Akropolis Q4 Update
Last few months have not been without their challenges. With the market downturn, we repositioned our development team, adjusted our development roadmap and focussed our resources squarely on protocol development using Rust+WASM technologies.
- Tech stack migrated to Rust+WASM to ensure robustness, compliance with enterprise standards and cross-chain portability. To this end, we added three Rust engineers to our team.
- Approached by the World Bank Group and a leading Irish life insurer ($90bn AuM)
- IBM technical partnership for enterprise application defined and MoU in progress
A Re-cap: What problem are we addressing?
Pensions are boring and complicated. Yet pension funds own almost half of the world’s total assets by value. Globally, they represent over USD47.0 trillion in asset value, whilst in Europe, pensions are one of the largest and most profitable markets with combined assets of EUR7.0 trillion.
With the sheer volume of asset under management and sticky long-term nature, the legacy players have had no incentive not only to innovate but to address the mismatch of incentives in the system. With providers of capital having no self-sovereignty over their assets and seeing their returns eroded through a complex web of intermediaries with no “single source of truth” or portability of pensions records, the case for disruption of this critically important sector becomes more compelling every year.
A number of analysts forecast a series of worldwide bankruptcies of major pension schemes. Some may receive government bailouts, some may not. What remains is the sheer size, complexity and urgent need to find a solution.
If you have 1.5 hrs over this festive break, we highly recommend you watch the two excellent documentaries: The Coming Retirement Crisis by Goldman Sachs’ Raul Pal (our brief video summary is here) and The Pension Gamble by the Frontline.
What we are targeting is a complex issue, that we believe is one of the limited number of a genuine real-world blockchain applications with ability to materially impact millions of users and therefore drive adoption, driven by need rather than entertainment, whereby alternatives can be developed without reliance on traditional “trusted intermediaries”. As such, systems design and economic incentives design as just as important as the code.
Our solution is presented as a blockchain-agnostic layer-2 protocol rooted in Rust and WASM to ensure compliance with enterprise standards, upgradeability and adaptability of the code. It was important for us to ensure that our technological stack allows us to produce a universal protocol capable of portability across chains as technology evolves and to minimise dependency on a single blockchain.
The protocol is designed to enable the following features:
- Ability to create a user-centric system, with user self-sovereignty of their data and assets
- Any qualified party can set up a digital “pension fund”: unraidable and provably solvent at all times
- Programmable money: allows a sender to programme the destination into the transaction, ensuring that funds are spent for a specific purpose
- Ability to create novel payout models, especially for “communities of interest”
- Ability to create novel, user-defined contribution and benefit schedules
- Marketplace for fulfillment of investment mandates
- Improvement on UBI — due to matching mechanism, “salary/earnings top-up”, by a benefactor, corporation, government, anonymous philanthropist, etc.
- Same-day and fractional liquidity, if the fund permits it
- Real-time transparency
- Contribution or benefit pausing
- Automated enrolment, administration and reporting
Most importantly, an individual previously unavailable economic alignment of interests between capital providers (beneficiaries) and capital utilisers (fund managers). The protocol will enable the following use cases:
- Pensions/savings platform for freelancers (benefits: portable immutable track record)
- Open-source pensions/savings platform for decentralised communities of interest
- Transparent pensions marketplace
- Programmable pensions/benefits (multi-jurisdictional over time)
- UBI delivery platform linked to partial or full employment
We are continuous reviewing protocol design to ensure the elements of the functionality can be used in the enterprise use case, as well open source.
Where is the Innovation?
The value of blockchain is not in simply a de facto API for legacy financial infrastructure to talk to. Instead, the value is in moving from the system-of-record at the level of the firm to an authoritative system-of-record deployable market-wide.
This means developing and pushing forward the adoption of open unified standards for the consistent and cost-effective , financial primitives and common semantic approaches.
To this end, we proposed and developed a financial primitive which allows for a more flexible protocol implementation. To get to the core of the underlying relationships, we abstracted the key interactions between capital providers and capital utilisers, and stripped them down to exchange of cashflows between the parties. The tokenised cashflow agreements, if correctly implemented, can be batched and traded, thus simplifying architecture and infrastructure requirements at the protocol level. More on the EIP in later posts.
We will be seeking to utilise ACTUS (Algorithmic Contract Types Unified Structures), a domain-specific language of financial instruments, developed by a team of financial sector specialists from the US and Switzerland (props to the Trinkler Software team). ACTUS formalizes and implements in machine-readable form the terms and business-logic of virtually all financial contracts.
We believe that a domain-specific language therefore is instrumental in building the new financial infrastructure and is just as important as the tech stack if we are not to repeat past failures and ensure cross-chain functionality on a semantic level.
Ecosystem and Business Development
During October and November, we received direct inbound requests from the World Bank Group in Washington and the largest life insurance company in Ireland via a San-Francisco InsureTech incubator. We presented our protocol and vision to both organisations, provided a vision for how a blockchain and smart contract enabled infrastructure can align incentives, eliminate costs, and provide to an increasingly mobile workforce a compelling alternative. We also shared a high level overview of our business model, market development and partnering strategy. Both institutions requested a follow-up and proposed collaboration.
A more detailed business development status is below:
- Institutional clients or partners pipeline: In addition to our existing relationship with a leading Singaporean pensions asset manager, our pipeline currently includes responding to inbound inquiries from the World Bank Group, a number of life insurance companies and leading global pensions advisory teams looking for alternative solutions.
- Technology partnerships: we are in MoU stage with several blockchain companies in Korea and Europe. The flagship partnership with a leading global enterprise solutions provider is planned for early 2019.
- Ecosystem development: we are happy to announce that we joined a DeFi Network, alongside Dharma, Set Protocol, Maker, and other notable teams moving our ecosystem forward. Our involvement and participation will be covered in the next post.
- Academic partnerships: we will be announcing a DeFi venture initiative with two of the leading academic research centres for Blockchain and Big Data in the UK.
- Grant-making bodies: we have been invited to apply for a European Commission fintech grant through the initiative established as part of the EU plan to invest €340 million in blockchain tech by 2020.
We are making some of the repos public in our GitHub, where you can monitor our development progress. Our interim MVUs can be found in November and August repos. Last month, we updated our GitHub with smart contract backbone and key user journeys.
As a result of the decision to migrate to Rust+WASM, we revised our tech stack to ensure as technology evolves, we can produce a more secure, faster, universal protocol capable of portability across chains, thus minimising dependency on a single blockchain.
Our transaction broadcast layer exist to fulfil a sole purpose of affording an easy UI of approving broadcast transactions by a user without Akropolis having to interact with users’ private keys, and providing a secure solution to users. To this end, we selected two established wallets, CoinbaseWallet by Coinbase and TrustWallet by Binance.
Chainlink is a blockchain-agnostic oracle provider that is currently compatible with Ethereum, Bitcoin, Hyperledger and other leading blockchains.
Polkadot Substrate allows us to build an independent blockchain network (Proof-of-authority parachain) that will support WASM and can be integrated with other blockchain systems using Polkadot. Thus, Akro will effectively be a parachain, where every PF is a node.
Using Polkadot Substrate allows us to quickly and efficiently deploy our protocol on the Ethereum mainnet. Jack Fransham, a software developer at Parity Technologies explains well what Substrate is.
- Ongoing protocol specification [current work]
- Working on commitments to future cash flows specification and implementation
- Integration and initial implementation to reduce dependency on Ethereum as we are closely monitoring the scalability progress
- Reporting: creating a unified blockchain explorer for transaction monitoring inside the Akropolis network
- Integration with Binance’s Trustwallet
- Improved UX/UI [in progress]
Partnerships [see section below]
- Institutional pilot scoping — user feedback gathering and case study modelling
- Blockchain client pilot scoping — user feedback gathering and case study modelling
Research & Development
We continue with our R&D efforts to improve the token utility, which is an industry-wide challenge. The team has structured its work around four pillars:
- Token model improvements
- Economic and governance incentives
- Mathematical modelling
- Real-world testing
The sole purpose of the token design R&D was to reconcile two problems:
- How can we ensure that users get the best possible selection from a list of options given the voter apathy? In other words, to how align economic incentives over 2 conflicting types of actors of capital providers and service providers over long time frames (beneficiaries vs. fund managers and pension fund managers)
- Prevent collusions and reduce attack vectors
The team has experimented with imitation and multiagent modeling to test and refine the optimal parameters of operation, as well as externalities that can lead to unstable performance. We use Python as basic algorithmic language, in addition to the following program packages:
- PyMC3 for dynamic modeling using Markoff Chain Monte Carlo
- TensorFlow, Keras for solving optimization tasks
- NumPy, scikit-learn, StatsModels — mathematical program packages
One of the current hypothesis of the team is that the model may also resolve a wider set of industries and business issues, in the context of improved allocation outcomes where information asymmetry delivers sub-par results. In order to validate this, a set of experiments will be carried out.
In the process of our R&D work, we have developed a new methodology for marketplace governance that we believe has a wide set of applications outside of our use case. The approach is based on Token Curated Registries, first introduced by Mike Goldin of Consensys and further developed by teams behind Ocean Protocol[2,3], Messari, Parattii, Civil and other projects. Our model addresses the shortcomings of a single-TCR model and currently being prepared for a peer review. Mathematical modelling of the potential outcomes of our governance and incentives model has commenced.
Despite a deeply bearish sentiment in the cryptocurrency market and anticipation of a long winter, the interest amongst a wider traditional investor community in the problem we are addressing is only rising. As a genuine use case for the application of the blockchain technology, our mission also has a strong economic and social element. With an increasing number of market incumbent under pressure to find or fund solutions, our plan is to identify and execute on effective routes to market, as the ecosystem matures.