Development blog #3: Special issue — ET as a protocol
Today’s development blog is special. We are presenting excerpts from our technical paper, which is going to be published very soon. The publication of this document will mark the beginning of our strategic pivot towards becoming the first trustee protocol for hybrid intelligence-based autonomous execution of long-term purposes. Eternal Trusts will be setting up all necessary infrastructure to enable fiduciary companies, multi family offices, trustees, and experts from different fields to join the ecosystem and create their own dApps, based on a powerful toolkit that we will provide for them, catered to executing important objectives of people for hundreds of years to come.
The technical paper will describe the implementation details of our own decentralized application “EternalTrusts-dApp” as well as the protocol for creating distributed crypto trusts “EternalTrusts-Protocol”, and the differences between them.
Traditional Trust Funds
The mechanics of trust funds are quite straightforward: in the traditional financial world, trusts are usually employed by those who accumulated wealth over the course of their lifetime to transfer that wealth under control of another trusted party (a trustee) that acts for the benefit of the third party (the beneficiary), or to achieve a specific purpose, e.g. charity. Most trusts are irrevocable, which means that their terms cannot be amended or modified until their purpose has been fulfilled.
Generally, the process of establishing a trust consists of four steps. A client (a trust’s settlor) specifies a trust purpose which will determine how, when and for what goal the assets will be spent. For instance, such purpose can include covering the costs of education for the settlors’ children when they reach a certain age, at a university selected at the discretion of the trustee. The trustee documents the client’s wishes in relation to the trust assets, and the client transfers the right of asset ownership to the trustee. The trust company usually takes care of the asset management and seeks to grow the wealth in accordance with a certain financial strategy and the wishes of the trust settlor. When the conditions laid down in the trust deed are met, the assets are spent on achieving the trust purpose.
Trusts have operated in the same way for a very long time but as capital redistribution and inheritance needs of people grow and as financial technology advances at rates unprecedented in the history, a growing number of individuals are now thinking well beyond their own life times when it comes to the future management of their wealth. Here’s where the decentralized trusts of ET become valuable and necessary.
Decentralized Trusts of ET
Unlike classical trusts, the trustee in Eternal Trusts is represented by a system of smart contracts and a network of oracles — a group of individuals acting anonymously in the interests of the whole platform reputation and being rewarded for the right actions. In terms of asset management, decentralized trusts can store clients’ assets at smart contract addresses, not only in the cryptocurrency form or in the form of EOS / ETH tokens, but also in the form of tokenized traditional assets and funds. Automatic trading between various tokenized assets is possible through the mechanism of cross-chain swaps and decentralized exchanges (DEXes).
Holding assets in cryptocurrencies remains quite risky given that the crypto market has been extremely volatile. However, in recent years the trend of digitizing the traditional market assets has become more and more popular: e.g., the tokenization of national currencies, raw materials and precious metals, portfolios, stocks, and indices. At the moment, the most prominent projects that employ tokenization technology are TrueUSD, Tether, Basis.io, ColoredCoin, polymath.network, and Called Havven. Many analysts are expecting a large growth of tokenization projects in the nearest future, and the influx of big capital associated with it into the crypto world is deemed to stabilize cryptocurrencies and make the market less volatile.
ET-dApp vs ET-Protocol
The step towards creating the full-scale protocol has been perhaps the most crucial milestone that can increase the magnitude of the project and its impact on the whole blockchain ecosystem. On one hand, the decentralized application of Eternal Trusts (ET-dApp) will consist of an integrated and stable network of DAO directors, with an initial network of oracles and providers preselected by the founders that will be working with a single customer base.
On the other hand, the open source protocol in development (ET-Protocol) will allow for the creation of new ET-dApps on its basis using the ET token. Any company interested in integrating such mechanism of the decentralized trust into its business processes can do this by spawning a network of DAO directors and a network of oracles and contractors, setting up hosting and executive logic in private nodes and off-chain networks.
How is the ET-Protocol used
The Eternal Trusts multi-DAO protocol is the first blockchain-based mechanism of establishing crypto trusts — organizations that have fiduciary duties to manage and spend assets on behalf of the clients. These organizations are essentially private/anonymous co-ops comprised of multiple participants with different roles and aimed at spending assets for specific purposes in a transparent and autonomous way.
In order to integrate our protocol for safe and secure distribution of crypto assets and start using it immediately to achieve clients’ purposes, a business owner, trustee, or a family office should establish a decentralized autonomous organization with a network of DAO directors and set up the initial set of DAO rules through voting. These rules, including all fees and parameters, can be modified later through similar voting procedures.
After the initial steps, the DAO directors should gather and choose other participants of the protocol and assign roles. They need to form their own network of oracles (experts, arbiters, and assistants) or choose an already established one with a good track record, set up servers to store and process private data (sidechain nodes) and start attracting clients that want to fulfill their own fiduciary objectives.
Potential clients interested in executing their long-term purposes can begin their communication via the Eternal Trusts application or directly via the front office of the DAO, and formulate objectives to be autonomously fulfilled later.
After formulating the purpose that needs to be fulfilled, the client should choose the most suitable solution among all the proposals and assign a Protector from a close trustworthy person (e.g., a family member). The Protector is able to withdraw funds to the initial wallet of the client in a critical situation. When the clients arrive on the platform, they have to transfer their crypto assets onto a smart contract, initially with an ability to return those assets if needed through a special type of transaction. However, in the end the clients must revoke their rights to the assets and entrust them to the DAO in order for it to begin managing their assets and fulfilling their purposes. If the service is not good enough, the client or the Protector can initiate the process of removing the DAO and replacing it with a more suitable one.
Once a predefined trigger is set off, a series of voting by oracles begins that determines what must be done optimally in the best interests of the client. When the optimal solution is formulated and voted on, the necessary amount of crypto assets is made available using the multisignature protocol by some of the DAO participants and sent to the wallet of the service provider, or a mediator that can receive crypto and send fiat to the provider. The payment is finally confirmed by an Oracle-Arbiter, assigned by the DAO or the client.
This intricate, but easy-to-use system can give fiduciary companies, multi family offices, trustees, and other businesses in need of the fiduciary process an unprecedented flexibility, optimization, and security.
Summary
The protocol that we are building is destined to become a globally acclaimed and versatile infrastructure for the fiduciary industry and beyond. It will spawn multiple alternatives to the traditional fiduciary services and provide a controlled privacy level, a complete decentralization and lack of human factor, a strong guarantee of goal execution, and jurisdiction independence from the get-go.
Our token sale is live — join the whitelist to purchase our tokens and help us revolutionize the centuries old industry of trustees with the first ever fiduciary blockchain protocol! To find out more, head over to our website.
