Reactive Smart Contracts — PARSIQ’s Answer to Evolving DeFi Products, and Growing Complexities as More Parties Enter Web3

PARSIQ unveils Reactive Smart Contracts, revolutionizing DeFi and supply chain in the Web3 space by offering dynamic, real-time interactions among multifaceted smart contracts. Dive into the future of decentralized complexity with RSCs!

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PARSIQ

6 min readOct 5, 2023

As many of you know, PARSIQ recently announced that it would soon be developing the Reactive Network, blockchain’s first cross-chain EVM to transform the way smart contracts can react to the activities of another.

But why? And why now?

PARSIQ has been around since 2018, and we have watched with great excitement as the blockchain industry has gone through various evolutions. From the countless blockchains we have watched rise and fall, to the NFT craze, and through DeFi summer — we have been there each step of the way.

Today, as we sit in the middle of another bear market, we feel the tides shifting once again.

We believe with the utmost conviction that Decentralized Finance will continue to evolve, and that the financial products which will one day be offered will operate on a level of complexity that cannot be managed with today’s blockchain infrastructure. We also believe that there will be an increase in the use of decentralized technologies to manage existing complex processes — in particular, we are especially interested in the supply chain and logistics industries.

You may be wondering, what type of decentralized future are we envisioning? Let us take you on this path below:

The Evolution of DeFi

These days, DeFi is mainly limited to decentralized lending, yield farming, and staking. Decentralized financial products which are available in traditional finance continue to not be present in the Web3 world. But we believe that this is only a matter of time. In the future, we believe it is reasonable that we will see:

Decentralized stocks (either issued on the blockchain or mirroring traditional stock markets)
Decentralized Crypto Futures (grounded in BTC, ETH, and/or other crypto assets)
Decentralized Options (calls and puts on your favorite securities)
Decentralized ETFs

We also see at least one other way in which traditional corporate finance is transformed — wherein accounts receivables, collections, and other debt obligations are not only securitized and issued on the blockchain, but then can be bought and sold like traditional securities in the Web2 world.

But How Does Reactive Network Come In?

Decentralized Securities/Lending

We believe that the buying and selling of leveraged assets on the blockchain will be one of the main areas that stand to benefit from Reactive Smart Contracts.

As an example — imagine that two parties wish to enter into a Decentralized ETH Futures contract, with one party believing that the value of ETH will appreciate significantly before contract expiry, while the other party believing the opposite. To enter into the agreement, both parties will enter into a smart contract agreement on the blockchain, with sufficient collateral from both parties to allow for ETH price movements during the duration of the contract. Imagine that this collateral is 20% of the current price of ETH.

After both parties have entered into the agreement, imagine that the price of ETH swings downward 25% a few days later. In today’s smart contract environment, the buyer would get “margin called”, or in Web3 terms, get “liquidated” after the price dropped more than 20%. This is what happens when crypto assets are locked as collateral when taking out stablecoin loans, and the borrower loses his/her asset as soon as the value of their collateralized crypto falls below a certain threshold.

But what if this didn’t have to happen? What if a Reactive Smart Contract was setup to add additional collateral once the threshold was close to being breached?

We believe that Reactive Smart Contracts have the ability to “save” leveraged investors from sudden sharp movements in crypto asset values. RSCs not only effectively provide 24-hour monitoring, but they can also take action at the most critical times (e.g. when you’re not available).

Decentralized Corporate Finance

We believe that securitizing traditional assets on the blockchain will also one day become a normal occurrence. From mortgage-backed securities to debt that has gone into collections, collateralized debt obligations may very well become the norm.

But again, how does Reactive Network come in?

Imagine that a company is strapped for cash. Because of payment terms set with a large customer, they are unable to collect a significant sum of funds for at least 60 days. In the traditional world, this company could explore the feasibility of factoring their customer receivable — wherein they sell the receivable to an entity (e.g. a bank) at a predetermined discount (e.g. 3%). So a $1M receivable collectible in 60 days could be sold to a bank today, at a 3% discount, so that the company could receive $970k. The bank would then collect the receivable from the customer 60 days later.

Imagine that this transaction is securitized on the blockchain. The Company and its customer have entered into a smart contract for the delivery of goods. The smart contract is programmed to not release funds for 60 days after the goods have been accepted by the customer. How would the Company seamlessly transfer the funds from this receivable to the bank?

Enter Reactive Smart Contracts. A RSC established between the Company and the bank could be programmed such that once the 60 days passes, the RSC interacts with the original smart contract to then transfer the funds to the bank — bypassing any manual transfers which would need to be worked out in a separate blockchain transaction.

The Web3 Adoption of Supply Chain and Logistics

Another area we are incredibly excited about is supply chain and logistics. We believe that the majority of manufactured products will one day be represented by individual NFTs. This would, as an example, allow an end consumer to trace his/her brand-new Nike shoes all the way to the production facility in which it was manufactured in, and all of the stops it might have made along the way.

We know that an end-to-end supply chain process involves a mind-boggling number of parties. For the production of Nikes, as an example, you could have:

3rd Party Manufacturer
Freight forwarder to shipping port
Outbound Port operator
Government inspectors of cargo
Shipping Company
Inbound Port operator
Inbound customs agents
Freight forwarder to Company warehouses
Freight forwarder to Distribution Centers
Freight forwarder to sporting goods store

By all accounts, this is likely an under estimation of all of the parties involved — just to transport a pair of Nikes from the factory floor to the end consumer’s hands.

We believe that turning a pair of Nikes into an NFT will be the norm. And we believe that as that pair of Nikes exchanges hands, various smart contracts will be activated, ensuring that proper tracking and payment occurs each step of the way.

But how to monitor and govern the entire process?

We believe that Reactive Smart Contracts can provide a consolidated view of all of the different smart contracts which need to be activated throughout the life of a manufactured good. RSCs that are tied to each smart contract which goes along the logistics flow will provide the interested party a full view of every asset that travels from A to B, and where certain assets which may get stuck along the way.

Conclusion

We are developing Reactive Smart Contracts in anticipation of the coming evolution of decentralized financial products, and the growing complexity that we expect to take place in the blockchain world — driven in large part by the growing number of parties which will be involved in transactions.

In Web2, transactions are seldom linear and 1:1. Multiple parties are often involved, coupled with high degrees of complexity in the transaction itself.

Reactive Smart Contracts will prepare exactly for this — but designed fully for the world of Web3.

About PARSIQ

PARSIQ is a full-suite data network for building the backend of all Web3 dApps & protocols. The Tsunami API provides blockchain protocols and their clients (e.g., protocol-oriented dApps) with real-time and historical data querying abilities. Data Lake APIs allow complex data querying & filtering for any project, specifically designed and tailored for our customers’ blockchain data needs.

Supported blockchain platforms: Ethereum, Polygon, Polygon zkEVM, BNB Chain, Avalanche, Arbitrum, and Metis.