regulatory requirements.

Johnson discusses two primary methods for implementing KYC (Know Your Customer) on Solana: transfer hooks and the unfreeze action. Transfer hooks allow for on-chain storage of KYC data and can check both parties' KYC status during a transfer. However, this method may limit protocol integrations. The unfreeze action, using a freeze authority, doesn't store data on-chain but allows for off-chain KYC processes to determine which accounts should be frozen or unfrozen.

Asset seizure capabilities are another important aspect of compliance, particularly for dealing with sanctioned entities. Johnson introduces the permanent delegate extension, which allows admins to control user-owned accounts, transfer tokens, or burn them as needed.

Composable Compliance and Real-World Examples

Johnson introduces the concept of composable compliance through a Solana attestation service developed by ExoTech. This service allows for the creation of custom schemas for KYC data, enabling institutions like centralized exchanges to attest to wallet KYC status. This information can then be used by other DeFi protocols, creating a transparent record of KYC'd wallets.

The presentation concludes with examples of teams that have successfully built compliant products on Solana. Securitize, a US-registered securities tokenization platform, implements robust access control and a flexible token policy engine to enforce transfer restrictions. Another example is a Singaporean-registered tokenization platform that uses approved rules for deposit redemption and supports token clawbacks with permanent delegate extensions.

Facts + Figures

• Solana has two token programs: the original token program and Token 2022
• Token 2022 offers extensible token logic and is mutable and upgradable
• There are about a dozen token extensions available for Token 2022
• ExoTech has developed a Solana attestation service for composable compliance
• Securitize is a US-registered securities tokenization platform built on Solana
• A Singaporean-registered tokenization platform uses approved rules for deposit redemption and supports token clawbacks
• Taylor Johnson has been building financial applications on Solana since 2020
• Programs built by Johnson's team have secured hundreds of millions of dollars on-chain

Top quotes

1. "On Solana, there are two existing token programs. The original token program and token 2022."
2. "These are composable building blocks that allow to use pre-existing logic. They don't have to build yourself to build whatever types of products that you want onto Solana."
3. "We need to make sure that only the folks that can interact with the-- you know, update KYC information or updating it, only fund managers can move liquidity around, et cetera."
4. "Another important compliance is asset seizure. If you have some wallet that is now determined, it isn't a sanctioned country or something like that, you need to make sure that you can claw back the assets."
5. "This is a generalized attestation service that could be used for multiple things, but here we show an example of KYC where you can set up custom schemas to decide what information you want to test to."

Questions Answered

What are the two token programs on Solana?

Solana has two token programs: the original token program and Token 2022. The original token program has full ecosystem support but lacks flexibility and is immutable. Token 2022, on the other hand, offers extensible token logic, is mutable and upgradable, and allows for customization of transfer instructions and metadata. This newer program provides more options for developers building complex financial products on Solana.

How does tokenization work on Solana compared to other blockchains?

Tokenization on Solana is uniquely streamlined compared to other blockchain ecosystems. On Solana, no contract deployment is necessary to launch a token. Instead, developers simply call an instruction to create their token. This process is facilitated by the existing token programs, allowing for rapid and efficient token creation without the need to write and deploy custom smart contracts for each new token.

What are token extensions in Solana's Token 2022 program?

Token extensions in Solana's Token 2022 program are composable building blocks that allow developers to use pre-existing logic when creating new tokens or financial products. These extensions provide safe, pre-built functionality that can be easily integrated into new projects. Examples include transfer hooks for custom transfer logic and permanent delegate extensions for asset seizure capabilities. By using these extensions, developers can quickly implement complex features without having to build everything from scratch.

How can KYC be implemented on Solana?

KYC (Know Your Customer) can be implemented on Solana in two primary ways: through transfer hooks or using the unfreeze action. Transfer hooks allow for on-chain storage of KYC data and can check both parties' KYC status during a transfer. This method provides transparency but may limit protocol integrations. The unfreeze action uses a freeze authority and relies on off-chain processes to determine which accounts should be frozen or unfrozen based on their KYC status. This method doesn't store data on-chain but may be more flexible in terms of protocol integration.

What is composable compliance, and how does it work on Solana?

Composable compliance on Solana refers to the ability to create and use standardized compliance mechanisms across different protocols and applications. ExoTech has developed a Solana attestation service that exemplifies this concept. The service allows for the creation of custom schemas for KYC data, enabling institutions like centralized exchanges to attest to wallet KYC status. This information can then be used by other DeFi protocols, creating a transparent and interoperable compliance layer across the Solana ecosystem.

How can asset seizure be implemented in compliant on-chain products?

Asset seizure capabilities can be implemented in compliant on-chain products using the permanent delegate extension in Solana's Token 2022 program. This extension allows an admin to control user-owned accounts, giving them the ability to transfer or burn tokens as needed. This feature is crucial for dealing with situations where an account is determined to be in a sanctioned country or involved in illicit activities. However, it's important to note that implementing this feature may limit integration with some protocols.

What are some examples of compliant products built on Solana?

Two notable examples of compliant products built on Solana are Securitize and a Singaporean-registered tokenization platform. Securitize, a US-registered securities tokenization platform, implements robust access control and a flexible token policy engine to enforce transfer restrictions. The Singaporean platform uses approved rules for deposit redemption, allowing fund managers to control which wallets can redeem real-world assets. It also supports token clawbacks with permanent delegate extensions and uses transfer hooks for KYC validation across every transfer.