DAH is a Distributed Ledger Technology startup founded by Blythe Masters and other financial industry veterans. DAH aims to use distributed ledger technologies to disrupt the legacy processes which slow down the financial industry. In their own words:
In theory, a shared, immutable ledger enables transparent, peer-to-peer, real-time settlement without the need for financial intermediaries. In reality, markets require known, reliable counterparties, rights of reversal and error correction, high levels of privacy and the operational benefits of net settlement in a system in which legal entities are responsible for the perfection of title to and legal standing of financial assets. Consequently, markets will continue to benefit from and require third party service providers to perform a variety of functions as they do today: from ensuring clean title, to enabling operational and balance sheet netting.
Assets are not currently issued solely into these distributed networks, and may never be. This necessitates careful on- and off-ramping procedures for keeping the two systems in sync as new technology is adopted. These needs can be met at the transaction layer, where Digital Asset software maps business logic and legal processes to cryptographic signature flows. As an example, our software constructs transactions that enjoy privacy and, when required, permit the ability for net settlement.
Digital Asset claims they select the right kind of distributed ledger for the problem at hand; they can work both on permissionless ledgers (like Bitcoin and Ethereum) as well as permissioned ledgers (Hyperledger), which provides better control. To enforce the right type of smart contract execution logic, DAH has modeled a new language called Digital Asset Modeling Language (DAML). DAML is similar to a smart contract language in many ways but is designed with the needs of financial institutions in mind. According to DAH, it is optimized for usage in a private execution environment rather than in an open execution environment(in which it would be processed by all of the nodes in a network). DAML is designed to achieve many of the same benefits within Smart Contracts.
DAML does not support Turing Completeness. This allows it to specifically focus on financial services use cases where the potential outcomes are predictable (and hence avoid the halting problem). DAML focuses on verifiability only by the stakeholders of that agreement rather than by everyone, and on certainty – being able to accurately predict all possible outcomes of the agreement rather than introducing doubt with unnecessary complexity.
Consensus in DAML: DAML ensures that all stakeholders can reach consensus by utilizing the shared log containing the complete provenance of the rights and obligations along with an off-chain execution environment for processing the workflows and the behaviors that are being modeled. DAML also ensures that not all nodes in the network need to know and process the contents of a contract; only the parties specified/relevant in the contract are involved in the execution. Contract data is revealed on a need to know basis and even the distributed ledger, which only contains references to the agreement, is encrypted.
DAML Agreements and Hyperledger: The name Hyperledger used below can be easily mistaken for the Linux Foundation’s Hyperledger project. Tim Swanson from R3 explains the naming confusion between these two in his blog post here. Take a few minutes to read that before you proceed below. If you did not have the time, here is a brief blurb:
So when someone asks “what is Hyperledger technology?” the short answer is: it is currently the name of a collective set of different codebases managed by the Linux Foundation and is not related to the original distributed ledger product called Hyperledger created by a company called Hyper that was acquired by DAH. The only tenuous connection is the name.
The combination of the Digital Asset Modeling Language and Hyperledger allows for scale and privacy while maintaining a fully reconciled system across multiple parties. DAML serves as a logic and validation layer sitting above the ledger, providing an auditable way to prove the updates that occurred to the distributed ledger. An agreement modeled in DAML is only active if Hyperledger confirms it is valid and not referenced by any other transaction, creating an independently verifiable logical mapping between the original business intent all the way through to the relevant Hyperledger transactions.
Image Credit: Coin Desk Construct 2017
Nodes in the Hyperledger network that are not party to the agreement are still able to agree upon its outcome because they can independently verify that all of the required authorizations have been made without ever actually seeing the contents of the agreement itself. However, the contents of agreements can be provably revealed to authorized third parties such as regulators.
We will cover the last three (Chain, Ripple and Enterprise Ethereum in Part 2 of this series).
Deva Annamalai is a technologist at heart who brings an unique business value proposition with his diversified experience in various vertical industries that include Banking, Finance, Mortgage, Healthcare, B2B marketplaces and Logistics. Currently Deva works as Director of Marketing Technology and Innovation for Fiserv. He is also responsible for managing the INV Fintech startup accelerator program in partnership with Bank Innovation and various Financial Institutions.3 - Readers Like This Post