The only valid smart contract is a voluntary one — easier said than done

Digital Asset
May 31, 2018 · 10 min read

DAML models, tracks, and enforces smart contract rights and obligations

In What properties must an enterprise smart contract language have?, Simon and Neil defined several properties that “a smart contract language must enable for it to be acceptable for automating financial workflows.” The first of these specified that “for the consequences of a contract to be compulsory, entrance must be voluntary.” Sounds pretty straightforward, right? But let’s probe this property more deeply and see what surfaces.

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Basic contract mechanics: contract instances on the ledger are instantiations of contract templates.
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This graphic illustrates how a transaction authorized by Alice — for example the execution of a “buy” order with her broker — causes an equity holding contract to be created on the ledger (direct creation). Should Alice then choose to exercise a transfer, her original holding contract would be archived and replaced by two new contracts on the ledger (indirect creation) representing the transferred amount and her residual amount (if any). Note that Alice no longer holds any rights or obligations with respect to the shares transferred to Bob.
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This graphic illustrates the offer/acceptance pattern, using a portion of a simplified OTC call option business flow. Alice authorizes a transaction that causes a call offer contract to Bob to be created on the ledger. Bob’s authorization was not required to create this contract, and Bob controls the choices on this contract. Should Bob exercise the accept choice, the offer contract is archived and replaced by an option contract. Alice’s authorization was not required to create this contract, as she authorized the initial offer, and Bob controls the choices on this contract. Should Bob choose to exercise the option prior to expiry, the option contract will be archived and new contracts created obliging Alice and Bob to settle the trade.

About the authors

Martin Huschenbett, Ph.D, Senior Software Engineer — Language Engineering, Digital Asset.

DAML Driven

The developer’s choice for building safe, concise smart…

Digital Asset

Written by

The leading provider of Distributed Ledger Technology for multiple industries. digitalasset.com

DAML Driven

The developer’s choice for building safe, concise smart contracts

Digital Asset

Written by

The leading provider of Distributed Ledger Technology for multiple industries. digitalasset.com

DAML Driven

The developer’s choice for building safe, concise smart contracts

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