Project Tridecagon: R3 Participates as a Technology Partner
R3 is excited to have been a technology partner in Project Tridecagon, led by the Asian Development Bank (ADB). The project explored possible distributed ledger technology (DLT) solutions for the CSIF (Cross-Border Settlement Infrastructure Forum)’s CSD (central securities depositories)-RTGS (real-time gross settlement systems) Linkage model. This was enabled via the development of DLT-based CSD-RTGS Linkages prototype(s) and by testing cross-border, cross-currency DVP and PVP settlement under the DLT based systems.
Project Tridecagon was initiated to help support the discussion of the Asian Bond Markets Initiative (ABMI) supported by ASEAN+3―10 member states of the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China (PRC), Japan, and the Republic of Korea.
This innovative project exhibited how DLT can play an instrumental role in the post-trade arena by processing complex transactions to a range of pre-defined conditions and can observe such conditions even among different blockchain instances. In this Proof of Concept (PoC), connectivity was established between different blockchain networks, namely R3’s Corda, Consensys’ Permissioned Ethereum, Soramitsu’s Hyperledger Iroha and Fujitsu’s ConnectionChain to constitute a unified working ecosystem.
Fig: Conceptual Model of Project Tridecagon
Project Tridecagon Intended to Cover Two Scenarios
- Buyers overseas: that of a buyer domiciled in a market other than the domestic market and, hence, required to remit funds to an account or wallet in the domestic DVP environment to pay for the purchase of the bonds in the domestic market.
- Seller overseas: that of a seller being domiciled in a market other than the domestic markets and, hence, the requirement to remit to the seller the proceeds resulting from the sale of bonds the seller already owned in the domestic market to an overseas location (account or wallet or similar).
Both scenarios were intended to help represent the PVP leg of the intended cross-border DVP settlement, through the need to remit funds between overseas market and domestic market and convert the same from or to foreign currency, thereby linking 3 underlying assets or tokens.
R3 handled the atomic domestic Delivery vs Payment (DvP) side of the transaction using Corda. A Bi-directional integration was also established with Fujtsu’s ConnectionChain to ensure connectivity across all platforms.
Fig: Atomic Swap in Corda
Settlement regulations differ in each country, and participants in a cross-border settlement are subject to the different regulatory frameworks. A key challenge was how to simplify the cross-border Delivery v/s Payment flow while respecting differences across jurisdictions. The tokens in the PoC were a representation of a proxy-token that were created for the settlement purpose on-ledger. Tokens once issued in an economy will never cross the boundary of that economy. With accounts and custom logic ability, Corda was well-suited for this use-case.
Fig: Corda Network Participants
More details around the POC, conclusions and next steps were published today by ADB in a report on their website. View the report here.