# 2.8.4 Verifiable Legal Binding

In developing the OAE framework, we've opted against the traditional method of legal wrapping  - where asset ownership is transferred to a dedicated entity (like a trust), and tokenized shares are issued against it. Our approach maintains direct ownership with the asset owner, leveraging a structure of verifiable legal binding.

<mark style="color:orange;">Legal Binding Explained:</mark>

* KYC and pledge:   When an asset's smart contract is established, the administrator of the contract legally pledges to accurately represent the asset's factual and legal status, assuming responsibility under both contractual and criminal liabilities. This commitment is tied to the asset owner's KYC-verified identity and is encoded within the smart contract.
* Fraud Detection:  To reduce the potential for fraud, each asset that comes on board must establish an event mirror oracle policy. This outlines how authentication, compliance validation, and insurance procedures will be conducted for the asset. It plays a crucial role in determining the asset's credibility score.
* Insurance Coverage: Actions or events occurring outside the OAE ecosystem, which might lead to losses for asset token holders, are safeguarded by insurance providers. This ensures that investors are protected against unforeseen circumstances affecting their holdings.

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For more details please refer to[ I - AC interdependence and regress claims ](/2.0-oae-onchain-assets-environment/2.7-iac-partners/2.7.3-i-ac-interdependence.md)section


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