The ixo Protocols provide innovative data verification and capital liquidity mechanisms enabling capital to be programmed for sustainability. These protocols are delivered through the ixo blockchain. This is built with Tendermint consensus and Cosmos modules and a bridging mechanism into the Ethereum network. Our article explains why we chose Tendermint with Cosmos and Ethereum to build a shared, global, censorship-resistant, open data and financing infrastructure for sustainable social, environmental and economic development. In an accompanying bridging article, we describe how we have built a 2-way peg between ixo-Cosmos and Ethereum.
Programming capital for sustainability
Capital can be programed to achieve specific financial results that have extrinsic value, such as cash dividends on profits. Capital can also be programed to achieve desirable non-financial results that have intrinsic value. Intrinsic value includes what matters for the sustainability of the economy, the good of society and to protect the planet. An example of intrinsic value is carbon emissions that are measured as reduced tonnes of CO2 and traded as Carbon Credits. (As a point of clarification — we use the term ‘Capital’ to denote all economic units of value and not only fiat capital).
In the past, non-financial results have typically been described as “externalities” that cannot be quantified and therefore have not made their way into the ledgers of traditional economic activities. Despite their costs to the economy, people and the environment, these seemingly intangible externalities have not been properly valued, or priced into the real economy.
For the world to transition to a sustainable future and avoid our impending crash-course into social, economic and environmental collapse and chaos, escalating capital flows must urgently be programmed towards achieving sustainability objectives. This requires accounting for, valuing and investing capital with the objective function of increasing positive intrinsic results and decreasing negative results. We need to have better ways of specifically knowing what impacts our economic activities are having — period!
The ixo Protocols for sustainability
The ixo protocols are purpose-designed to program capital for sustainability, in ways that can optimize both financial and non-financial outcomes.
With blockchain ledgers, smart contracts, deterministic oracles and tokenization, we now have the technological means and economic mechanisms to program capital for sustainability.
This is achieved by providing a highly versatile, standardized data verification mechanism that can be widely deployed to record, identify, measure, factually verify and value information about things that matter.
The protocol outputs uniquely identified digital assets that tokenize the intrinsic value of whatever is being claimed and counted. Tokenization provides a capital liquidity protocol on which financing applications, such as smart impact bonds, can be programed.
ixo enables anyone to capture information in a format that can be verified and used to program flows of capital.
The ixo blockchain for sustainable development
We have chosen to execute this protocol using the best currently available blockchain infrastructures that will enable rapid scaling of capital flows into sustainability, at the most decentralized levels and with the least restrictions. Keep in mind that the ixo blockchain needs to at least provide a capable, upgradable infrastructure to underpin the UN sustainable development goals, up to the year 2030!
Data processing and storage are provided by fully decentralised, containerised data hubs (Elysian Data Stores), that can be independently deployed and hosted anywhere. These ixo Data Stores are identified, located, authenticated and secured using the ixo public network.
Data flows into projects in the high-definition data format of Verifiable Claims. As claims are validated and factually verified, they are secured with proofs ledgered into the ixo public network. Staking and payments for processing and hosting claims data is accounted for on the ixo blockchain, using the native IXO token as the standard unit of account.
Anyone can now configure and deploy their own ixo project, as a project founder (which has some analogies with creating a DApp on Ethereum).
A project is a generic coordination mechanism for any initiative that will authorize Service Agents to submit pre-defined claims; Evaluation Agents to process, opinionate and verify these claims; and Investment Agents to exchange value for verified claims that are transacted as tokenized assets.
Each agent in this mechanism is identified by their universal digital identifier, using the W3C Decentralized Identifier (DID) specification. We have chosen to implement the DID specification using the Sovrin Method (the rationale for which we will explain in a separate article). This will enable agent authentication to be based on Verifiable Credentials, which provides a powerful computational security model, using Object Capabilities. As an aside, we have been privileged to work with Professor Mark Miller, in the Rebooting the Web of Trust design workshops, who is credited with bringing to the DID specification work his philosophy of Robust Composition, which enables us to computationally implement a unified approach towards access control and concurrency control.
We believe that a universal identifier system, implemented using the DID specification, with an Object Capabilities model, could provide a key part of the solution for securing cross-chain transactions.
Why we chose Tendermint-Cosmos to build the ixo blockchain
Our team researched a range of currently-available blockchain infrastructures (including Ethereum) to determine what could best provide the features needed for running data-intensive projects that could in future interact with a pluralistic ecosystem of many blockchains. This had to be proof-of-stake today, with the capacity for high-throughput volumes and low-cost transaction costs, to process and secure claims at scale, for hundreds-of-thousands of sustainability projects of all sizes. Consider that it is not tolerable within the context of environmental sustainability to rely on a proof-of-work network for the use-cases that will be built on the ixo network.
We found Tendermint consensus robust and relatively easy to implement. The core Cosmos SDK components are well-composed, versatile in their modularity and easy to customize to add new features and enhancements. Cosmos is written in Golang, which we felt is a solid language for blockchain development and was easy enough for our Java-experienced developers to learn.
It is relatively trivial to configure the business parameters of a Cosmos network, such as transaction fees, accounting and staking. Our experience of the Tendermint-Cosmos core development team has been impressive and they are supported by a strong community that we enjoy being part of.
ixo Ethereum Dapps
To coordinate and incentivize agents to collect, verify and exchange project data, we have built a system of smart contracts on the Ethereum network for staking on projects and settling value-transfers between agents. In this configuration, the ixo blockchain provides a state-channel to account for all per-claim project transactions, without gas costs and speed limitations. The Ethereum public network provides a secure settlement layer.
Atomic exchanges can be made between ETH or any ERC20 compliant token and the IXO Token on Ethereum, to enter and exit the IXO native token on the ixo network.
Most important, any smart contract on Ethereum can be configured to receive signed messages from the ixo network that will provide the oracle inputs to trigger state-changes in Ethereum DApps. It means that a diverse range of applications can be built and deployed on Ethereum, using the ixo network to program exchanges of assets or trigger any other transaction types. Applications could include Smart Impact Bonds, Crowd-funding, DAOs, Token Curation, Decentralized dispute-resolution, Prediction Markets, Decentralized Governance, or whatever else the Ethereum developer community can imagine.
Why we chose Ethereum as the open financial settlements and application layer
The primary reason for choosing Ethereum-based networks as the first blockchains into which ixo is integrated is the vibrancy of the ecosystem and developer community. Bridging into Ethereum plugs ixo projects into the rich ecosystem of interoperable Ethereum decentralized applications, which provides almost limitless extensibility to the ixo solution space.
Ethereum has a solid roadmap and direction of travel towards improving performance, scaling and the ability to create sidechains. These future features are all elements that the ixo protocol requires and our longer-term view is that ixo could possibly adopt these capabilities, once they have been productionized and proven.
A practical immediate consideration is that the ERC20 standard can be used to generate tradable project tokens that can be listed on existing exchanges.
The maturing standards for Non-Fungible Tokens (NFTs) is also important for extending into non-fungible units of verified claims, which we refer to as Impact Tokens.
For development purposes, the Solidity programing language and ability to easily build smart contracts that can interoperate with Cosmos made this a sensible starting-point.
As we move deeper into building specific programmable capital applications for financing projects using ixo, such as Smart Impact Bonds, we will need to consider whether Ethereum is best-suited to provide the privacy and advanced computational requirements for these applications, given the current limitations of the EVM, such as the lack of floating-point decimals and handling of big numbers.
Conclusions (for now)
Being able to program capital flows through progressive states, based on verifiable information about conditions in the world, is a powerful generic capability that will change how our financial systems operate. This could enable us to optimize the allocation of capital, to achieve both objective financial and objective non-financial outcomes. With ixo, we have chosen to purpose these capabilities towards social, economic and environmental sustainability.
We have applied new web standards for decentralized identifiers and verifiable claims, to create a set of protocols for identity authentication, data verification and capital liquidity, in the context of sustainable development projects.
As a starting-point, to deliver these capabilities through a networked infrastructure on which programmable capital applications and use-cases can be built, we have deployed the ixo blockchain. This is built with Tendermint consensus and customized Cosmos components and we have created a bridge into Ethereum to use the security features of the Ethereum public network for financial settlements and to provide extensibility of the ixo solution space, through interoperability with the growing ecosystem of Ethereum DApps.
We look forward to iterating on this foundation and would be grateful for collaborators to join these efforts to build a shared data and open financial infrastructure for sustainable development.
Join the Community
Learn more about ixo and how to get involved at ixo.foundation (and meet the ixo chatbot who will deal with FAQs).