TEN x EthCC — Day ONE Musing

A few of us from TEN converged on Brussels for EthCC 2024. This blog series explores how TEN.xyz, combined with Secure Enclave technology, disrupts traditional solutions and enables next-gen web3 use cases. The following insights are my personal opinions as an engineer, information theorist, and innovator. These proposed integrations are spontaneous, driven by daily interactions and evolving conversations. I hope this spurs your imagination and provides context for why the future lies with Secure Enclaves.

Today we’ll reminisce on a discussion on Decentralized Space and Threshold-Intent Dark Pools w/ HODL — Web3 VC fund.

Just before you read-on, take a moment to follow us in the field on Twitter/X: @alchemist_x, @0xBhavB, @liamencrypted and of course: @tenprotocol

Decentralized Space

During discussions with some VCs, I proposed that a 2–4 year timeline for market makers in the space industry is inevitable. This sector commands significant mindshare, intrigue, and capital, making it an ideal candidate for re-staked liquidity or dormant equity.

Investors are often motivated by profit combined with either predictability or sheer excitement. The promise of participating in an “inevitable” space industry market — whether infrastructure, tourism, supply chain, or commodities — is compelling regardless of one’s disposable income.

Let’s delve into the real challenges and values that blockchain can immediately address in this niche, high-value ecosystem. Supply chains and resources become first-class concerns in the space industry, involving a complex network of specialized subsidiaries, private and government contractors, and manufacturers. Ensuring efficient and competitive scalability is difficult. Tokenization and public ledgers of capacities and capabilities, along with decentralized market making, can significantly improve this paradigm. Consider the urgency in situations like Ryan Air’s recent faux pas with fake aircraft parts from their supplier.

The potential becomes even more intriguing with Secure Enclave/TEE-enabled L2s like TEN. The aeronautics and space industries require regulatory and safety compliance, handling proprietary and export-controlled technologies and materials, and international talent and agency collaborations. These needs would be a non-starter for web3 if not for the engineers at TEN, who have already achieved this with the R3/Corda ecosystem. The encryption-by-default and layered approach enable zero-trust through:

• Enclave-computed, minimum predicate attestations for regulatory audits.
• Provenance of source and destination regarding assets, with full need-to-know transparency and automated restrictions.
• KYC and DID enabling secure interactions between counterparties related to data access and actions.

Consider this: Do you imagine a world where the above does not happen? I can’t. The questions then become where, when, and how. The answers are TEN, NOW, TEN. Acronym that to TNT — it’s explosive. Boom. 💥

Threshold-Intent Dark Pools

Let’s keep this concise. A dark pool is a type of loosely regulated liquidity environment where entities trade OTC (over the counter) with delayed transparency, meaning trades are not reported until some time has elapsed. This allows large institutions or high-net-worth individuals to make trades without immediately impacting the market price. A decentralized, open-access dark pool fits perfectly with TEN.xyz. There are already partners working on this, but let’s take it further for the fund reps at HODL.

Consider this: When making a market move, whether in a dark pool or not, you are essentially inventorying your capital resources — liquidity, analysts, traders, etc. — which constitute your degrees of freedom or ability to execute an intent. The more degrees of freedom you have, the more effectively you can drive higher profits. This is why you seek more funding, hire more teams, or invest in better/faster systems — the “structure of freedom.”

Conventionally, we think of “enterprise,” “fund,” or “organization” as encapsulating trust boundaries. However, the “structure of freedom” can also occur as an aggregation of sub-entities. What if we treated counterparties in a trustless compute ecosystem as individual divisions of a higher-level organization? This is where a Threshold-Intent contract comes into play.

Imagine N distrusting counterparties with proprietary goals and knowledge engaging in a single “promise.” A fair arbiter, with no bias or ability to favor any party, accesses consensual data from the outside world and full omniscient views of our subjective-private inner worlds. This arbiter takes in:

A) Objectives and intents from each of the N parties (liquidity requirements, commodity/stock/RWA splits, ROI requirements, qualitative constraints like green/fair practices, etc.).

B) Degrees of freedom (legal moves/capital allowances) each party can execute in given domains, scenarios, and regions or markets.

The arbiter continuously runs against active markets. An internal (audited/attested) AI agent can simulate and review combinatorial collaborations and their expected values (EV). If and only if all parties involved will benefit from a collaborative set of instructions, an event will trigger a counter-blind set of actions. Each participant is contractually enforced to execute their part of the agreement without knowing what moves others are making in tandem.

For example, imagine Alice and Bob are trading two types of assets. Alice has gold (Asset A) and silver (Asset B), while Bob has oil (Asset C) and wheat (Asset D). Each trade they consider has an expected value of $10. They don’t initially know which combination of trades will be most beneficial, so it seems random. The possible trades are gold-oil (AC), gold-wheat (AD), silver-oil (BC), or silver-wheat (BD). However, the combination of gold and wheat (AD) might have a higher combined expected value — say $12 and $14 — because when gold prices go up, wheat prices tend to go down, and vice versa. This inverse correlation makes the gold-wheat trade more valuable together than separately, while the other combinations would remain somewhat equivalent or uncorrelated.

This concept extends to more complex scenarios like pooling liquidity to offset large market swings or insuring against black swan events. Collaborative, trustless strategies can also activate actuarial and insurance policies.

This dark pool extension is only possible with Secure Enclave handling of compute and data layers in tandem with smart contract automation. This answers the question, “Why hasn’t anyone done this before?” TEN enables such scenarios. Practically, it’s a higher-dimensional efficiency driver. Counterparties will, in most cases, maintain distinct positions relative to each other, but relative to broader market dynamics, they will find new collaborative methodologies. This offers a tremendous first-mover advantage analogous to the introduction of high-frequency trading (HFT). Returns rely on information — either faster execution (as in HFT) or higher data resolution (as in Big Data Analytics and ML strategies). An often-missed axis of information transfer is intra-party communication and bi-party strategy, involving elements of game theory, privacy layers, trust enforcement, and differential. This is the next greenfield, bottlenecked in the past by human capacity and interface. Humans are not efficient at this, but Threshold-Intent on TEN is.

TEE’ser for tomorrow

On the Day 2 re-cap I’ll be reminiscing on an exploration decentralized social graphs, an how they can work in tandem with private agents on TEN.

Alch3mist, (aka Anthony Nixon) is a web3 engineer with a passion for cognitive science, AI, and information theory. Currently contributing to TEN.