Laying the foundation for open finance on Ethereum
Open-sourcing the first foundational building blocks of ACTUS Protocol
In his keynote at the 2019 Ethereal Summit Joseph Lubin took us on a journey to the year 2047 and the Other Side of the Trust Revolution. Along this revolution Ethereum, the ACTUS Protocol and other key components transform finance from an opaque, mis-incentivized, and inefficient industry to an open, interoperable and frictionless ecosystem. Working towards fulfilling this vision we have open-sourced the first foundational building blocks of the ACTUS Protocol for Ethereum today!
#buidl with ACTUS Protocol on Ethereum!
The published resources can be found on the GitHub of atpar AG, the company behind the ACTUS Protocol. In essence, the actus-solidity repository provides a Solidity implementation of the ACTUS “Principal At Maturity” Contract Type including all associated utility tools such as ACTUS definitions, or conventions like business day conventions and day count conventions. Thereby, the Contract Type engines distributed in the actus-solidity repository implement the logic that evaluates the legal obligations under a specific financial contract as well as the respective contract state transition logic. Hence, the PAMEngine, currently contained in the repository, allows deriving and iterating through the schedule of contractual obligations for all kinds of bullet loans, lending contracts with full repayment at maturity.
“Principal at Maturity” is the first of some more than 30 ACTUS Contract Types that will be made available through the actus-solidity repository.
Furthermore, a lightweight demo app can be accessed here. The demo app runs the actus-solidity code on testnet and allows to evaluate the future contractual obligations for given sets of contractual terms for the Principal at Maturity Contract Type.
But wait, what is the ACTUS Protocol again and why do we need it?
In essence, the ACTUS Protocol is a blockchain protocol for the issuance, servicing, tokenizing, pooling, and reporting on for all kinds of financial assets in a unified manner.
The goal of the ACTUS Protocol is to provide the Ethereum community with the tools necessary for fulfilling the vision of an open, interoperable and frictionless financial ecosystem.
As financial assets (or contracts, respectively) build the basic building blocks of finance respective tools are key for the community of builders. Moreover, availability of a unified finance toolbox, covering all kinds of financial assets, not only accelerates the development of financial applications through the community but also adoption of Ethereum (and blockchain in general) as the core technology for the open financial ecosystem.
At its core, the ACTUS Protocol leverages the Algorithmic Contract Types Unified Standards (ACTUS) which is a standardized representation of all kinds of financial contracts in terms of their legal obligations. The ACTUS standards consist of
- a simple financial contracts taxonomy
- a data dictionary defining all relevant contractual terms
- a formal description of the legal agreements encoded in all kinds of financial contracts and in form of about 32 Contract Types (CTs)
ACTUS was launched in 2012, after the 2009 financial crisis, by a group of visionaries consisting of financial industry veterans, financial services providers, and universities. Initially, the work was supported by two significant grants from the Alfred P. Sloan Foundation and the initial consortia members themselves. Over the past couple of years an ecosystem has formed on top of the ACTUS standard with users building risk-management, financial simulation and reporting, accounting, core-banking, and educational software.
About 1.5 years ago we started porting the ACTUS standard to Ethereum and announced the ACTUS Protocol earlier this year. This announcement and the public availability of ACTUS tools for Ethereum are another milestone in the fulfilling of the 2047 vision.
The first of many tools to follow
This post is just the first of many through which we will announce new tools around the ACTUS Protocol and document progress in our mission to enable the Ethereum community to build an open, interoperable and frictionless financial ecosystem. Thereby, adding the remaining ACTUS Contract Types is only one of the dimensions along which we will release new tools. Going forward, we will also complement the toolbox with facilities for the issuance, servicing, tokenizing, pooling, and reporting on financial assets. So, stay tuned! Follow us on Medium, Twitter, LinkedIn or subscribe to our newsletter in order not to miss any of our announcements!
At atpar AG we believe in the spirit of free and open source software (FOSS), its superior quality through continuous peer-review, accelerated adoption through network effects and potential to change entire industries. Come aboard and help us change the financial industry — your involvement matters!
Acknowledgments: My thanks go to the entire atpar-team who are doing an excellent job building the ACTUS Protocol. Specific thanks go to Michael Svoboda, Johannes Pfeffer and Johannes for their valuable inputs to this article.
Disclaimer: I am a core-team member of ACTUS and co-founder of atpar AG. The opinions expressed in this article are my own an not opinions of the companies. No investment advice.
