World First — Construction Contract Settled Using Pilot CBDC

NotCentralised and its partners in the RBA’s CBDC pilot program (in collaboration with the DFCRC), are pleased to have concluded a specific use case for the construction sector. Working with the teams at Digital Mutual, Trade Collective, OC Interiors, Hedera and ZeroCap, with assistance from Herbert Smith Freehills, NotCentralised demonstrated its TradeFlows system for easing liquidity risk in supply chains.

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) collaborated on a research project to explore the potential use cases and economic benefits of a Central Bank Digital Currency (CBDC) in Australia, with selected industry participants demonstrating potential use cases for a CBDC using a limited-scale pilot CBDC.

NotCentralised utilised the pilot CBDC as a risk-free asset to support the issuance of a stablecoin in its TradeFlows system that allowed participants to create digital escrows, agree contracts and program the conditions of associated payments, all using tokens. This allowed for the stablecoin to have an additional level of trust.

Speaking about the pilot project, NotCentralised Cofounder and Lead Developer Arturo Rodriguez said “…through participating in the RBA pilot, NotCentralised simply wanted to show the potential for real-world application of blockchain technology, with positive impact. We believe this has been demonstrated, and we thank our partners for their involvement in the achievement.”

Don Bruin from Digital Mutual said “we have needed something like this in our industry for a while. For too long, construction companies have worked without the ability to be completely comfortable that the other side has the funds to pay them and with these trust/escrow capabilities, now we can.”

Kel Matheson, founder of OC Interiors who used this system to pay for construction work done on a project, said that “with tools like this, we can have better control over how payments for work are made and reduce the frictions we see currently in the construction space.”

Susannah Wilkinson Regional Head of Emerging Technology (APAC), Herbert Smith Freehills added “it is exciting to see implementation of digital asset solutions to real world pain points through the RBA CBDC pilot. In this use case, tokenisation and automation promote higher levels of trust within the supply chain. These same concepts have broad application across different industry sectors and their associated legal frameworks”.

Rob Allen, Executive Director of The Hashgraph Association said, “This inspiring CBDC-collateralised stable coin project demonstrated well how a public distributed ledger network, such as Hedera, can be utilised for delivering solutions to real-world problems. The speed of delivery and quality of the solution is testament to the professionalism of the NotCentralised team that were building on Hedera.”

Rounding things out, Nick Bishop at NotCentralised added further that “the costs of establishing trusts is prohibitive so we are pleased to see technology like this able to be rolled out and used for transaction sizes which would not have traditionally qualified for escrows (and trusts). Blockchain brings the power of this tech to industries that need it.”

Further information can be found for our use case here on the RBA website: https://www.rba.gov.au/media-releases/2023/mr-23-06.html

as well as DFCRC: https://dfcrc.com.au/2023/02/28/construction-supply-chain-payments/

As well as The Australian: https://www.theaustralian.com.au/nation/digital-currency-breakthrough-rba-trials-blockchain/news-story/58c8f3a7bcf5c408fe50fcebbf81b605

Key Figures

• $229 billion AUD — size of Australian construction industry as of 2023 (link)
• 1,709 — construction companies entering administration in Australia between July 2022 and April 2023 (link). Taking it back further to mid-2021 and the number of companies is 2,023 (link).
• 1,700 — Projects in jeopardy when Porter Davis collapsed as Australia’s 13th biggest builder (link).
• 36% — Year on year increase in number of building companies collapsing in 2023 compared with 2022 (link)

For more information about the TradeFlows use case as part of the DFCRC pilot, please reach out to we@notcentralised.com.