Webinar - Unified Ledgers - Technical Enablers of Innovation

Captions as YouTube publishes them, usually machine-generated, so names such as Daml and Canton can be misheard.

1. 0:06

   good morning good afternoon or good day all thank you very much for joining us today to this webinar on unified ledgers my name is Bernard elner I'm the chief product officer at digital asset I'm joined here today uh by by my colleague Vincent who is going to monitor uh the the question section and uh possibly possibly interrupt to um you know forward those questions to me during the talk so please by all means use those

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   features you can find them in your sidebar uh you can submit the questions there he'll review them and uh then essentially prod me if there's something something to be said the the topic of today's talk is really I would say an overview over a recent uh literature coming out from uh some of the global Regulators um I'm really delighted in a way that there seems to be a u renewed

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   push this year from The Regulators and the markets in general for Global collaboration in the capital markets to really unlock um new value and transform transform the way the markets operate and I hope of course that uh many of you have had a chance to actually read those papers if not I can highly encourage you to do so I think they were very good reads um some don't like reading so

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   today is my my take on these papers effectively and I I want to be very clear here uh I'm going to be talking about um Papers written by other entities the bank of international settlements and uh monetary authority of Singapore in particular I cannot speak on their behalf right so what you hear today is really my my interpretation of what they're saying my way of basically reconciling what they're saying uh with the work uh that we are doing with Partners on um the Canton Network work

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   um and how I see all these things fitting together and you'll see that actually I think they really fit together very nicely so to start um I'll give a little overview over the literature that I'm even talking about the first body of work um is a uh actually series of papers that the bank of international settlements has put out over the last year uh the most recent big one uh being one just titled the

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   finet uh uh came out in April of this year uh the official author is the current acting general manager uh Austin Kon um I assume there was a whole team behind writing it just given its volume but uh he's the he's certainly the the the name on the paper and what it what that paper does is really to effectively make a case and paint a vision for a Global Financial Network they title the finet

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   which I think is a genius name I should say here uh basically an internet for finance an internet of value they make that internet analogy very explicitly right talking about connecting Financial ecosystems with each other very much like the internet and it's all about breaking down barriers breaking down barriers both between system right really connecting organizations to each other but it also talks a lot about financial inclusion right on these slides you'll

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   see a lot of quotes they are real quotes here for example um the you know the the highlighted text they are quotes um I've tried not to take them out of context but really just to use them to underline right so they they say it's really all about lowering barriers between services and systems to reduce comp Le Lex clearing and messaging chains uh that cause friction and hinder today's Financial systems right of course I'm

9. 4:07

   selective and what I pull out but that is very much sort of the the bottom line that they're trying to get to um they they coin a term called unified ledgers which is sort of the I would say the venue on which all of that happens and I'll I'll get to those later the second body of work that I'll speak to is a um is an initiative uh I think LED I hope that's the right term but certainly certainly mostly communicated about by the monetary authority of Singapore under the name

10. 4:41

    Global layer one it's in collaboration openly uh with a with a number of large financial institutions which I've listed here uh and this group is working together uh to ultimately create what they call a shared Ledger infrastructure right it is very openly a project and initiative right again the quote here being gl1 is expected to be multi-year initiative to do this stuff but I think the the goal the um the value that they're trying to create is

11. 5:13

    very aligned uh with you know the one on the fnet I'll dig deeper into that right they're saying when the vision is realized it will transform asset life cycles and how Capital markets are conducted they're really talking about the same things in terms of you know asset life cycles of course are multi- entity uh processes right between sort of the issuers the owners the the custodians the servicing parties so when when the bis talks about breaking down barriers transforming these life cyle

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    here I think boils down to very much the same thing they too elude to the internet as an analogy in a slightly different way effectively saying that creating something like the global ler one as a shared Ledger infrastructure for financial institutions will be as impactful as the internet saying you know that that level of um uh sort of cooperation is unprecedented since I guess the 1980s and of course you know I I will

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    make no secret of who I am right as the CPO of digital asset um my you know my heart is with the cter network the third body of the third body of work that I'll talk about today to compare and contrast is the Canton Network which is you know effectively a sort of unified Ledger in the spirit of the internet targeted and regulated Financial use cases we published um the white paper for the Canton network uh at the January of this year I mean like

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    many projects this was years in the making and again we we used very similar language right I'm not going to read all the quotes in the webinar I would I would just bore you with that but I've highlighted a few things here we too elude to the internet right talking about particular properties of it in terms of heterogeneity and scalability uh which we believe are really important for networks and we too talk about connectivity between financial

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    institutions right mostly about synchronization of data across participants uh via a DT system so we've got these three bodies of work and they don't talk about each other on paper right and they use very very different language so I really try to lay them next to each other what topics they treat what they say about each topic what conclusions they come to and in this sort of webinar I really want to effectively go through these topics step

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    by step and talk about where I see where I see similar ities and where maybe the the views diverge ever so slightly but fundamentally at the very high level I after rereading these papers a few times I came to the realization that they talk about the same thing simply at very different layers of abstraction and are at very different stages in the journey right so the the the language used in the finnet paper is really

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    making a case and painting a vision it is very forward-looking very aspirational um it paints a vision for the markets of the future right interconnected markets all around actually a fairly abstract concept of a unified Ledger I personally only realized on rereading that paper for the purpose of creating this webinar that the paper barely mentions technology the words DT or blockchain might occur once or twice in the paper but not really it only talks

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    about what we need from the financial system uh and from underlying technology without trying to say what the technology could be the gl1 paper makes things one level more concrete it proposes a very concrete project to build foundational infrastructure for a layer and they're very explicit that this is going to blockchain based the paper is all about the design principles the high level architecture the operational model Etc that would be needed to realize such a

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    thing so it's really a you know a starting gun to build something and then the third the CTO Network white paper is really a description of something that exists today right in that paper we introduced a concrete implementation of a public permission blockchain Network and in that we just focus on the designs and the rationale for the design of very specific things right daml Canton and the global synchronizer so the first really big contrast is just the level at

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    which these different pieces talk about but beyond that there are a lot of overlaps the first is that all three talk about the why right the value that is trying to be generated and I found it really striking that all three clearly point out that tokenization is at the core of value generation uh for these sorts of networks right the really the idea is always that you start with programmable tokenized assets that you can synchronize across the stakeholders and then you start

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    Building Services on top right and I I want to be clear for me tokenization doesn't necessarily mean you know creating new digital assets which is the usual um usual model in crypto tokenization could well mean taking large pots of existing fixed income or financial assets uh and essentially creating a representation on a new software system that allows for programmability of assets right and the bis paper I think

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    does a really good job of explaining uh what tokenization even is um in terms of basically breaking breaking down the separation between ownership records and all the logic that's attached to them um to basically put everything to do with an asset in one system so that and I think this is sort of the the key here you ease the bottlenecks that exist by effectively replacing sequences of messages passed between different financial institutions uh with essentially a

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    single shared record that people can uh can access and adjust right and the masas paper and the basically cter Network work paper they're really about you know saying we are going to create an infrastructure for hosting tokenized Financial assets or in terms of you know duml and Canton um it's really all about you know giving the giving the specific sort of programming tools and the platform um you know like DL Finance as a comprehensive tokenization library for

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    real world assets and the automated life cycling so on this on this dimension of value proposition very close alignment but then even better there everyone like all three papers clearly point to a second probably equally if not more important value pillar which is interconnectivity and the way I I phrase it here it's interconnectivity that is really the flywheel of value generation a single tokenized asset can already

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    have significant value just by breaking you know reducing Laten um reducing breaks in in life cyclings and processings but what we're learning from you know the the sort of the really Innovative and disruptive sort of defi world is that um you know the the ability to have multiple assets interact with each other and more importantly interact with that programmable asset in new kinds of enhanced Services means you can actually um you know do things you couldn't do before right you can

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    integrate transactions to open the door to entirely new types of economic Arrangements is you know the quote from the from the bis paper here but to do that and that is I would say at the core of the bis paper you need to put these assets and services in the same place right what they call a common venue and their term for that common venue is a unified Ledger the unified that meaning it's one Ledger on

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    which you can have many different types of assets backed by different issuers and csds and custodians you can have different Services provided by different entities all sharing that common venue where they can interact that common venue being you know the finnet as a whole or maybe a sub piece of the finnet which they call a unified Ledger right and the you'll find very similar sort of rhetoric in the gl1

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    paper and Canton Canton papers right it's all about uh you know basically having a single venue where you can have multiple applications uh the gl1 paper calls them composite applications right where you basically have um new capabilities based on having multiple assets and services in place we digital asset usually talk about composable applications rather than composite I think we mean exactly the same thing and enabling those

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    through Atomic smart contract calls with privacy across independently controlled applications again just very different levels of abstractions but fundamentally all saying the same thing so that's the value side now I said earlier the finnet paper and the gl1 paper talk a lot about essentially the the needed properties to make that happen so we can really go through what they are concerned with in the first one

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    is topic very close to my heart which is really the essentially the access and permissioning model and I'm going to claim here they're not they're not explicit about this so this is me putting new words on this that effectively all three are making a case for public permission networks and all for the same reasons the first one is everyone I think at this point and this is not just The Regulators I think that's the whole Market the whole financial industry has realized that to really get value out of

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    networks out of DLT and the like you need public networks and you need the public networks effectively to open the door to liquidity providers to application providers to add their new complement to the existing ecosystem without barrier right as soon as you start excluding people either excluding investors or liquidity or excluding Services you're effectively distorting the markets and you're you know putting pressure on other venues coming about in

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    which case that common unified venue doesn't really play out right different ways of talking about that is you know the the bis talks about openness simply fostering a rich ecosystem of financial applications right that's about just you know people not being excluded uh the gl1 paper you know talks about accessibility right economical and and functional um meaning that really anyone that meets sort of the membership

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    criteria there an Institutional setup would be able to participate again to be to be as open as possible and you know our our language talking about cont network is a little bit more more blockchain aligned generally um right we're we're really talking about uh building an sort of uh an open ecosystem saying the global synchronizer that is effectively the backbone of the cter network needs to be a public infrastructure so that anyone can build the applications and bring them to this

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    network and anyone can join the network and connect to these applications just like the internet right other than in few a few jurisdictions where essentially governments at the infrastructure layer um cut access the internet is a public network anyone can connect anyone can launch an application on the internet and reach the audience to it however now I'm flipping sort of to the to the other side public doesn't

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    need to mean permissionless right the internet I would claim is permissioned there are some very I would say privileged entities um you know that act as Gatekeepers for names and numbers um it is not easy to become you know a tier one or tier 2 Network um you can work at it uh but they're clearly different different levels of access and more importantly just because an application is on the internet you don't give up control over

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    that application right if a bank launches an ebanking application on the internet they fully control that application and its servers right that's different to public permissionless blockchain where deploying a smart contract effectively gives control of it to the network and all of these papers make the clear case that we need permissioning the finnet paper essentially proposes a model where the tokens are backed and managed by a

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    special sort of entity called token managers and this is you know I would say actually a different term maybe for something that today we would call a CSD or custodian which really safekeep the um the records and that's all about you know creating compliance and security uh for those assets the gl1 you know openly says that some activities on that platform May well be restricted and permissible only by designated service providers and of course you know if you're going to build

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    a a global you know critical infrastructure you're going to be very careful in selecting who provides that infrastructure and you know our stance is generally more aligned with the intent and analy which I made which is that really you don't you you want permissioning first and foremost at the application Level which really means smart contract level right you really want to um determine on each piece of application that you have in such a network you know who can access it in

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    read or right way you know who can access the ebank who can read the accounts who can instruct transfers and so on so you really want um Web Two level permissioning effectively uh on on apps so a network that really transforms the financial markets has got to be public permissioned I think both the regulators and us are fully agreed on that the second aspect that they bring up and here I've only got a a quote from bis is about the scalability and I think you know scalability has been a topic in

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    blockchain for you know as long as blockchain has existed and the I think the the fundamental problem is that um you know most of the time when we talk about a ledger you know a blockchain we think of literally a chain of blocks which is a you know a fairly rigid and you know non-scalable model because um you can only make the blocks faster or bigger but that that really really gets you into bottleneck and that is not at all how the internet works right the the

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    internet is highly elastic and that you can dynamically add servers you can add backbones you can add Network switches and it's a very very loose Network that is just connected enough that we can get a packet pretty much from any point8 to pretty much any point B and I think the realization by the bis and you know some in the in the DT industry is really we need to design our DLT systems similarly right we need to design these systems in such a way that we can really

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    accommodate organic growth without compromising the functionality right most scalability solutions out there which are about you know I'm just going to have multiple simultaneous blockchains next to each other with bridges in between they have a negative effect on the functionality of the network we'll get to that later uh and really what we need is Unified Ledger which can really just accommodate growth

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    and you know we we talk about that in terms of scalability like the internet right our goal is to create a DLT network uh which is sort of sufficiently flexible that really each application can expand the capacity of the network by adding nodes effectively servers and adding Network infrastructure that is used to expand the blockchain uh without impacting you know the value proposition of having that unified

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    venue so moving on from Network shape to network governance which is also a really big sticking point so I think there are two two aspects to this the first is um you know having the right sort of entities in charge of the network which is one of the reasons that crypto Network are so difficult to access for regulated Finance but the other is that you cannot centralize these things right the um effectively you cannot have a single commercial entity or a single government

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    even control such a network because it wouldn't become a Global Network because it wouldn't be a neutral space right the the the monetary authority of Singapore um I think puts this very well effectively saying to make a network successful you need to prevent concentration or aggregation of control within a single entity now with the internet you know people are already arguing whether that's sufficient with uh with entities like Ian and Diana effectively under US

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    government control but you the internet works um so clearly a little bit of a tiny bit of sort of centralization is acceptable now we've tried in in establishing the Canto Network and the global synchronizer infrastructure below to really follow this Mantra of open and neutral governance uh without centralization so we've worked with the uh the Linux Foundation um to create a um a foundation to essentially look after the governance of this this this network called the global synchronizer

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    Foundation which in and of itself is you know essentially governed by a significant group of Industry stakeholders so that um you know the the the governance of this network and this infrastructure really is as decentralized as open and as neutral um as really legal legal structures allow moving on from the governance which is sort of how how this thing is sort of managed internally to the sort of external legal side right the the big

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    sticking point next to sort of who who runs these networks is how these how these networks behave and how that interacts with regulation the the reason we see so little um tokenization and services on the public permission networks is really down to this I can tell you from my day today there are plenty of you know large financial institutions and Banks and fund managers that would that would do business on a network like ethereum

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    right if in a way if it was tenable but you know our Regulators exist for a reason and you know these These are regulators and regulation is all about risk management right about putting or rather controlling that financial institutions put in place the right controls um so that they don't introduce undue risks and in particular new risks so the the general stance of the regulators and this is probably not surprising but it is certainly lined with how we've gone about things is

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    that really we should design these Technologies these networks to allow financial and technological innovation under existing regulatory uh regimes right this is in stark contrast to many of the crypto networks I mean those that follow sort of trafi um sort of trfi involvement in ethereum most of the time the the the dialogue around um around regulation is well if only The Regulators would create Clarity but really The Regulators have

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    created Clarity with papers like se60 from the bis with statements from the FED in America they have been pretty clear what the regulatory stance is and the regulatory stance is your tokenization platform your DLT must not introduce new risks otherwise you're going to get higher risk rates right and they reflect that in these papers right the the the Mas says very clearly it's got to be compliant with applicable regulations right and accessible to The Regulators

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    for for supervision the the bis even more clearly says right existing laws and regulations should apply right we we can't have regulation follow technology but we have to determine what risks we're willing to live with right it's all about ultimately consumer and institutional protection and then design technology and safeguards around that and that's really our I would say our uh guiding North Star right to build a DT

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    system where financial institutions can still control the key functionality of their tokenized assets and ultimately retain the same Capital treatment because I think that's the Crux you could to toonize almost anything on a on a blockchain sort of technically right it's just not going to be the same asset because it has Sim because it has different properties both in terms of controls as well as in terms of privacy so you're going to have very different

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    treatment from the regulatory side part of these controls is privacy I've already alluded to that right uh and The Regulators do explicitly require ire confidentiality uh the the bis se60 paper makes that very clear now this is where you know so far I've just said we agree we agree we agree in a way this is the first time where I'm going to have a smattering of criticism to these papers

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    both the bis paper as well as the Mas paper mention privacy but very superficially right there's one sentence effectively in the gl1 paper and maybe one paragraph in the bis paper and effectively they only acknowledge that privacy is a problem right so the bis says adequate safeguards for data privacy and secrecy are needed the mass says the platform will provide for privacy and The Superficial treatment

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    really surprises me because for those that really follow the industry the lack of privacy on blockchain platforms I think is amongst the top reasons why blockchain initiatives get delayed or falter altogether a really good recent example is the for example the the Brazilian digital real initiative uh still ongoing but they they made two public announcements this year the first one after they completed phase one where they openly said you know this thing is

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    going to take longer than expected because um the essentially the the platform in phase one could not meet our required privacy to move forward they've now recently announced the start of phase two and there is a whole subsection of the announcement of phase two where they talk about you know how Phase 2 is about evaluating and finding the right privacy solution so I think this topic is swept slightly under the carpet in these papers

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    because most are still missing the right solution and that becomes clear I think in the um in the in the gl1 paper which right next to that statement I just highlighted about saying we're going to have privacy where they just see we may complement transactions with privacy enhancing Technologies like zero knowledge proofs and homomorphic encryption now these Technologies exist but they are very early stage right so

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    effectively they're saying we will figure out how to do privacy down the line based on technology that is not yet essentially production ready now you know this is this is where I'm going to toot our own horn a little bit you know we've we've been working on duml and Canton for the best part of 10 years now always with those controls and privacy as our sort of guiding star so you know our effectively sort of the the magic source and the superpower of our

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    technology which underlies the counter network is that um it it is able to split transactions into component parts synchronize them between participants on a strict need to no basis uh and still get DLT properties in terms of atomic commits and double spend protection right and this is pretty unique right the example that I always give that is in a way a challenge to the market how

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    would you do this elsewhere is a simple DVP right where you say you have one essentially sort of backing entity like a CSD with a delivery asset and another entity uh with a payment asset uh and you want to do an atomic swap whilst preserving two types of privacy first you want each of the tokens to have internal privacy so that say two entities that hold you know cash don't see each other's totals but you also want privacy between the different asset issuers so when you do a DVP like

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    this this you don't want the CSD to find out anything about the cash side and vice versa you don't want the bank that you know creates the stable coin or similar to find out anything about the delivery side so you have a single transaction with multiple different privacy views involved and um I believe that that's really what is needed for unified Ledger for regulated Financial assets uh and I

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    think the the reason the Privacy topic is so often swept under the carpet is um that there are really very very few solutions to this out there and that is one of the I would say the the really major differentiators of the of the cter network the last sort of detailed topic that I'll go through here is interoperability right and this I it's sort of maybe almost redundant that I talk about it because the the second the second value pillar that I talked about

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    earlier that common men that unified part of the unified Ledger is uh is really all about interoperability right having uh having multiple applications effectively on the same unified ledger to interoperate but and this is really important that sort of leads one to think that a unified Ledger needs to be all-encompassing right and everyone realizes that you know not everything will run on one one unified Ledger one DLT certainly you know in in in short time frames and the

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    B is very explicit they say the concept of a unified Ledger does not mean one Ledger rule all right what they do say though and this is very important is uh effectively the more of a transaction essentially process you know of maybe of an asset life cycle you can move to a single unified Ledger the more value it has but they sort of say we expect there to be multiple you know unified ledgers maybe one for equities in some countries

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    maybe one for cash in a few other countries and the one thing to avoid is to create new silos with this right the whole the whole purpose of the internet is to break down barriers which are created by silos so if we just create new bigger silos that's no good so um you know we really need to make sure that uh you know to use the the gl1 words here um instances of unified ledgers are both interoperable with each other but maybe even more importantly in

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    the short and Midterm interoperable with traditional fmis and Legacy systems right otherwise I think their adoption will be far too hard and the cost in terms of building new barriers will outweigh the benefit of breaking down uh existing barriers and this topic of interoperability and indeed the two different kinds of interoperability or even three different kinds that I'll cover in a moment are often lumped

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    together and it's really important to distinguish different levels of interoperability and different kinds of interoperability right and the first is anything Legacy and traditional right you integrate with a DLT with the unified Ledger exactly the same way you integrate it with any other system right and both gl1 and bis are clear about this you integrate your new enhanced assets and services with your traditional systems through apis and

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    message message-based Integrations effect L from the point of view of a traditional Java application an application on the blockchain is just another application and everyone can do that right you can do that from the counter Network you can do that from EV every other system and every other blockchain the second one is interoperability within a unified Ledger right to have the ability to really build a common venue for many many independently

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    controlled uh yet interoperable uh um uh assets and services in the common venue and that's I think where the where the cter network is fairly uniquely positioned and that it does allow Atomic smart contract calls between different applications that run within the CTO Network without having to give up control to a single traditional fully replicated blockchain but then there's the Third Kind of

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    interoperability which is the interoperability you know between a unified Ledger like the Canton Network and another blockchain Network like say ethereum or you could say the interoperability between ethereum and Solana or even the interoperability between two evm based lgers like two Basu instances or ethereum and Avalanche and here I think uh people get a little bit um I would say you know ahead of themselves um right

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    now the only Integrations that exist out there right be that within an ecosystem like poka dots cross chain messaging or cosmos's IBC or um systems like portal that go between ethereum and um and Solana or you know the the sort of interoperability between polygon rollups the only interoperability Solutions between independent blockchains right now are API and message-based systems

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    right effectively different blockchains integrate with each other exactly how traditional fmis integrate with each other and how blockchains integrate with traditional fmis now there is a lot of talk about changing that the the bis paper for example coins the term unified interledger protocol by which they mean if you had a unified Ledger say on an evm blockchain and you have a unified Ledger on the Canton blockchain we want

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    a protocol that now connects those back together and you know right now that simply doesn't exist there are approaches to having more unified I would say cross- Ledger me messaging you know things like chain link ccip or IBC or so on I talked about but they are ultimately just trying to standardize message formats right and my opinion here is that and this is where I said I think people are getting ahead of

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    themselves is we do not yet or until maybe the cter network we did not yet have a viable unified Ledger at all that could be adopted by regulated Finance right my General claim and I'll Make That explicit in a moment is that the Canon network is the first viable unified Ledger for regulated Finance so we're a bit early to talk about interoperability between unified ledgers right should a cross lger interoperability protocol really come to fruition I'm sure the stakeholders in

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    the Canton network will be open adopting it but right now I would say my recommendation to the industry would be focus on building one really robust unified Ledger prove out the value proposition show that the vision of the finnet works right first of all in one sub venue and then go even wider and say okay now that we understand how to build one we can build others that are maybe

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    suitable for slightly different purposes and connect them with each other all right that's my recommendation and that's certainly where my focus is day today it's all about building that one viable UniFi ledger so I'm almost at the end I'm bringing it sort of round full circle now again trying to connect these things together so what is my view of all this I really enjoyed reading the bis finet paper I

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    think it paints a really sound and compelling vision for connected financial markets and that Vision it paints is a north star very similar to the one digital asset has been chasing you know for at least seven years in developing Canton and is now really sort of putting putting into the market with CTO Network the Mas paper right I read as a rallying cry for the industry to get together and make something like that happen right and they are right there is

79. 42:21

    no sort of default standard unified Eder right now and they're saying that's make one right let's do it which is great U I agree we should absolutely make that happen now of course here my opinion is the technology is already there in Canton and the global C Center uh Global synchronizer right the global synchronizer as the decentralized backbone of the CTO network is the closest thing to a technology for unified Ledger that exists today I'm very happy to you know be challenged on

80. 42:57

    that I'm sure they differing opinions but that but that is my view so fundamentally I would say as much you know as I love the Visions being painted in the rallying CME I think the implication in both cases is that we need to develop the technology but I believe personally that the technology is there today DL Canton and the global synchronizer that jointly effectively lay the groundwork for the c network is a Global shared Ledger in all

81. 43:29

    the important ways consistent with the regulator visions and you know the world's most Innovative Enterprises are already working with duml and Canton and trying to get those you know unified of common venue value props uh sort of extracted and uh so it's it's already in motion right so I would say you know let's let's do it let's make the finnet vision reality one step at a time let's build

82. 44:02

    Global layer ones and it might be that the gl1 project creates a different form of unified Ledger but the really important thing for the industry right now is to create these unified ledgers as drivers for Innovation and once we figure out how to build really complimentary value Cycles within unified unified ledgers possibly multiple I have no doubt that there'll grow together into a into a single unified finet in the

83. 44:33

    future so that was my sort of my opinion piece here on these papers and I'll just repeat what I said in the beginning uh if you found this interesting if you want to learn more there's nothing better than to actually read those papers they are well written they're very readable and as I say I think the Visions they paint are very compelling uh so just Google Google finnet and you'll find the bis paper and can read it there so we've now got 15 minutes for

84. 45:02

    Q&A um so I'll I'll open the floor here and Vincent I don't know to what to what extent you have uh monitored the the written questions hi Bernard thank you very much I'll give you a moment just to catch your breath uh we've had quite a number of questions so just to everybody thank you very much for submitting them we will try to get through to as many as we can if we're not able to we will uh hopefully get in contact with you very soon just picking up from where you left off um talking about standardization and

85. 45:34

    unified ledgers one of the first questions is really uh querying standardization of messaging formats and given the bis's papers emphasis on breaking down barriers between Financial systems what is your view on whether message standardization alone will be sufficient to achieve the vision of a true finnet or the internet of Finance as it's being called hm that's a that's a great question and I sort of alluded to that a little bit in the in the on the slide around um interoperability right message-based

86. 46:06

    integration is nothing new we've had you know systems in different financial institutions for longer than we've even had the internet and I think the internet has been used to integrate these systems for you know close to close to 40 years now I think given how how much time we've spent you know in that mode um I cannot find an argument to believe that entities like Swift and standards

87. 46:35

    like you know fix and uh you know fpml and so on haven't already optimized message-based systems to the extent they can be they can be optimized right so you know just just ask yourself the question if if it was possible to build the finnet simply using standard IED messaging what has stopped that stopped that happening for the last 40 years right there are it is theoretically possible you can you know do a handwave argument that ultimately all that

88. 47:09

    happens with blockchain technology is messaging at a very low level but I think the the evidence is it isn't sufficient you really need several additional layers of abstraction um to give a to give a unified Ledger that can unlock finet like value thank you uh we have uh many others so to meet existing regulations across borders would the friction in conducting Financial transactions become any better

89. 47:38

    with new technology again opinion based one otherwise we will have better technology without uh any gain deficiencies is this question that's a fantastic question uh really and I think the answer is it slightly depends which border we're crossing um you know I'm I'm sure they will be jurisdictions uh you know that are so mutually incompatible that no technology right now will make things more frictional but I also think that there are jurisdictions in the world

90. 48:09

    that are sufficiently compatible already uh that uh new technology could significantly enhance things right and I mean the the most striking examples are simply simply within I would say a semif Federated Realm like the EU or the United States you have such good regulatory alignment but still so many barriers to smooth Financial systems right now that I think with the right technology you could you could really uh transform those markets and I think

91. 48:44

    within with sorry between the really major markets like you know the European Market North American market and so on there's also already so much regulatory alignment and so much inter connectivity whilst you might not get to the exact same level I think there's a lot of gains to be had um you know within new technology when you talk about something like you know the the mainland Chinese market uh connected to the rest of the market right there are there are regulatory barriers in place there uh

92. 49:16

    which you know effectively need need sort of um need hops via VIA connecting markets like Hong Kong so you you'll get slightly different models there so in short there are definitely definitely barriers that can be broken down but there are also barriers which are of a regulatory nature where the technology can only get you so far we've got a question actually two questions I'm going to roll into one uh one is on do our protocols use

93. 49:48

    encryption to store data on The Ledger H and the second one which I think I can roll into this one is just talking about the global synchronizer and whether as a third party uh will it not have details of both sides of the transaction yeah um the the analogy I usually make is that the synchronizers in Canton are very similar to isps on the internet so the participant nodes uh where really the business logic happen uh they transmit

94. 50:17

    encrypted multicast messages via the synchronizers and they synchronize effectively guarantee globally consistent ordering and delivery guarantees um so just like an ISP can see which servers you connect to and establish a TLS connection and how much traffic you push through uh the synchronizers can see that meta information but they can't see what's inside those packets um and effectively if you are uncomfortable with a particular synchronizer operator seeing that

95. 50:49

    information you need to find an alternative and just like the internet has many many backbones right if the the essentially the uh the industry decides that the particular operators of the global synchronizers aren't the right one they will be there will be an open market uh for these things that simple uh we've got another one here this one is is touching on interoperability um are there any universally accepted standards emerging that will facilitate interoperability across different

96. 51:21

    digital uh asset networks or will this be done by Bridges uh between networks I know you mentioned apis before but I guess this person wants a little bit more detailed I think the I think the answer is it's not an either awe the standards that are being pushed are effectively bridging standards and there are many such initiatives right I mean Swift and ccip are running experiments there with essentially you know Bridges

97. 51:46

    bridges between networks you've got um you've got particular initiatives that are usually associated to some ecosystem like IBC um and you know I heard somebody recently say something that really resonated with me which is you know standards are set by winners I think ultimately there will be many many competing uh sort of interledger interoperability sort of approaches and um they will compete for a long time and eventually the one that

98. 52:18

    works best and gains adoption will de facto become a standard I don't believe um that given where we are with the topic you can create an artificial standard right now just by getting people around the table um I've seen too many such initiatives of getting people around the table and creating a standard with pen and paper they they don't work out so we'll just see how the market

99. 52:42

    plays out uh many projects have discussed Atomic settlements in real time using liquidity to alleviate the need for extra cash at hand to settle if Europe is still at T plus2 and China is at t plus Z how long until the dream of instant crossb settlements happen this is a tough one what's your view um so the the example you used there with China and Europe is a particularly particularly complex one because of how China is connected to the rest of the capital markets in the world

100. 53:16

     um but I mean the whole the whole point of doing these unified ledgers is ultimately to you know move away from the infrastructure uh that causes T plus2 settlement right so really when when we talk about doing a a settlement on one of these unified ledgers the way um the way I usually talk about is you currently have all these Financial Assets in existing CSD systems connected to existing exchange infrastructures and those won't go away

101. 53:47

     anytime soon right but what you need to make possible is to mobilize those existing Financial assets into unified ledgers so that you can have the same asset and I mean not just some claim to it or some derivatives so it but really the same asset with the same Capital weights on a new software system where you can have t+1 or t plus 0 settlement or even instant Atomic settlement right because the the the the the settlement time is not really a property of the

102. 54:19

     asset it's a property of the financial system which currently manages that asset right so I think I think there are ways there are ways to do this but it really means mobilizing the assets into essentially into these UniFi ledgers great thank you um is a global synchronizer locked to the Cantor Network since it comes across as a Linux Foundation project is there any play of the hyperledger foundation here um so yeah the the the the code the code that uh underlies the global

103. 54:59

     synchronizer uh resides within hyperledger it's a project called splice if you go to the repo you'll see it's partial right now effectively there is still a bit of shoveling to be done uh but yeah the code the so the the the GSF the global synchronizer Foundation which is the um essentially the The Entity that facilitates the governance of the network is a standalone Foundation

104. 55:23

     managed by the Linux Foundation um the code that underlies the the global synchronizer will reside in hyperledger which is now Linux Foundation decentralized trust right they just they just rebranded we've got a another question here this is around um the sort of governance uh model but but basically they're asking what sort of happens if uh you know digital asset for bid was to to go out of business or stop supporting the Cantor network is

105. 55:59

     digital asset's future inherently tied to the Cantor Network again this is really stressing on on the the decentralized nature of the Cel network if you can go into a bit more detail on that yeah what a fantastic question I can't tell you how much how much time and thought we have spent on that question over the last years all with the goal to make that answer no right we we've been very conscious and this is this is similar to the open and neutral governance that as long as the future of this network was tied to a single entity

106. 56:32

     like digital asset it wouldn't have the required properties to really become a unified ledger to become part of the finnet so we've um we've we've launched the Canton Network and the global synchronizer not as digital asset but really as an industry initiative right I I would recommend you you know just go Google maybe the the the press releases of the the um Canton Network launch last year the global synchronizer launch this year um and have a look at the group of

107. 57:04

     entities um that is doing this jointly right and this is also why we're we're really at this point transferring a lot of our you very valuable IP to to to the Linux Foundation to hyperledger because we really want this thing to be independent of digital asset and not to be reliant on our resistance I've got a another sort of toughy here which which I think uh leans a little bit on demand and and a market Readiness but if the technology of the

108. 57:36

     canel network is already here what needs to happen for Universal adoption to achieve the bis Vision uh seems like the concepts are compelling but not everyone is jumping in right yet oh I mean so what what needs to happen is exactly the you know in a way these transitions will take a really long time we only have couple of minutes left um the institutions that we're working with right and the sorts of assets we're wanting to bring here these institutions

109. 58:07

     exist to manage risk right so they are very considered in the movement it will take in my opinion years to complete this transition so I think the momentum is absolutely there right I showed a slide a few minutes ago about the the sorts of entities that already working on DL and Canon um you know one of the big problems with the cter network because it's all privacy enabled you don't actually see that much what's happening uh and it's all institutional so you don't see so

110. 58:37

     much what's happening um but it's absolutely happening right and I think it will take a little time for these fly wheels to really get spinning uh and for the VIS visibility to pick up um but I think I think it's absolutely in motion it's just you know moving moving the global Capital markets takes time I think we'll uh we'll end on that note because we're we're just about out of time again apologies to those whose

111. 59:02

     questions were answered we will try to get back to you individually and just one last thing this will be available on demand please keep tuned in to our channels on social uh and also on bright talk for upcoming webinars and Bernard I believe we'd be able to make this available as a uh a download would that be possible to the audience absolutely we'll make this webinar available as a download and for those that attended the

112. 59:26

     session um I think we will we'll maybe circulate the questions and and answers as well um maybe even some of the unanswered questions we'll we'll we'll put a note in there thank you so much for your time and thank you all for tuning in thank you all for your attention absolute pleasure see you bye-bye