Blockchain Technology Use Cases

Some of the largest #carboncredit standards of the #VCM - Verra, Gold Standard, and Climate Action Reserve - failed to get approved for #CORSIA Phase 1 This is unfortunate for the market, for the standards themselves and for project developers who have registered their carbon mitigation outcomes via these standards. 🗯 What bothers me the most however, is that there is a readily available solution to this problem 🔗 Blockchain. Let me explain. 👩🏻🔧 First, what is CORSIA Phase 1?  [background in comments - I ran out of space] ✅ Carbon standards must get approved by UN's International Civil Aviation Organization for their credits to count towards CORSIA targets. 2️⃣ Only ACR at Winrock International and Architecture for REDD+ Transactions (ART) have been approved so far. ❌ Three major standards just failed the test. Their credits can no longer be used to offset airline emissions. 🤼 OK, where do we go from here? 🛠 Here is what they need to fix according to IACO: 🔢 mitigating risk for double-counting emission reductions  ⚖ setting up a fail-safe system for handling reversals and baseline emissions 📜 demonstrate compliance and approval from host countries for credit adjustments Enter #blockchain 🔗 Lets be clear - its not a silver bullet to solve ALL our transparency and accountability issues (and make everyone rich out of thin air) - but its really really good solution to fix some of our current market weaknesses. 👯♂️ Tell me more? At its core, blockchain provides an immutable, transparent, and secure ledger—essential for accurate tracking and verification of environmental data and transactions. A glorified database perhaps. 👯♀️ How would blockchain address CORSIA's quality concerns? With a blockchain based registry for carbon credits, double-counting wouldn't be an issue anymore. Credits would be given a unique identifier that is tamper-proof and anyone can follow verification, trade or retirement of that asset transparently. We'd move from a piece of paper (that can be copied and edited) to a digital asset with integrity. The same system would be used for reversals and baseline emissions data. In fact, when a project developer first uploads the project information, baseline data, verification reports and evidence, it would all be tagged to that same tamper proof digital carbon credit - versus stuck in current 'early-2000's pdf-database' nightmare. 👭🏻 So why the frustration? ⛏ We're still trying to solve upgraded market (and media) demands on quality and integrity with old tools. We have the tech for cabron markets 2.0 (and 3.0!) and its frustrating to see the slow pace of adoption by the standards. ⏳ Verra and GS have hosted digital working groups and done tests for how blockchain could be integrated over the last 2.5 years. Can the CORSIA approval be a catalyst? IETA - where is your digital WG when we need it the most? Rich Gilmore Dirk Forrister Hugh Salway Alasdair Were Svenja Telle

Over the past year, we’ve seen overwhelming demand among institutions for onchain financial products and tokenized real-world assets (RWAs) due to the greater liquidity and accessibility they offer. Chainlink is at the center of this mega-trend, providing a growing collection of major financial institutions and market infrastructures access to the services they require to enrich RWAs with data, transfer RWAs cross-chain, and keep RWAs updated even as they move cross-chain. An example of this, ARTA TechFin—a leading Hong Kong-based financial institution—is developing cross-chain tokenized funds using multiple Chainlink services: CCIP for secure token transfers across public and private blockchains; Data Feeds for Net Asset Value (NAV) reporting; and Proof of Reserve for verifying the collateral backing on chain fund tokens. This collaboration is both a strong indicator of the growing institutional demand for onchain finance and Chainlink’s role as the foundation for the Internet of Contracts.

I keep hearing people talk about Real World Assets as a key element for the future of Web3...yes...but assets as we know them are just speculative assets. Here's what RWA's need to become to really change the world. Beyond dApps to self-referential tokens For true real-world utility, we must move beyond the app and put utility into the token. We need to be Token Centric - if we do all you need is a wallet; the tokens carry all other utility. The token becomes a dApp itself and carries that utility wherever it goes. This also future-proofs the experience, as token holders can access utility on whichever platform they choose—and app developers don’t need to redesign an application for every new operating system that emerges. Offchain utility Token utility has also been looked at through the lens of on-chain only. While blockchains are great for creating some utility, such as ownership and user rights, they are not great databases for all things. They are slow, public, and immutable. These are not great qualities for applications that require latency, the ability to easily upgrade and fix bugs, and for situations where the token issuers do not wish all of their customer’s data to be public. By enabling tokens to go beyond the limitations of the blockchain and embrace off-chain logic, we can start to explore real-world utility that makes sense to the world beyond just being onchain assets, ironically isolated from the “real world” that they represent. Better Information A simple real-world utility that any token can carry is information, by allowing assets to carry streams of information with them it would greatly simplify price discovery. If it's a RWA it should have a feed of data from the underlying asset that is attested to, and allows for the asset to have real time information and greater value. Evolved digital experiences Beyond token gating and proof of ownership, advanced utilities such as communication channels or tokens being applications themselves can unlock a new era of functionality. For example, there should be no need to download a car app; your token could allow you to access critical functions such as unlocking, finding, or starting your car. This removes all consumer friction from the car-buying experience. No app to download, no registration required, and no setting up of information; it is all conveyed with the token. Real-world utility, such as asset management, could allow you to manage your assets directly from the token. Price discovery on rental and sale rates of your car enables the owner to maximize their asset. With a simple click of the button on the token, the owner could rent out the vehicle at those rates, take out a loan, or sell the car. Real-world utility should, of course, also extend into the actual world. It should enable the owner to do more than just prove they own the asset, it should enable them to go further, do more, have a better experience.

Did you know that Ernst & Young has built and launched an L2 on the public Ethereum Network? If you've been following me, you know that I've been quite vocal about how I feel about *private/permissioned* blockchains. In summary: I think they are on the wrong side of the fundamental innovation brought forth by *public blockchains.* As such, following E&Ys blockchain strategy has been like therapy for me. Per Paul Brody, E&Y's head of Global blockchain: "we don't see the value proposition in permissioned systems that claim to be decentralized." If you're not aware, E&Y is the only Big 4 company solely focused on the *public* Ethereum network. They turn down consulting engagements with anyone building on *private/permissioned* blockchains. Why? Probably because they view it as a short-term money grab. --- Back to the L2 launch. In my opinion, the existence of *private/permissioned* blockchains is due to the shortcomings of public blockchains *to date.* In particular, scalability and privacy. L2s are beginning to solve scalability constraints by batching transactions off-chain, and then recording proofs in bundled transactions to the L1 for final settlement. [This is the innovation of Ethereum: a credibly neutral, shared, permissionless global settlement network & database. It's a mouthful. But it's what allows businesses and individuals to engage with each other, and record their economic activity in a shared, neutral database without trusting each other.] Privacy is solved by zero-knowledge proofs: the ability to prove that something happened, without revealing the contents of the data. ---- In essence, this could open the floodgates for enterprises to utilize the public Ethereum network. E&Y is working on several manufacturing/industrial supply chain use cases. They forecast 4 billion transactions/day for this use case alone. And they think that 50% of enterprises will be on *public blockchains* within 10 years — in line with the timeline it took for enterprises to migrate to the cloud. ---- "Crypto" gets dragged through the mud quite a bit (and rightly so). But in an interesting twist of irony, the ultimate blockchain crime could ultimately be revealed as "private/permissioned blockchain." Or maybe we end up somewhere in the middle? What do you think? --- I covered this topic in detail recently for readers of #thedefireport. If you're interested, I'll leave a link to the free report in the first comment.

Excited to share groundbreaking developments in the world of finance and technology that are reshaping our future: 🌐 Israel and the Tel Aviv Stock Exchange make strides with a $2.2 billion government bond tokenization, setting a new standard for transparency and efficiency. 🏦 FDIC Vice Chairman Travis Hill sheds light on tokenization, highlighting its potential to revolutionize banking with 24/7 operations and improved efficiency. 🔓 A looming cybersecurity threat as the top four custodian banks begin tokenizing over $108 trillion in assets, signaling unprecedented risks. 🔒 Polymesh Association launches Polymesh Private, offering financial institutions a private blockchain solution tailored for regulatory compliance and innovation in asset tokenization. 💸 Figure Technologies secures $60M to disrupt the crypto exchange market with a decentralized platform, signaling a new era for digital finance. 🏢 BlackRock's partnership with Securitize to tokenize $100m in real estate assets marks a monumental shift towards digital investment platforms, blending traditional assets with blockchain technology.

I am often asked by friends who are not as familiar with Crypto what the “real” applications are - here is my typical answer! 🖖 In Developed Markets - Gambling / Speculation In countries like the US and the UK, Crypto has found product market-fit in speculation/gambling because: 1. Most token prices are very volatile going up and down very quickly 2. This creates news headlines and FOMO, so people think they can get rich quick. Obviously, this often goes wrong, just like gambling in a casino. Inevitably, people look down on gambling but humans are drawn to it and have been for a long time. As far back as 1916, $268m was wagered on the outcome of the US Presidential Election [1]. Whether it is ethical or not is a different question. 👉 In Developing Markets - Holding US Dollars In markets like Turkey and Argentina, Stablecoins (i.e. tokens that can be redeemed for a fixed amount of fiat currency like $1) are increasingly owned. Consumers want to hold US dollars to ensure the value of their savings don’t get eroded - by inflation or government policy. Stablecoins combined with blockchain settlement help them tackle two problems: 1. Local currency inflation: In 2023, inflation in Argentina and Turkey was 211% and >60% respectively [2]. The value of consumers’ local currency savings fall quickly so they want to own USD, which has much lower inflation. 2. Capital restrictions: In these countries, governments have confiscated assets and put restrictions on sending money abroad and how much foreign currency you can own. If assets are stored in self-custody blockchain wallets, a government can’t freeze your account like they can in a bank or exchange. In Turkey, I’ve seen 80 year olds on the street wearing Binance hats - holding stablecoins is not niche. It is common practice to buy USDT and store it on Binance or in a self-custody wallet. This market is already sizeable and growing fast [3]: 1. In 2022, >$11 trillion in stablecoin transactions were settled, dwarfing PayPal volumes ($1.4 tn) and comparable with Visa ($11.6 tn). 2. Supply of stablecoins has grown from $3bn five years ago to >$120bn in mid-2023. 3. >2/3 of stablecoins are held in self-custody wallets i.e. outside exchanges like Binance. 4. There are 25 million blockchain addresses holding stablecoins and 5 million sending stablecoins each week. As this market grows, we’re seeing business opportunities in areas like remittances. If you’ve seen other Crypto use cases in action now - I’d love to hear from you! [1] Historical Presidential Betting Markets - $165m in 2002 dollars converted to 2022 dollars: https://lnkd.in/gaGnh397 [2] 2023 Inflation in Argentina: https://lnkd.in/gNBdKvJF [3] Brevan Howard - The Relentless Rise of Stablecoins: https://lnkd.in/gSdAivei

What if you could own a fraction of a building, song, or luxury watch? Until recently, investing in real estate, art, or collectibles required significant capital and connections. But tokenization is changing everything. Tokenized Real-World Assets (RWAs) are transforming how we think about ownership. By converting physical and digital assets into blockchain tokens, we can now: 🏢 Own fractions of commercial real estate - Instead of needing $500K for a property, buy $100 worth of tokens representing your share 🎵 Invest in music royalties - Purchase tokens tied to hit songs and earn from streaming revenue ⌚ Collect luxury items collectively - Own a piece of rare watches, art, or vintage cars through fractional ownership 🌍 Access global markets - Invest in Tokyo real estate or Swiss art from anywhere in the world The blockchain ensures transparent ownership records, instant transfers, and eliminates traditional intermediaries. Smart contracts automate dividend distributions and reduce transaction costs. This isn't just about democratizing investment - it's about creating liquid markets for previously illiquid assets. Your grandmother's vintage jewelry could become a tradeable investment vehicle. A startup's equipment could be tokenized for instant capital raising. We're moving from a world where ownership was binary to one where it's fluid, accessible, and borderless. The future isn't just digital-first; it's fraction-first. The question isn't whether tokenization will reshape ownership - it's how quickly traditional industries will adapt. #Tokenization #RWA #Blockchain #FractionalOwnership #DeFi #RealEstate #Investment #FinTech #DigitalAssets #Innovation #Cryptocurrency #SmartContracts #AssetManagement #TradFi #Web3 #Web3dev

AIML +Blockchain (Made for each other ) I've been involved in the Crypto and Blockchain space since 2014, always seeking opportunities to collaborate with emerging technologies. It's no surprise to me that AI and ML will complement Blockchain seamlessly. I'm grateful to my friends Shreyaan Kaushal and Jatin Agrawal for helping me understand how this marks a paradigm shift in technology. This year, I'm dedicated to delving deeper into these technologies, identifying challenges, and working towards innovative solutions. Artificial Intelligence (AI) and Machine Learning (ML) can greatly benefit from Blockchain technology, and vice versa. Here's how they complement each other: Data Security and Integrity: Blockchain provides a decentralized and immutable ledger, ensuring the security and integrity of data. This is particularly crucial for AI and ML algorithms, which heavily rely on large datasets for training. By storing data on a blockchain, it becomes tamper-proof and resistant to unauthorized changes, enhancing trust in the data used for training AI models. Data Sharing and Collaboration: Blockchain facilitates secure and transparent sharing of data among multiple parties while preserving privacy and confidentiality. AI and ML algorithms often require access to diverse datasets for training and improving accuracy. Blockchain enables data owners to retain control over their data while allowing selective sharing with authorized parties, fostering collaboration and innovation in AI development. Transparent and Auditable AI Models: The transparency and traceability offered by blockchain technology can be leveraged to enhance the accountability and auditability of AI and ML models. By recording model training processes and decisions on a blockchain, stakeholders can verify the authenticity and fairness of AI outcomes, mitigating bias and ensuring compliance with regulatory requirements. Decentralized AI Marketplaces: Blockchain enables the creation of decentralized marketplaces where AI and ML models can be securely traded and exchanged without the need for intermediaries. Smart contracts on blockchain platforms can facilitate automated transactions based on predefined conditions, enabling efficient monetization and utilization of AI assets while ensuring transparency and fairness in transactions. Enhanced Trust and Governance: Blockchain's decentralized consensus mechanisms and cryptographic techniques enhance trust in AI systems by providing transparent and auditable records of data usage, model training, and inference outcomes. This can help address concerns related to data privacy, algorithmic bias, and accountability, thereby fostering greater trust and confidence in AI technologies. Overall, the synergy between AI/ML and Blockchain technologies holds significant potential to drive innovation and transformation across various industries, leading to more robust, secure, and transparent AI-powered solutions. #aiml #blockchain

Federal Reserve Board published a thoughtful piece of research recently, titled 'Tokenized Assets on Public Blockchains: How Transparent is the Blockchain?'. It indicates an optimistic curiosity that public researchers are engaging with the tokenization industry. It also reminds us that our current implementation of smart contracts is barely scratching the surface of asset issuances & servicing in capital markets. The researchers looked into the smart contracts data and functionality of two tokenized bonds on public Ethereum, Santander in 2019 and European Investment Bank (EIB) in 2021. It focused on two questions below: 1. What kind of information (e.g. securities attributes, lifecycle data, trade data) are available? 2. What kind of bond lifecycle functions are automated via smart contracts? Collin Erickson, Mac Naggar and myself crafted the 'Spectrum of Tokenization' in a research piece published by RWA.xyz a few months ago. It turns out to be a useful framework to understand the Fed's article. First, they found out that the settlement of cash against the bonds were done off-chain via fiat. There was also no public visibility into any coupon payments throughout the bond lifecycle. In other words, 'value exchange' is done off-chain. Second, the functions inside smart contracts do not automate or self-initiate either (e.g. coupon calculation, coupon payments etc.). "Instead, individual functions were manually called by an entity outside the smart contracts." Falling under the Spectrum of Tokenization framework, these bonds would be classified under Model 2: Onchain Representation. I've also included my diagrams that indicate the DvP and the lifecycle processes for such type of tokenization. Lastly, it seems like the Fed's researchers also note that there's an interoperability problem between the legacy infrastructure of the issuers & investors and the new rails that bonds are issued on. - "If the on-chain smart contracts are appropriately integrated with the off-chain application, the issuer can strictly permission the bond token according to the aforementioned controls." - "The entire user interface and layers of software used to access the tokenized bond itself for the end user were not created using smart contracts, either." We have a first-mile origination and last-mile distribution problem in tokenization..... 👀 I strongly commend the researchers of FRB for publishing such an interesting and rather niche article; Cy Watsky, Matthew Liu, Nolan Ly, Kurtis Orr, Amber Seira, Zachary Vida, Lawrence Wu. FYI, I've put the links to all the articles mentioned in the comment below 👇

This year's public #tokenization mark has been made by the mass amounts of legacy capital markets players and institutions joining in on the fun. In reality, it's a drop in the bucket in terms of the number of firms - but the ones who are already involved just so happen to be some of the most prominent and prestigious across the map. In this week's Q3 report breakdown, we're looking at the most notable themes of the quarter and some of the legacy names with modern brands ushering tokenization in like: - LSEG (London Stock Exchange Group): announced blockchain-powered exchange for simple cross-border, cross-jurisdiction securities transactions - J.P. Morgan: unveiled its Tokenized Collateral Network (TCN) through money market swaps between BlackRock and Barclays - Citi: offering Citi Token Services to institutional clients and trade finance partners; signs on as digital custodian distributing BondbloX digital bonds to the firm’s Singapore private bank clients - UBS: tokenized a variable capital company (VCC) money market fund within Singapore’s Project Guardian - Goldman Sachs: iterating with the Hong Kong Monetary Authority (HKMA) to improve custodial connectivity for its GS DAP digital bond issuance - WisdomTree, Inc.: launched its WisdomTree Prime app for digital 1940 Act Funds in 30+ states - The Depository Trust & Clearing Corporation (DTCC): fully acquires Securrency for blockchain-based transaction & settlement capabilities We also dive deeper into activity as it pertains to #securitieslending, sell-side payments and collateral management, blockchain interoperability AND off-chain connectivity via Chainlink Labs, who had quite the impressive quarter, and of course thoughts and reasoning behind the growth in on-chain money markets, treasuries, and related yield products as displayed below drawn from RWA.xyz. Full article can be found on Security Token Market 🌴 here: https://lnkd.in/e9Bq5nAd