2020-03-25

Date

25 Mar 2020

Attendees

• Vipin Bharathan dlt.nyc

• kellycooper.2ds
• Bobbi Muscara
• Manivannan Pillai
• Sean Young
• Jim Mason
• Karen Ottoni
• Michael del Castillo
• Danno Ferrin
• Prasad Kanche (Deactivated)

Goals

Discussion items

Recordings

Audio

Minutes

Anti-trust policy

Capital Markets - first ever use case is payments. It is part of the capital markets umbrella.

We formed this group 6+ months ago. The rationale is to discuss different aspects of capital markets and see where blockchain - Hyperledger technologies- apply.

Started with a taxonomy - structure of instruments of capital markets. Published on the projects page. Second, different projects people are interested in, some current, some not, some active. Examples, regulations, standards, (see projects page).

eThaler token formula - how it becomes important to think about a token as a composable set of behaviors and, subsequently, what those behaviors turn out to be in terms of implementation. Meaning, to have behavior such as transferable, you have to finally implement with an interface that has a certain signature.

Interfaces are contracts (basically) between the implementation and outside world.

Contract says this particular behavior, to be implemented, must have these functions and the function signature has to be 'x'. Freezes the contract with the outside world. Addresses interoperability. 

Why is eThaler important today? If read House Bill created a couple of days ago (1,400 page document!). Significant QE for the people. And, why is a central bank - digital currency important? Talk about giving a check to Americans, the way to distribute it is with a digital wallet, and blockchain. This first distribution is QE to the people. The concept of CDBC seems to be in view of House Finance Committee. Significant step. Crises product new ideas and acceptance of new ideas that will live on long after Covid 19. 

Article - author argues why do we need a digital currency in US? Thinks differently about central bank digital currency. https://www.forbes.com/sites/davidblack/2020/03/01/who-needs-cryptocurrency-fedcoin-when-we-already-have-a-national-digital-currency/#1ca5ef8b4951

All deposits are digital, credit card transactions are digital. But, it always comes with an intermediary. That's where the risk is tremendous. Digital cash in your account is protected by FDIC only up to a certain amount. What is standing in the back of all of this, (and it's tied to a bank, if the bank goes bankrupt, currency moves to another bank, etc). FDIC ultimately moves account to other banks, but only to the max amount insured. Difference with CBDC, not any of those things.

Backed by the central bank. Backing doesn't change, mechanics do. If you're holding in your wallet, nothing is standing between you and the central bank guarantee. Of course, the central bank can go under (low risk). 

Misinformation - why we have digital cash today or CBDC, the point is many countries are going for it and not all misinformed. They know more than some article authors. 

Current crisis - thousands of dollars to all people - digital wallet great idea for transferring value. Also, in NY, with Big Apps blockchain challenge. Digital wallet alert people to money and services, wallet has powerful repercussions also.

Emergent uses are important. 

== Move to eThaler project. 

	Fungible - one physical dollar can be substituted by one digital dollar.  Not, for example, not from a bad source with behaviors. Variable  supply, not fixed like ICO type supply. Supply can vary according to the Feds control of the monetary policy. Today function is between Feds and US Treasury. The supply is controlled, you can withdraw money from the supply. Physical dollars. Sometimes more are printed to replace, based on physical deterioration. Token can be minted or born. Fractional - can be divided into either decimals, up to 4-points for micro payments.
	D - dividable C - compliance T - transferrable Fulfills KYC AMC check - compliance kicks in when transfer amount is greater than 1,000. Starting to model wholesale CDBC. May not require heavy compliance because institutions are regulated. Might require further look into transfer operations amounts. P - Pausable. Tokens received and become tainted? Challenges notion of fungability.  Freezing - bugs or upgrade of infrastructure. Pause and resume particular account and set of tokens. SC - supply control mintable and burnable.
	JSON file Taxonomy services TTF printer. can parse JSON and come out with no errors.

Interface. Dividable, Transferrable, Pausable, Compliant, etc. need interface. Just starting. 

TTF already says what those behaviors need to implement, as far as interfaces go. 

Final challenge TTF, need to use JSON files to create user-readable documents that detail every one of these things out. Use case gets transformed from business use case into a specification (functional) for implementation.

11-55 part of the project.

Functions, intersection of roles.

Roles important - mintable - only central bank or its agents can mint the token. Also, burnable. 

Transferrable - can only happen between parties in the wholesale system.

Identity enters at an early stage. 

At HGF - Global Legal Entity - Identity Foundation. Implemented using early forms of Indy, an organizational wallet that went from LEI (enterprise focus) to role focus. If the Fed has a chief mint officer - delegated responsibility of minting. May need sign-off by someone else. Roles - created. PoC with an organizational wallet that goes from the institution to the actual roles. 

Great idea to integrate roles into eThaler - for end to end.

Asset transfers and settlement - Mani

Focus of initial phase to build basic infrastructure - token to start with commercial banks for transfer. Want to create a standard on the contact side, can eventually be a standard in commercial banks for issuing their own tokens, later. Started looking at what standards should be applied. Initial implementation.

Regional token will not be issued by commercial banks - they will be a conduit.

Look at infrastructure - enterprise - Hyperledger Besu as base for implementing the token. 

11-55 one contract to be used. Multiple currencies, multiple tokens. 

Open source over the next few weeks. Open test network. 

First test one currency, one central bank, couple of commercial banks. 

Assets, value transfer, and settlement. With a stable coin, infrastructure can be with bank issuing token, that can be settled with CDBC token. 

Swap or a derivative.

Actions - behaviors - well defined in the TTF. Example pause. In order to implement this behavior = implement this interface

Besu = any specific reasons, Ethereum client, why Besu selection

Wanted to have an enterprise standard

Besu goes hand in hand with TTF definition, makes sense to use Ethereum infrastructure. Anyone can adopt.

Transaction time? Far away from that. Goal for transaction time? Models sketched out, one - wallet separate from blockchain - transaction times would be almost instantaneous. Blockchain system of record, anchor. 

Implementation details, we'll see how we can separate. Creation of a digital wallet, non-trivial task. Secure digital wallet.