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Add ERC: Transparent Financial Statements #697
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title: Transparent Financial Statements description: A.P.I. for Protocols to Ensure Open Transparent Financial Data for all Investors. author: Ignacio Ceaglio (@Nachoxt17) <[email protected]> discussions-to: https://ethereum-magicians.org/t/e-i-p-8900-transparent-financial-statements/21191 status: Review type: Standards Track category: Interface created: 2024-09-20 requires: 20
Improved Specification for more Transparency.
Co-authored-by: Sam Wilson <[email protected]>
Co-authored-by: Sam Wilson <[email protected]>
Co-authored-by: Sam Wilson <[email protected]>
"All Transparent Financial Statements Standard implementations MUST implement ERC-20 to represent shares, and the financial numbers such as Revenue, Costs of Goods Sold, Operating Expenses, Operating Income, EBITDA, Other Income and Expenses, Net Income and Earnings Per Share MUST be displayed in the value of the protocol's stablecoin of choice."
Co-authored-by: Sam Wilson <[email protected]>
Co-authored-by: Sam Wilson <[email protected]>
Co-authored-by: Sam Wilson <[email protected]>
Corrected 2 mintor formattings and changed to "Review".
eip-review-bot
changed the title
ERC-7776: Transparent Financial Statements. Fixed 2 minor formatting issues mentioned by @SamWilsn and changed to "Review".
Add ERC: Transparent Financial Statements
Nov 3, 2024
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ERC-7776: Transparent Financial Statements. Fixed 2 minor formatting issues mentioned by @SamWilsn and changed to "Review". You can find the ERC Document HERE.
Abstract
This proposal defines a standard API that enables EVM Blockchain-based companies (or also called "protocols") to publish their financial information, specifically Income Statements and Balance Sheets, on-
chain in a transparent and accessible manner through solidity smart contracts. This standard aims to emulate the reporting structure used by publicly traded companies in traditional stocks markets, like
the SEC 10-Q filings. The financial statements include key information, namely as Revenue, Cost of Goods Sold, Operating Expenses, Operating Income, Earnings before Interest, Taxes, Depreciation, and
Amortization (EBITDA) and
Earnings Per Share-Token (EPS), allowing investors to assess the financial health of blockchain-based companies in a standardized, transparent, clear and reliable format.
Motivation
The motivation of this ERC is to bring seriousness to the cryptocurrencies investments market. Currently, the situation is as follows:
The current state of token investment analysis is opaque, with most information presented in an abstract and non-quantitative form. This standard API ensures a consistent and reliable way for investors to
evaluate blockchain projects based on real financial data published directly on-chain, not just speculative promises. This will establish a greater
trust in the cryptocurrency markets and align token analysis with the standards of traditional equity markets.
Most ERC-20 Tokens representing EVM Blockchain-based companies (or also called "protocols"), DO NOT work the same way as a publicly traded stock that represents a share of ownership of the
equity of that such company (so the user who buys a protocol's ERC-20, is also now a share-holder and co-owner of the business, its profits and/or its dividends), but rather function as "commodities" such
as oil; they are consumable items created by said EVM Blockchain-based company (or "protocol") to be spent in their platform. They are publicly traded and advertised to be representing the underlying
protocol like a share, working in practice the same way as a commodity and without any public, transparent and Clear Financial Information as publicly traded stocks have.
Added to that, most token research analysis reports that can be currently found on the internet are informal Substack or Twitter posts, with lots of abstract explanations about the features of the said
protocol to invest in, that lack of transparent financial numbers and factual financial information, that are made by anonymous users without real exposed reputations to affect.
This ERC will improve that by giving users and investors transparent, clear and factual financial information to work with when analyzing as a potential investment the such
EVM Blockchain-based company that implements this ERC in their solidity smart contracts, and that will generate trust, transparency and seriousness in the cryptocurrencies investments market long term.
Specification
The key words "MUST", "MUST NOT", "REQUIRED", "SHALL", "SHALL NOT", "SHOULD", "SHOULD NOT", "RECOMMENDED", "NOT RECOMMENDED", "MAY", and "OPTIONAL" in this document are to be interpreted as described in
RFC 2119 and RFC 8174.
All Transparent Financial Statements Standard implementations MUST implement ERC-20 to represent shares, and the financial numbers such as Revenue, Costs of Goods Sold, Operating Expenses, Operating
Income, EBITDA, Other Income and Expenses, Net Income and Earnings Per Share MUST be displayed in the value of the protocol's stablecoin of choice.
All Transparent Financial Statements MUST implement ERC-20's optional metadata extensions.
The
name
andsymbol
functions SHOULD reflect the underlying token'sname
andsymbol
in some way.All methods MUST be of visibility
external
.All methods MUST return their financial numbers valued in the provided
stablecoin
.If the contract owner uses data or methods from other owned smart contracts external to their smart contract implementation of this standard, those smart contracts MUST be verified in the correspondent
blockchain explorer and of open and visible source code.
Timestamp Constraint: For all methods,
startTimestamp
MUST be less than or equal toendTimestamp
. IfstartTimestamp
is equal toendTimestamp
, the method returns a balance sheet snapshot. IfstartTimestamp
is less thanendTimestamp
, the method returns an income statement for that period.Output Structs: Instead of a single
uint256
value, each method returns astruct
with one or OPTIONAL moreuint256
entries to allow for detailed financial data, each one with their own customizedentry
name
.Definitions
Methods
stablecoinAddress
Returns the
address
of the individual stablecoin used to value the publicly displayed financial numbers.revenue
Returns total revenue generated by the protocol within a time period.
cogs
Returns the cost of goods sold within a specified period.
operatingExpenses
Returns the total operating expenses within a specified period.
operatingIncome
Returns operating income for the specified period (Revenue - COGS - Operating Expenses).
ebitda
Returns EBITDA for the given period.
otherIncomeExpenses
Returns non-operating income and expenses, such as interest and investment gains or losses, for the specified period.
netIncome
Returns net income for the period (Operating Income + Other Income/Expenses - Taxes - Depreciation).
earningsPerShare
Returns Earnings Per Share Token (EPS) for the period.
fullFinancialReport
Returns a comprehensive struct that includes all the prior financial details of the protocol combined: Revenue, COGS, Operating Expenses, Operating Income, EBITDA, Other Incomes and Expenses, Net income,
and EPS into a unified
Struct
.