Key Points

References

Key Concepts

IBM - Economic Impact of Blockchain - 2020

https://drive.google.com/file/d/1Umsfk4X7afh-RKUV4OODqNOkKBgfJHyC/view?usp=sharing

Andy Martin - Token Economy 

https://www.linkedin.com/pulse/token-economy-andy-martin/

Possibilities

1. New business models with smart devices bargain connected in micro-transactions
2. Payment methods allow real-time clearance and settlement in some cases
3. Ownership and value are exchanged simultaneously
4. New secondary markets make ill-liquid assets liquid by fractionalisation
5. Slow, expensive and manual paper processes needed for trade are put into smart contracts. Anything of value can be tokenised to be traded including physical assets
6. Tokens can reward good marketplace behaviors

The theory - no middleman
trade value, peer to peer, without the need for anyone in the middle to make sure ownership is transferred with no double spend

The reality
There IS a financial blockchain payments platform in the middle. Just like POP money has Zelle or Venmo in the middle. Easier? True. No middle man? False.

The theory - blockchain payment systems are trusted

The trusts in theory

• identity - who the parties are
• provenance - of the products or services and payment exchanged
• exchange guarantees - smart contracts can guarantee execution as atomic.

The trusts in reality

• identity - who the parties are - low risk of digital identity fraud
• provenance - of the products or services and payment exchanged still need verification but much of the data is cryptographically verifiable
• exchange guarantees - smart contracts can guarantee execution as atomic but the digital transaction needs physical confirmation in many cases on the value and quality exchanged

Digital Economies integrated by Blockchain 

From Andy Martin, IBM

https://www.linkedin.com/pulse/my-first-week-vblogs-blockchain-andy-martin/

One view of Blockchain Network Operations Funding

How is the data layer funded?

1. a consortium operating in the innovation layer or other business models may fund it based on revenues or another factor
2. a platform provider may fund it especially if they have strong profits in the innovation layer
3. it may not have a well defined business model

Evolution of a Token Marketplace

1. Decentralized network creates shared data
   Provenance of assets is created as supply chains are digitized. B2B shared processes are captured in private enterprise blockchains as source of the truth is created and ecosystem reconciliation is eliminated. This creates a new asset of trusted data at the level of a market.
2. New services evolve from trusted data
   New quality of data may be traded in open marketplaces to new types of innovators bringing new services to market to make the most of this new trusted data at the level of the market.
3. Liquidity improves
   Markets achieve a new level of liquidity as primary issuance onto the market is tokenised along with the digitally native payment rails.

Blockchain Trends toward Hybrid

Utility Tokens

https://www.linkedin.com/posts/andy-martin-387188a_token-economy-ownership-activity-6705736204945514496-RFux

 This is a new form of decentralised equity to reward platform owners and decentralised delegates. In creating our decentralised hybrid token marketplaces the incentive in the form of a platform utility token is key. This token is used to pay public permissioned delegates to validate transactions and to create blocks. It is bought as a stake by these decentralised service providers in order to gain the right to validate or order. Finally is used as a transaction fee which also serves as a protection against spam/DDoS attacks

Utility Token usage

Utility token life cycle includes:  mint, purchase, sell, spend, burn, redeem, convert

Conversions to fiat best with stable coins

Token Types

m Tokens#TokenTypes

https://invao.org/token-classes-explained-coin-vs-utility-token-vs-security-token/

But it’s actually quite simple: Coins are a currency, utility tokens offer a right to use a product or service, and security tokens represent an investment product.

1. Security token is an investment with a defined stake in assets ( eg company eps, fixed assets etc )
2. Coin token is a digital currency ( an alternative to fiat currency )
   1. coins bought and sold through exchanges for a fee
   2. coins can have fluctuating value ( value store ) like Ethereum, Stellar etc
   3. coins can have stable values ( value transfer ) like USD coin etc
3. Utility tokens have specific value in a defined context ( eg buy a product or use a service in  online marketplace etc )
   1. To use a utility token outside the platform, it is normally redeemed for digital currency or fiat currency unless there is an ecosystem that accepts it
   2. Investors can buy these tokens and use them as a means of payment on the platform developed by the issuing company.
4. Single Use tokens
   
   1. issued by party A to party B for party B to execute a transaction on A's blockchain using a smart contract one time only

What are utility tokens

https://blog.sfox.com/what-are-utility-tokens-and-how-will-they-be-regulated-89cfb6bb2a45

Using Utility Tokens

A Uber token, for example, could be used to pay for a ride with a Uber car. But not for anything else. If you wanted to use the Uber token to buy another product or service, you would first have to exchange it against either fiat money or a crypto-coin such as bitcoin.

Tokens and Account management in Stellar network

Use Stellar net to create new token 

https://how-to-use-stellar-laboratory.readthedocs.io/en/latest/token.html

Here are the steps involved:

• Step 1: Create 2 accounts (One for Issuance, another for Distribution).
• Step 2: Execute a change of trust transaction from Distribution to Issuance.
• Step 3: Create the token.

Step 1: Create 2 accounts

You will need TWO (2) accounts. One to act as the issuer and one to act as the distributor account.

Create two and save them to your local computer. Make sure you clearly label somehow one as issuer and one as distributor. For me, I saved the data as “issuer-test-account-Stellar.txt” and “distributor-test-account-Stellar.txt”.

Using the testnet faucet and fund both accounts with RIA. Make sure that the slider in the top right is set to “test”.

Go to Create an account for more details.

Step 2: Change the trust between the two accounts.

For us to issue the token, we need to issue a change trust transaction between the distribution account and the issuance account. You can do that through this handy web interface.

Using the accounts you have created, change trust using the distribution account aimed at the issuing account:

Submit this using your private key

And you’ll come to this final screen:

If all goes well, you’ll see a JSON response similar to above.

Step 3: Creating the Actual Token

This step is not intuitive: the token creation is done by sending a payment from the issuing account to the distribution account, denominated in the new token. This is why we had to change trust to begin with — the distribution account issued a statement of trust that this “BLOCKSIMPLE” thing was the real deal.

Go to Transaction Builder, this is what that operation looks like:

If all goes well, you’ll see a successful transaction like so:

Ok, so now we have issued 5000 BLOCKSIMPLE tokens on the test net. Woohoo!

Congratulations! You just issued your first ever custom token!

Source: https://hackernoon.com/how-to-make-a-custom-token-on-stellar-ae5296512a2e

Custom Tokens on HLF example 1 - for ERC20 wallet

https://medium.com/deqode/erc20-tokens-on-hyperledger-b82399b4b969

Sample token framework example for HLF and ERC20 wallets

Github links

https://github.com/grepruby/ERC20-Token-On-Hyperledger/tree/v1.0/chaincode/token_chaincode/node
https://github.com/grepruby/ERC20-Token-On-Hyperledger/tree/v1.0/chaincode/token_chaincode/node/tokens

it sets up a token network based on Fabric and shows the use of a smart contract for using ERC20 token (still a token and principles/functions of using it still apply etc...)

Issue custom tokens on the Stellar Network for use in HLF solutions

https://www.lumenauts.com/guides/how-to-issue-a-token-or-ico-on-stellar

tokens-lumenauts.com-How to Issue a Token or ICO on Stellar.pdf

Interwork Token Architecture

https://interwork.org/

The value exchange layered protocol for Interwork opens many doors 

https://www.forbes.com/sites/vipinbharathan/2020/06/07/digital-assets-ecosystem-will-be-powered-by-end-to-end-standards/#1b13be873fd8

Stellar Asset Token Concepts

Stellar Concepts - Glossary

https://developers.stellar.org/docs/glossary

Account​

A central Stellar data structure to hold balances, sign transactions, and issue assets.

See the Accounts section to learn more.

Account ID​

The public key used to create an account. This key persists across different key assignments.

Anchor​

The on and off-ramps on the Stellar network that facilitate one-to-one conversion of off-chain representations to and from tokenized assets, for example, digital tokens representing bank deposits.

Application (app)​

A software program designed for users to carry out a specific task (other than operating the computer itself).

Balance​

The amount of a given asset an account holds. Each asset has its own balance and these balances are stored in trustlines for every asset except XLM, which is held directly by the account.

Base fee​

The fee the network charges per operation in a transaction. When the network is in surge pricing mode, the base fee varies based on an auction mechanism. When it's not, the base fee defaults to the network minimum currently at 100 stroops per operation.

Learn more in our Fees, Surge Pricing, and Fee Strategies Encyclopedia Entry

Base reserve​

A unit of measurement used to calculate an account’s minimum balance. One base reserve is currently 0.5 XLM.

Learn more in our Lumens section.

Keypair​

A combined public and private key used to secure transactions. You can use any Stellar wallet, SDK, or the Stellar Laboratory to generate a valid keypair.

Keystore​

An encrypted store or file that serves as a repository of private keys, certificates, and public keys.

Ledger​

A representation of the state of the Stellar universe at a given point in time, shared across all network nodes.

LedgerKey​

LedgerKey holds information to identify a specific ledgerEntry. It is a union that can be any one of the LedgerEntryTypes (ACCOUNT, TRUSTLINE, OFFER, DATA, or CLAIMABLE_BALANCE).

Liability​

A buying or selling obligation, required to satisfy (selling) or accommodate (buying) transactions.

Orderbook​

A record of outstanding orders on the Stellar network.

Passive order​

An order that does not execute against a marketable counter order with the same price; filled only if the prices are not equal.

Pathfinding​

The process of determining the best path of a payment, evaluating the current orderbooks, and finding the series of conversions to achieve the best rate.

Payment channel​

Allows two parties who frequently transact with one another to move the bulk of their activity off-chain, while still recording opening balances and final settlement on-chain.

Price​

The ratio of the quote asset and the base asset in an order.

Rate-limiting​

Horizon rate limits on a per-IP-address basis. By default, a client is limited to 3,600 requests per hour, or one request per second on average.

Sequence number​

Used to identify and verify the order of transactions with the source account.

Secret (private) key​

The private key is part of a keypair, which is associated with an account. Do not share your secret key with anyone.

Signer​

Refers to the master key or to any other signing keys added later. A signer is defined as the pair: public key + weight. Signers can be set with the Set Options operation.

See our Signature and Multisignature Encyclopedia Entry for more information.

Source account​

The account that originates a transaction. This account also provides the fee and sequence number for the transaction.

Starlight​

Stellar’s layer 2 protocol that allows for bi-directional payment channels.

Stellar​

A decentralized, federated peer-to-peer network that allows people to send payments in any asset anywhere in the world instantaneously, and with minimal fees.

Stellar Consensus Protocol (SCP)​

Provides a way to reach consensus without relying on a closed system to accurately record financial transactions.

Stellar Core​

A replicated state machine that maintains a local copy of a cryptographic ledger and processes transactions against it, in consensus with a set of peers; also, the reference implementation for the peer-to-peer agent that manages the Stellar network.

Stellar.toml​

A formatted configuration file containing published information about a node and an organization. For more, see the Stellar Info File spec (SEP-0001`)

Transaction​

A group of 1 to 100 operations that modify the ledger state.

Read more in the Operations and Transactions section.

Transaction envelope​

A wrapper for a transaction that carries signatures.

Transaction fee​

Stellar requires a small fee for all transactions to prevent ledger spam and prioritize transactions during surge pricing.

Trustline​

An explicit opt-in for an account to hold a particular asset that tracks liabilities, the balance of the asset, and can also limit the amount of an asset that an account can hold.

Learn more in our Accounts section.

Validator​

A basic validator keeps track of the ledger and submits transactions for possible inclusion. It ensures reliable access to the network and sign-off on transactions. A full validator performs the functions of a basic validator, but also publishes a history archive containing snapshots of the ledger, including all network transactions and their results.

XLM (lumens)​

The native currency of the Stellar network.

Wallet​

An interface that gives a user access to an account stored on the ledger; that access is controlled by the account’s secret key. The wallet allows users to store and manage their assets

Monetize and Tokenize Data

Ocean Protocol Network

https://blog.oceanprotocol.com/how-to-monetize-tokenize-data-8f860e405773

four building blocks needed to make this vision of open data sharing a reality. This open system allows every data provider to monetize and tokenize their data, so that data itself could be a sustainable business model. Once I explain how data can be used more openly, can we then apply the tools of finance to it?

Ocean architecture

https://docs.oceanprotocol.com/concepts/architecture/

• Components

  • Tier 3 - Application Layer
  • Tier 2 - Protocol Layer
  • Tier 1 - Decentralized VM Layer
• Interactions

https://docs.oceanprotocol.com/concepts/secret-store/

Ocean Software components

https://docs.oceanprotocol.com/concepts/components/

Keeper

A computer running an EVM-compatible blockchain client (such as Parity Ethereum) where the associated blockchain network is running the Ocean Protocol keeper-contracts (smart contracts).

Secret Store

A Parity Secret Store: software for distributed key pair generation, distributed key storage, and threshold retrieval. It’s used to store asset access-control keys.

Acquarius item metadata manager

Marketplaces run Aquarius to store and manage metadata about the assets available in their marketplace. It provides an HTTP API for interacting with an off-chain database (sometimes called “OceanDB”).

Ocean DB Drivers

Aquarius supports several options for the off-chain database (OceanDB), including Elasticsearch and MongoDB. One can add support for another off-chain database by creating a new driver similar to the existing OceanDB drivers.

Birzio to manage access to market assets

Publishers run Brizo to manage interactions with marketplaces and consumers. It interacts with the publisher’s cloud and/or on-premise infrastructure.

The most basic scenario for a publisher is to provide access to the assets the publisher owns or manages, but Brizo can do much more.

Events Handler

Brizo communicates with the Events Handler to deal with Keeper Contracts events.

The Events Handler monitors Service Execution Agreement (SEA) events and acts as a provider agent to grant access and release rewards for the publisher/provider. This is a critical part in the process of consuming data sets in the Ocean Protocol network.

Every provider in the network must run some sort of an events handler to be able to fulfill the access condition of an Access service in a Service Execution Agreement.

Osmosis Drivers

Brizo supports several options for file storage, including Azure Storage, Amazon S3 and on-premise storage. One can add support for another file storage option by creating a new driver similar to one of the existing Osmosis drivers.

Squid Libraries

Client libraries used by applications (such as Pleuston or Jupyter notebooks) to interact with Ocean components, including Keepers, Aquarius nodes, Brizo nodes, etc.

Commons Marketplace

An online example marketplace/publisher for consumers to explore, download, and publish open data sets in the Pacific Network. Implemented using React and squid-js.

For more information, see the blog post about Commons Marketplace.

Pleuston example marketplace publisher

An example marketplace/publisher front-end for developers to explore, download, and publish assets in an Ocean Protocol network. Implemented using React and squid-js.

Ocean Tutorials

https://docs.oceanprotocol.com/tutorials/introduction/

Potential Value Opportunities

Stellar and Ripple are useful for international payments with automated FX

https://www.crypto-news-flash.com/harvard-ripple-xrp-and-stellar-lumens-xlm-will-be-backbone-of-payment-system-of-the-future/

SEC report notes  blockchain technology has become mature enough to handle FIAT currency in the digital format. Interestingly, the report also mentions that blockchain networks like Ripple and Stellar Lumens have seen growing acceptance while becoming the preferred choice for international businesses.

Payment and FX settlement example

These two blockchain platforms can facilitate instant CBDC settlements worldwide while leveraging the power of AI and Machine Learning. This process also involves an ML-controlled FX interface. The author explains the entire seven-step automated process for the immutable fund transfer chain.

1. The sender would initiate the transaction in FIAT currency, receive the private key and give the public key to the receiver.
2. The sender would choose either immediate conversion or future date conversion and give instructions to the ML-driven FX platform.
3. Based on instructions, the FX interface would convert FIAT to either XRP or XLM.
4. The ML-controlled Smart Contract will execute the instructions.
5. The FX interface shall send the crypto to the receiver. The XRP blockchain shall handle immutability and the verification process. The execution shall be handled with ML-implemented smart contracts.
6. The receiver would use the public keys sent by the sender and receive funds either in XLM or XRP tokens.
7. The receiver can convert the crypto to the FIAT of his/her choice instantaneously or on a future date. The ML-driven smart contracts will handle the future date execution.

Stellar can run CBDCs on the platform at low cost

Instead of building the CBDC infrastructure from the ground up, central banks can leverage the existing infrastructure to cater to their instant settlement needs.

Stellar easily handles 3,000 TPS for payments today

The Stellar developer tools and SDK make it easy to create any custom CBDC and run it on the Stellar network

Given costs and slow times to finality and throughput Ethereum and Bitcoin are not viable platforms for CBDC etc

Potential Challenges

Candidate Solutions

Social Solutions 

https://www.socialsolutions.com/blog/why-its-time-for-a-new-era-in-funding-social-good/

Sybal Social Goods Market

The Sybal Foundation provides an open market where participants invest in tokenized social good solutions ( projects and services ) and actively trade those investments managing their portfolios while supporting important social programs.  Non-profit organizations offer a wide selection of different social goods projects and services in the market participants can invest in and trade. 

Social good projects and services can apply for free market listings. 

This open system allows every data provider to monetize and tokenize their data, so that data itself could be a sustainable business model. Once I explain how data can be used more openly, can we then apply the tools of finance to it?

Communities Served

Investors

Step-by-step guide for Example

sample code block

Recommended Next Steps

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