Digital Infrastructures for Decentralized Organizations - Revision history

Tebaldi at 13:43, 17 September 2023

2023-09-17T13:43:43Z

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	Blockchain solutions are characterized by the fact that the recorded peer-to-peer information cannot be forged and tampered with, and are easy to trace, in the same time having lower operational risks than traditional supply chains, and that suppliers will benefit from blockchain-based supply chain financing.		Blockchain solutions are characterized by the fact that the recorded peer-to-peer information cannot be forged and tampered with, and are easy to trace, in the same time having lower operational risks than traditional supply chains, and that suppliers will benefit from blockchain-based supply chain financing.

	Supervisory agencies, international institutions, and scholars study affirm that the application of blockchain in supply chains ~~make~~ sharing ~~of information possible~~, ~~and that~~ it ~~can be more efficient for parties new in the financing industry,~~ can facilitate international payments, automate transactions~~, duplicate financing~~ and ~~secret protection~~.		Supervisory agencies, international institutions, and scholars study affirm that the application of blockchain in supply chains may improve information sharing, it can facilitate international payments, automate transactions and improve access to funding opportunities.

	~~However, the decentralized nature~~ of ~~the~~ blockchain~~, coupled with the application of internet, reduces the intermediary role of banks. Currently, to assist small enterprises in financing, peer~~-~~to-peer/person-to-person (P2P) lending through internet or e-commerce platforms, has been put to use in~~ Supply Chain Finance (SCF hereafter), for example: Ant Financial Services, Zopa UK, The Receivables Exchange USA etc. However, as unspecified persons are being served, identity verification, personal information protection or money laundering prevention and control are all the difficult issues or even obstacles, resulting in a dilemma between supervision on one side and inclusiveness on the other side. As a matter of fact, it is confirmed that reducing the ~~quality of financing does bring a lot~~ of ~~drawbacks to the P2P financial lending platform. With that the issue of legal compliance begins.~~		The adoption of blockchain-based Supply Chain Finance (SCF hereafter) solutions still requires the solution of these three issues.

	~~The current use of blockchain for SCF still requires~~ three issues ~~that need to be solved~~.

	# current research focuses on the passive nature of using the blockchain in log records, which fails to use the advantages of smart contract programs to issue and operate tokens.		# current research focuses on the passive nature of using the blockchain in log records, which fails to use the advantages of smart contract programs to issue and operate tokens.

Tebaldi at 15:05, 22 August 2023

2023-08-22T15:05:17Z

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	In this section we review the information on digital infrastructures that are relevant to understand how technology may improve efficiency of decentralized organizations. A general discussion on the appropriate a digital infrastructure to be considered to make the decentralized organization more efficient must necessarily start from the selection of the most appropriate architecture.		In this section we review the information on digital infrastructures that are relevant to understand how technology may improve efficiency of decentralized organizations. A general discussion on the appropriate a digital infrastructure to be considered to make the decentralized organization more efficient must necessarily start from the selection of the most appropriate [[BLOCKCHAIN ARCHITECTURE FOR CORPORATE FINANCE\|architecture]]. This choice will depend fundamentally on organizational and economics motivations.

	In particular, we introduce the basic information that is relevant to become familiar with the, nowadays widespread notion of [[Decentralized Autonomous Organization]] (DAO) as commonly perceived in the ~~crypto-space~~. This specific analysis will be focused on the digital infrastructure characteristics and, given the large amount of available material, will only review those sources that are relevant to the MUSA [[FINTECH TECH4FIN MILEStone 1 MUSA SPOKE 4 WP BOCCONI\|research project]] at hand. In particular, as a last discussion topic, we review the implementation of a project dedicated to implementing a supply chain finance solution relying on the use of a public DLT.		In particular, we introduce the basic information that is relevant to become familiar with the, nowadays widespread notion of [[Decentralized Autonomous Organization]] (DAO) as commonly perceived in relation to thos that have been developed relying on permissionless blockchains and in particular on the Ethereum blockchain. This specific analysis will be focused on the digital infrastructure characteristics and, given the large amount of available material, will only review those sources that are relevant to the MUSA [[FINTECH TECH4FIN MILEStone 1 MUSA SPOKE 4 WP BOCCONI\|research project]] at hand. In particular, as a last discussion topic, we review the implementation of a project dedicated to implementing a supply chain finance solution relying on the use of a public DLT.

	== Introduction ==		== Introduction ==

Tebaldi at 15:00, 22 August 2023

2023-08-22T15:00:56Z

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	In this section we review the information on digital infrastructures that are relevant to understand how technology may ~~improv~~ efficiency of decentralized organizations. In particular, we introduce the basic information that is relevant to become familiar with the, nowadays widespread notion of [[Decentralized Autonomous Organization]] (DAO) as commonly perceived in the crypto-space. This specific analysis will be focused on the digital infrastructure characteristics and, given the large amount of available material, will only review those sources that are relevant to the MUSA [[FINTECH TECH4FIN MILEStone 1 MUSA SPOKE 4 WP BOCCONI\|research project]] at hand. In particular, as a last discussion topic, we review the implementation of a project dedicated to implementing a supply chain finance solution relying on the use of a public DLT.		In this section we review the information on digital infrastructures that are relevant to understand how technology may improve efficiency of decentralized organizations. A general discussion on the appropriate a digital infrastructure to be considered to make the decentralized organization more efficient must necessarily start from the selection of the most appropriate architecture.

			In particular, we introduce the basic information that is relevant to become familiar with the, nowadays widespread notion of [[Decentralized Autonomous Organization]] (DAO) as commonly perceived in the crypto-space. This specific analysis will be focused on the digital infrastructure characteristics and, given the large amount of available material, will only review those sources that are relevant to the MUSA [[FINTECH TECH4FIN MILEStone 1 MUSA SPOKE 4 WP BOCCONI\|research project]] at hand. In particular, as a last discussion topic, we review the implementation of a project dedicated to implementing a supply chain finance solution relying on the use of a public DLT.

	== Introduction ==		== Introduction ==

Tebaldi: /* Inventory Financing */

2023-08-21T20:47:44Z

Inventory Financing

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	Similar to borrowing and lending platforms, many example in DeFi space.		Similar to borrowing and lending platforms, many example in DeFi space.

			==== Peer-to-Peer/Person-to-Person (P2P) Financing ====
			As in centralized platforms, the scheme is given by: [[File:SCF Fig 7.png\|center\|thumb\|P-2-P Funding]]

	===System Design and Implementation===		===System Design and Implementation===

	====SCF System====		====SCF System====
	An example ~~could be~~ represented in this picture:		An example of implementation is represented by this picture:
	[[File:SCF Fig 7.png\|center\|thumb\|~~P-2-P Funding~~]]		[[File:SCF Fig 8.png\|center\|thumb\|SCF system implementation]]

	====Blockchain and Smart Contracts====		====Blockchain and Smart Contracts====
	Unfortunately, contracts are not verified, so no further analysis can be performed. However		Unfortunately, contracts are not verified, so no further analysis can be performed. However

Tebaldi: /* SCF System */

2023-08-21T20:43:05Z

SCF System

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	====SCF System====		====SCF System====
	An example could be represented in this picture:		An example could be represented in this picture:
			[[File:SCF Fig 7.png\|center\|thumb\|P-2-P Funding]]

	====Blockchain and Smart Contracts====		====Blockchain and Smart Contracts====

Tebaldi: /* Loan or advance payments */

2023-08-21T20:41:14Z

Loan or advance payments

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	=== The Application of CT to SCF ===		=== The Application of CT to SCF ===
	~~[[File:SCF Fig 4.png\|thumb\|Payments in Advance]]~~

	==== Loan or advance payments====		==== Loan or advance payments====
			[[File:SCF Fig 3.png\|thumb\|Payment in Advance]]
	Traditionally, the buyer pays in advance for the goods, however has not yet received the goods for sale or needs an early planning of its sales, resulting in a funding gap, therefore, it secures it financing by using “future trade receivables” as guarantee.		Traditionally, the buyer pays in advance for the goods, however has not yet received the goods for sale or needs an early planning of its sales, resulting in a funding gap, therefore, it secures it financing by using “future trade receivables” as guarantee.

	If CTs are used, they can replace the collateral agreed upon by both parties as shown in Figure 4, because we assume core company has proof of credits already. CT is provided at the same time the sale happens, helping the dealer solve the funding problem caused by repeated pledges.		If CTs are used, they can replace the collateral agreed upon by both parties as shown in Figure 4, because we assume core company has proof of credits already. CT is provided at the same time the sale happens, helping the dealer solve the funding problem caused by repeated pledges.[[File:SCF Fig 4.png\|thumb\|Purchase order]]

	On the other hand, if the seller receives a purchase order for goods, but has not yet received cash before the product or delivery is finished, the situation results in a gap in raw material funds, leading to the purchase order being similar to the “future trade receivables”.		On the other hand, if the seller receives a purchase order for goods, but has not yet received cash before the product or delivery is finished, the situation results in a gap in raw material funds, leading to the purchase order being similar to the “future trade receivables”.

Tebaldi: /* Purchase of Account Receivable */

2023-08-21T20:38:37Z

Purchase of Account Receivable

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	====Purchase of Account Receivable====		====Purchase of Account Receivable====
	[[File:SCF Fig 6.png\|thumb\|Accounts Receivable]]		[[File:SCF Fig 5.png\|thumb\|Accounts Receivable]]
	After upstream companies (or exporters), being the sellers, complete the order and ship the goods to the core company (or importer), while the buyer did not pay upon delivery, it will create accounts receivable (AR) that are received by the seller. If AR is sold directly, it is called factoring, with the fund provider being called factor.		After upstream companies (or exporters), being the sellers, complete the order and ship the goods to the core company (or importer), while the buyer did not pay upon delivery, it will create accounts receivable (AR) that are received by the seller. If AR is sold directly, it is called factoring, with the fund provider being called factor.
			[[File:SCF Fig 6.png\|thumb\|CT for Accounts Receivable]]
	CT’s are used as accounts receivable or as a payment instrument of the buyer, so that the sellers (upstream) can sell the CT’s to fund providers. Sellers can also use the tokens as AR or payment instruments when dealing with higher tier manufacturers, and can modify the conditions of the CT to reflect time value (discount) and the respective expiration date, waiting until expiration date, or to show the CT to claim payment for the goods. The transfer process of the CT will be recorded in the blockchain where anyone can verify it and thus know whether the information is correct or not.		CT’s are used as accounts receivable or as a payment instrument of the buyer, so that the sellers (upstream) can sell the CT’s to fund providers. Sellers can also use the tokens as AR or payment instruments when dealing with higher tier manufacturers, and can modify the conditions of the CT to reflect time value (discount) and the respective expiration date, waiting until expiration date, or to show the CT to claim payment for the goods. The transfer process of the CT will be recorded in the blockchain where anyone can verify it and thus know whether the information is correct or not.

Tebaldi: /* Loan or advance payments */

2023-08-21T20:36:28Z

Loan or advance payments

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	On the other hand, if the seller receives a purchase order for goods, but has not yet received cash before the product or delivery is finished, the situation results in a gap in raw material funds, leading to the purchase order being similar to the “future trade receivables”.		On the other hand, if the seller receives a purchase order for goods, but has not yet received cash before the product or delivery is finished, the situation results in a gap in raw material funds, leading to the purchase order being similar to the “future trade receivables”.
	~~[[File:SCF Fig 5.png\|thumb\|Purchase Order]]~~
	Purchase order financing is based on the demand for funds in the entire process from placing an order until payment is received. The “future trade revenue“ of the order is used as the source for loan repayment. The deposit can be either cash or currency tokens. Manufacturers who accept the CT can exchange it for capital, or transfer it to other manufacturers, basically solve and mitigate the risk of multi-level information transmission of purchase order financing.		Purchase order financing is based on the demand for funds in the entire process from placing an order until payment is received. The “future trade revenue“ of the order is used as the source for loan repayment. The deposit can be either cash or currency tokens. Manufacturers who accept the CT can exchange it for capital, or transfer it to other manufacturers, basically solve and mitigate the risk of multi-level information transmission of purchase order financing.

Tebaldi: /* Loan or advance payments */

2023-08-21T20:35:24Z

Loan or advance payments

← Older revision		Revision as of 20:35, 21 August 2023
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	=== The Application of CT to SCF ===		=== The Application of CT to SCF ===
			[[File:SCF Fig 4.png\|thumb\|Payments in Advance]]

	==== Loan or advance payments ====		==== Loan or advance payments====
	Traditionally, the buyer pays in advance for the goods, however has not yet received the goods for sale or needs an early planning of its sales, resulting in a funding gap, therefore, it secures it financing by using “future trade receivables” as guarantee.		Traditionally, the buyer pays in advance for the goods, however has not yet received the goods for sale or needs an early planning of its sales, resulting in a funding gap, therefore, it secures it financing by using “future trade receivables” as guarantee.

Line 219:		Line 220:

	On the other hand, if the seller receives a purchase order for goods, but has not yet received cash before the product or delivery is finished, the situation results in a gap in raw material funds, leading to the purchase order being similar to the “future trade receivables”.		On the other hand, if the seller receives a purchase order for goods, but has not yet received cash before the product or delivery is finished, the situation results in a gap in raw material funds, leading to the purchase order being similar to the “future trade receivables”.
			[[File:SCF Fig 5.png\|thumb\|Purchase Order]]
	Purchase order financing is based on the demand for funds in the entire process from placing an order until payment is received. The “future trade revenue“ of the order is used as the source for loan repayment. The deposit can be either cash or currency tokens. Manufacturers who accept the CT can exchange it for capital, or transfer it to other manufacturers, basically solve and mitigate the risk of multi-level information transmission of purchase order financing.		Purchase order financing is based on the demand for funds in the entire process from placing an order until payment is received. The “future trade revenue“ of the order is used as the source for loan repayment. The deposit can be either cash or currency tokens. Manufacturers who accept the CT can exchange it for capital, or transfer it to other manufacturers, basically solve and mitigate the risk of multi-level information transmission of purchase order financing.

	==== Purchase of Account Receivable ====		====Purchase of Account Receivable====
			[[File:SCF Fig 6.png\|thumb\|Accounts Receivable]]
	After upstream companies (or exporters), being the sellers, complete the order and ship the goods to the core company (or importer), while the buyer did not pay upon delivery, it will create accounts receivable (AR) that are received by the seller. If AR is sold directly, it is called factoring, with the fund provider being called factor.		After upstream companies (or exporters), being the sellers, complete the order and ship the goods to the core company (or importer), while the buyer did not pay upon delivery, it will create accounts receivable (AR) that are received by the seller. If AR is sold directly, it is called factoring, with the fund provider being called factor.

	CT’s are used as accounts receivable or as a payment instrument of the buyer, so that the sellers (upstream) can sell the CT’s to fund providers. Sellers can also use the tokens as AR or payment instruments when dealing with higher tier manufacturers, and can modify the conditions of the CT to reflect time value (discount) and the respective expiration date, waiting until expiration date, or to show the CT to claim payment for the goods. The transfer process of the CT will be recorded in the blockchain where anyone can verify it and thus know whether the information is correct or not.		CT’s are used as accounts receivable or as a payment instrument of the buyer, so that the sellers (upstream) can sell the CT’s to fund providers. Sellers can also use the tokens as AR or payment instruments when dealing with higher tier manufacturers, and can modify the conditions of the CT to reflect time value (discount) and the respective expiration date, waiting until expiration date, or to show the CT to claim payment for the goods. The transfer process of the CT will be recorded in the blockchain where anyone can verify it and thus know whether the information is correct or not.

	==== Inventory Financing ====		==== Inventory Financing====
	CT is obtained by using the inventory as a collateral, and it requires to be verified and evaluated before issuing. The core company can use the CT for itself or transfer the CT to other companies.		CT is obtained by using the inventory as a collateral, and it requires to be verified and evaluated before issuing. The core company can use the CT for itself or transfer the CT to other companies.

	Similar to borrowing and lending platforms, many example in DeFi space.		Similar to borrowing and lending platforms, many example in DeFi space.

	=== System Design and Implementation ===		===System Design and Implementation===

	==== SCF System ====		====SCF System====
	An example could be represented in this picture:		An example could be represented in this picture:

	==== Blockchain and Smart Contracts ====		====Blockchain and Smart Contracts====
	Unfortunately, contracts are not verified, so no further analysis can be performed. However		Unfortunately, contracts are not verified, so no further analysis can be performed. However

	* Currency token (XT): https://goerli.etherscan.io/address/0x601cdEcd235a43F9181A8213B2a664A9703a742e		*Currency token (XT): https://goerli.etherscan.io/address/0x601cdEcd235a43F9181A8213B2a664A9703a742e
	* CT operations (obligatory-type CTs): https://goerli.etherscan.io/address/0xee02f04a9b5c500dc915d54e1fce79d016795526		*CT operations (obligatory-type CTs): https://goerli.etherscan.io/address/0xee02f04a9b5c500dc915d54e1fce79d016795526
	* Verification: https://goerli.etherscan.io/address/0xf2b706d5e3c828D592Db44980Fbd8899D6490938		*Verification: https://goerli.etherscan.io/address/0xf2b706d5e3c828D592Db44980Fbd8899D6490938

	It seems they released an ERC1155 token with ID 1 (similar to a NFT)		It seems they released an ERC1155 token with ID 1 (similar to a NFT)

	* Investment and profit distribution: https://goerli.etherscan.io/address/0xf788E3cEdfc6E66Cd553CE9636d418F141992DB2		*Investment and profit distribution: https://goerli.etherscan.io/address/0xf788E3cEdfc6E66Cd553CE9636d418F141992DB2
	* Channel financing: The core company will mint obligatory-type CT with specified conditions on the blockchain to provide guarantee and transparency, then the receiving downstream company can use it for further finance or transfer.		*Channel financing: The core company will mint obligatory-type CT with specified conditions on the blockchain to provide guarantee and transparency, then the receiving downstream company can use it for further finance or transfer.
	* Accounts receivable financing: The obligatory-type CTs are minted to reflect the time value, therefore discounts are applied in the financing process.		*Accounts receivable financing: The obligatory-type CTs are minted to reflect the time value, therefore discounts are applied in the financing process.
	* Inventory financing: The obligatory-type CTs are authorized by a third-party institution. The inventory is used as the collateral which will be liquidated after a breach of contract, then the funding provider(s) would be able to retrieve payback from the inventory liquidation amount.		* Inventory financing: The obligatory-type CTs are authorized by a third-party institution. The inventory is used as the collateral which will be liquidated after a breach of contract, then the funding provider(s) would be able to retrieve payback from the inventory liquidation amount.
	* Investment service: Natural person or juridical person can be secured via right-type CTs after providing funds. Every right-type CT offers different annualized payment yield (APY) by investing in different tranches for different ranking of claims.		*Investment service: Natural person or juridical person can be secured via right-type CTs after providing funds. Every right-type CT offers different annualized payment yield (APY) by investing in different tranches for different ranking of claims.
	* Transfer and conversion of CTs: CTs can be transferred via blockchain as the debt transferring. Companies will be able to manage their obligatory-type CT received from the previous company to conduct risk-control more easily, meanwhile to maximize the efficiency of the supply chain.		*Transfer and conversion of CTs: CTs can be transferred via blockchain as the debt transferring. Companies will be able to manage their obligatory-type CT received from the previous company to conduct risk-control more easily, meanwhile to maximize the efficiency of the supply chain.

	* Finance management: Profit sharing agreement between core company and investors is programmed in smart contract.		*Finance management: Profit sharing agreement between core company and investors is programmed in smart contract.

	==== Methodology comparison. ====		====Methodology comparison.====
	{\| class="wikitable"		{\| class="wikitable"
	\|'''Items'''		\|'''Items'''
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	\|'''Conditional Tokens'''		\|'''Conditional Tokens'''
	\|-		\|-
	\|Tier		\| Tier
	\|1 + 1 + 1		\|1 + 1 + 1
	\|N + 1 + N		\|N + 1 + N
	\|N + 1 + N		\|N + 1 + N
	\|-		\|-
	\|Safety (consensus)		\| Safety (consensus)
	\|centralized database		\|centralized database
	\|asymmetric cryptography		\|asymmetric cryptography
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	\|unspecified person		\|unspecified person
	\|-		\|-
	\|Flexibility		\| Flexibility
	\|law		\| law
	\|middle		\|middle
	\|high		\| high
	\|-		\|-
	\|Inclusive		\|Inclusive
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	\|}		\|}

	=== Final Considerations ===		===Final Considerations ===
	Security tokens are all those who respond to Howey's test (1946) which defines a security in this way: if a person invests his own money in a common project and is expecting profits deriving exclusively from the efforts of the promoter or a third party, then this is automatically a security. SEC is getting tangled with this definition, and lately it defined many cryptocurrencies as securities, excluding Bitcoin and Ethereum, and some discussions are ongoing.		Security tokens are all those who respond to Howey's test (1946) which defines a security in this way: if a person invests his own money in a common project and is expecting profits deriving exclusively from the efforts of the promoter or a third party, then this is automatically a security. SEC is getting tangled with this definition, and lately it defined many cryptocurrencies as securities, excluding Bitcoin and Ethereum, and some discussions are ongoing.

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	== Useful information on DAOs available on the Internet ==		== Useful information on DAOs available on the Internet==
	The following links provide a vast amount of information about the existing DAOs:		The following links provide a vast amount of information about the existing DAOs:

	* DeepDAO: https://deepdao.io/organizations Leading discovery and analytics engines for DAO ecosystems. It aggregates,displays, and analyze a rich view of up-to-date token, treasury, governance, and membership data for over 2,000 DAOs, on multiple blockchains and governance platforms.		* DeepDAO: https://deepdao.io/organizations Leading discovery and analytics engines for DAO ecosystems. It aggregates,displays, and analyze a rich view of up-to-date token, treasury, governance, and membership data for over 2,000 DAOs, on multiple blockchains and governance platforms.
	* Coinbase resource: https://cointelegraph.com/learn/types-of-daos A useful classification and discussion about the basic steps to be done in order to create a DAO.		*Coinbase resource: https://cointelegraph.com/learn/types-of-daos A useful classification and discussion about the basic steps to be done in order to create a DAO.
	* ''J Internet Serv Appl'' 12, 9 (2021). https://doi.org/10.1186/s13174-021-00139-6 Faqir-Rhazoui, Y., Arroyo, J. & Hassan, S. perform a comparative analysis of the platforms for decentralized autonomous organizations in the Ethereum blockchain.		*''J Internet Serv Appl'' 12, 9 (2021). https://doi.org/10.1186/s13174-021-00139-6 Faqir-Rhazoui, Y., Arroyo, J. & Hassan, S. perform a comparative analysis of the platforms for decentralized autonomous organizations in the Ethereum blockchain.

	[[Category:MUSA ~~Tech4Fin_Milestone_1~~]]		[[Category:MUSA Tech4Fin Milestone 1]]
	[[Category:MUSA IT infrastructure]]		[[Category:MUSA IT infrastructure]]

Tebaldi: /* Conditional tokens */

2023-08-21T20:20:54Z

Conditional tokens

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	Issuing right-type CT:		Issuing right-type CT:
	[[File:SCF Fig 1.png\|thumb\|Obligation-type CT]]		[[File:SCF Fig 1.png\|thumb\|Obligation-type CT]]
	[[File:SCF Fig 2.png\|thumb\|Funding ~~Source~~-type CT]]		[[File:SCF Fig 2.png\|thumb\|Funding Right -type CT]]

	# the supply side transfers account tokens, locks them into the smart contract		# the supply side transfers account tokens, locks them into the smart contract