London-based startup Clearmatics is running an enterprise blockchain hackathon hosted by Barclays. It aims to find the best applications for its interoperability protocol, especially for Hyperledger Fabric and Ethereum to communicate. The hackathon is being held at the Barclays fintech hub Rise in London on 5-6 February. Barclays previously hosted to popular hacks to explore the use of ISDA's new derivatives standard for blockchain applications.
Many financial and enterprise applications are being built on a handful of blockchain protocols: Ethereum, Hyperledger Fabric, Rope, Digital Asset and MultiChain. The concern is that blockchain networks will create large silos of data. For example, there are a number of trade finance blockchain networks. The network is targeted at specific industries.
Utility Settlement Coin's interoperability need
In Clearmatic's case, they're the technology behind the Utility Settlement Coin (USC) which was jointly conceived with UBS back in 2016 and is expected to launch this year. Major financial institutions.
Although the group has been expanded, the BNY Mellon, the Canadian Imperial Bank of Commerce, Credit Suisse, Deutsche Bank, HSBC, ICAP, MUFG, NEX, Santander, UBS State Street and Founder.
The coin should be used for payment on any type of network. Hence the USC blockchain needs to interoperate with a variety of enterprise blockchains based on different technologies.
By enabling trading of a tokenized assets – such as a stock, bond or derivative – in exchange for digital currency, immediate settlement finality can be achieved, referred to as delivery versus payment (DvP). Because there's no waiting for payment there's no risk of non-performance. The removal of the counterparty risk reduction the need for the intermediaries that act as the financial market central counterparties.
Similarly, a coin in one currency could be instantaneously swapped for another currency – payment versus payment (PvP). In both cases where a tokenized asset or one digital currency is exchanged for another digital currency, you need to have an atomic swap. So if one side of the transaction fails, both sides must fail.
Ion and the interoperability challenge
Hence Clearmatics developed the Ion framework to enable cross-chain atomic swaps and decentralized exchanges. The Ion source is on Github, and the company has written extensively about the protocol on its blog. Axoni which like Clearmatics uses Ethereum's technology.
Polkadot and Cosmos have made it say "their focus on public access chains". The developers of Cosmos were behind one of the very first permissioned blockchains, Tendermint.
Other permissioned interoperability approaches exist. There's the Corda Network which enables interoperability with other Corda-based DLTs, but not other technologies. The Hyperledger initiative has the Hyperledger Quilt project. Accenture has implemented a solution that uses a trusted "interoperability node", a centralized solution that may work for some applications but may be unpalatable for a project like USC.
Many "Band-Aid" integration approaches involve APIs or multiple levels of blockchains. Ion is platform agnostic, and Clearmatics emphasizes that Ion is platform.
This is not the case, but it is not the same. Late last year Hyperledger announced that Ethereum smart contracts had been integrated into Hyperledger Fabric. That makes interoperability between these two blockchains slightly lower hanging fruit.
However, it's unlikely Clearmatics will turn away teams that are willing to explore interoperability with other enterprise blockchain technologies though the task may be beyond to hackathon timeframe.
One thing that participants might want to know who will own the hackathon code? I know Clearmatics has not responded to Ledger Insight's query. The Ion Framework code, like the large parts of Ethereum, uses the GPL 3 license. Permissive compared to the Apache 2 License and use by Hyperledger Fabric and Corda.
While Clearmatics has a strong motivation for the USC project, the larger picture is an enterprise blockchain interoperability is critical. The more minds that are focused on the problem, the better.
The hackathon sign up is on Eventbrite.