Composable Commerce with Mattereum Asset Passports
Asset passports are more than object identities — they are dynamic tools for designing commerce using legal and software engineering.
The explosive growth of DeFi (decentralized finance) in the blockchain ecosystem has showcased the incredible power of “money legos” in building out an open, permissionless, and borderless alternative to traditional finance. At the time of writing, the total value locked in these protocols has exceeded $85 BILLION. Yet all of this value is largely speculative, facilitating little in the way of actual commerce or social impact.
Bringing the programmable and combinatorial nature of these open financial protocols to commerce in the real world could revolutionize how people access and provide goods and services in the years to come. But how do we bridge these two worlds?
The foundation of the Mattereum Protocol, the Asset Passport provides a powerful and composable legal-tech framework by bundling together warranties around goods and services which can broaden and secure the design space for digital commerce.
Warranties: The Legal Lego of Asset Passports
The Mattereum Asset Passport (MAP) was originally presented as a digital identity for physical things. The idea was to use legal and software engineering to create a persistent digital identity for goods rather than people. Tethering an object with a cryptographic key pair would enable a secure evidence chain of interactions and transactions around an object, securing provenance and value for years to come. The design methodology stems from the Ricardian contract framework developed by Ian Grigg, which allows us to secure and execute property rights in virtual and physical space through dual integration of legal contracts and software.
In the process of gathering the data, certifying authenticity, cryptographically signing agreements (warranties) on the blockchain, and storing all documentation on IPFS, we realized that this design framework was very modular and customizable, on both the legal and technical side.
The key modular element of the MAP is the warranty. Each warranty covers various terms of a contract, ranging from identity, terms of service, arbitration, vault condition, tokenization, carbon offsets, and eventually even anti-slavery certification.
With the Ricardian framework, we can bind warranties together around an object over time, securing value and accountability while maximizing utility.
Let’s explore these areas in more detail.
Asset Passports Give Objects Accurate and Lasting Value
Securing the value of property is a core purpose of MAPs. We can look at two distinct but related elements which enable this within the Mattereum Protocol: digital provenance and trust communities.
Blockchain-Enabled Provenance Creates an Enduring History of Trade
By using the Ricardian framework of using cryptographic signatures to bind contracts and software, we can bring together all warranties around an object or service in such a way that any transaction or change to the documentation is recorded in a cryptographically secure and verifiable evidence chain of activity.
And since we use the public and global infrastructure of a blockchain shared ledger in tandem with immutable, distributed file storage via IPFS instead of traditional client-server databases, there is a much higher confidence in the integrity and accessibility of that data for years and decades to come.
Instead of relying solely on paper certificates of authenticity or siloed ledgers across individuals and organizations, we can immortalize the information of an object’s ownership history on the most secure networks on the planet.
Trust Communities: Distributed Trust Networks Secure Value & Reduce Doubt
One of the innovations which arises from the MAP is the Trust Community, a peer-produced alternative to centralized certification methods whereby a network of independent certifiers provides digital warranties to facts within the MAP over time. All claims are backed by financial stake, putting skin in the game and adding weight to their assessments. In blockchain parlance, Trust Communities can be seen as mini-DAOs for securing product information.
Without a durable and incentivized trust framework like Trust Communities, commerce on the Internet suffers from the “doubt discount.” Lack of trust and certainty impairs the value of goods online, costing sellers an average 20% per exchange.
Mattereum Trust Communities, built upon the composable, legal-tech framework of the Asset Passport, restore value, increase liquidity, and bring peace of mind to digital commerce.
Asset Passports Create Accountability in Digital Commerce
A clever and powerful aspect of the MAP’s design is how the dual-integrated, legal-transactional framework creates crystal-clear lines of accountability: between buyers, sellers, certifiers, and other third parties (custodians, C02 offset markets). Whenever an entity interacts or transacts with the asset, they show intent to honor a shared agreement by signing the document with a cryptographic key.
When multiple parties sign a shared agreement in this way, an interwoven evidence chain of signatures is produced which is cryptographically secure and verifiable. Ian Grigg has referred to this process as “entanglement.”
Now what happens when things go wrong?
In the event of a commercial or systemic fallout, any party within the MAP can file a claim for breach of a warranty which is then presented to a designated arbitration court to settle. Applicable in 150+ countries under the 1958 New York Convention on Arbitration, this digital dispute resolution framework enables near universal legal enforceability of the contracts that comprise an Asset Passport.
This arbitration clause is included in the core contract of the MAP, waiting to be invoked if things go south.
Asset Passports Give Objects More Utility
In a world littered with hundreds of billions in stranded, underutilized goods, passported objects are not only more valuable than their zero-history counterparts but are also more useful. Without a system akin to the Asset Passport, goods drastically lose their value in the secondary market and either gather dust at best or end up in a landfill at worst.
An object with an MAP is imbued with more potentiality, as we can then program value flows and structure social protocols which unlock its full potential. This can encompass all scales of value: a socket wrench shared by a neighborhood, a treasured art piece secured in a vault, or even a forest that owns itself.
Using warranties which connect to smart contracts, we can bring blockchain innovations in finance and governance into the real world. From various forms of tokenization to collective ownership and management of assets, we can create new modes of value creation that oscillate between the realm of matter and the realm of bits.
It’s warranties all the way down.
Warranties within a MAP give us a composable design space for commerce on the Internet. We can offset carbon emissions behind the production and use of goods, bind an asset to a smart contract (tokenization) to mint digital assets of varying utility (physical NFTs, securitization, etc.), obtain risk protection, and provide digital dispute resolution in the case of commercial or systemic fallout. And this is simply what we’ve built to date.
What started as “digital identity for physical things” became a framework for programming value flows around goods and services as well as structuring the social protocols around them: a precursor to the Mattereum vision of smart property.
Join us as we build new experiences in this exciting new frontier of digital commerce!
About Mattereum
London-based Mattereum was established in 2017 by a trans-disciplinary team with a track record in designing and launching nation state-level infrastructure and headed by former Ethereum release coordinator Vinay Gupta. With blockchain-enabled authentication and tokenization of physical assets with built-in legal guarantees, Mattereum removes the fear, uncertainty, and doubt that has plagued digital commerce for decades.
Follow us as we bring the Mattereum Protocol to an expanding variety of markets ranging from memorabilia, gold, wine, to prized classical instruments, and more.
More at: http://www.mattereum.com
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