Democratized Financial Services

Información del proyecto

DFS

Identificador del acuerdo de subvención: 865430

DOI

10.3030/865430

Proyecto cerrado

Fecha de la firma de la CE 23 Abril 2019

Fecha de inicio 1 Mayo 2019

Fecha de finalización 31 Agosto 2019

Financiado con arreglo a

• INDUSTRIAL LEADERSHIP - Innovation In SMEs

Coste total

€ 71 429,00

Aportación de la UE

€ 50 000,00

Coordinado por

BLOCKSTATE AG
Switzerland

Periodic Reporting for period 1 - DFS (Democratized Financial Services)

Período documentado: 2019-05-01 hasta 2019-08-31

Resumen del contexto y de los objetivos generales del proyecto

Today the investment banking industry faces several significant challenges with increased compliance costs due to new regulations and legacy systems which still cannot meet current requirements for risk management, transparency and cyber-security.

BlockState is proposing efficient, transparent and compliant democratized financial services (DFS) for the financial market using Blockchain technology. BlockState’s mission is to create a new generation of investment banking services with greater efficiency, increased transparency, and full regulatory compliance.

We have built a technological and legal platform that solves root inefficiencies like non-transparency, legal overhead and manual processing using the power of distributed ledger technologies (DLT). BlockState uses blockchain technology to replace antiquated parts of the existing infrastructure in asset management, debt, and derivatives. DFS is a stack of software and legal frameworks that automate resource-intensive investment banking processes like the issuance of products, valuation and custody of assets, clearing and settlement, and reporting. This saves the market countless intermediaries and manpower, reducing complexity and making it more efficient, transparent and accessible. Our product stack represents a leap forward at every layer of finance. BlockState bring efficiency gains that translate in direct cost savings by eliminating the middleman and opaque processes.

As financial markets are expansive, and B2C customer segments are already covered by FinTechs like N26, Revolut, the DFS solution will be implemented within several specific financial segments. As such, BlockState will be approaching the equity issuance market below official Listing requirements (freefloat, market cap.), the corporate debt market, and the derivates market.

The feasibility study as part of the Phase 1 project helped validate BlockState’s technical viability, market acceptance and future market potential.

Trabajo realizado desde el comienzo del proyecto hasta el final del período abarcado por el informe y los principales resultados hasta la fecha

During the Phase 1 project (May – August 2019), we have spoken to and interviewed more than 30 experts and potential customers for their needs to gain a complete understanding of the solution technical acceptance, demand, willingness to pay, pricing validation, and expected conversion rates. The feedback to and reception of the DFS solution has been sincerely positive throughout all cases. We also ran an intense 3 months trial with our first client Streetlife and our own Security Token offering, allowing us to test our end-to-end product from legal and financial structuring to issuance. The tests’ results provided a valuable source of information to enhance the platform and its components over the course of various iterations, as well as positive feedback from Swiss Financial Authorities (FINMA and tax authorities). The collected feedback provided us with sufficient data to create a development plan towards TRL8-9. The risks identified at this stage were categorized and addressed by our technical and commercial team.

Phase 1 also helped validate the business concept by demonstrating the market need for our solution as well as evaluate the prospects for European growth and international expansion, consistent with the commercialisation plans. BlockState has also undertaken several complementary actions in order to maximize its market success, by defining and implementing the communication needs (product positioning and marketing message) as well as cooperation with established Audit companies (Big 4) to be used during the commercialization phase, thereby creating the basis for successful product launch.

Avances que van más allá del estado de la técnica e impacto potencial esperado (incluida la repercusión socioeconómica y las implicaciones sociales más amplias del proyecto hasta la fecha)

DFS’s DLT-powered infrastructure and smart contracts allow us to tokenise financial instruments, bridging them to the wrappers of traditional financial products, lowering issuance and structuring costs, increasing liquidity in secondary markets and enabling easier listing and trading of securities. Our digital and decentralised calculation agent uses oracles and smart-contracts to provide data in real-time, with 24/7 availability, full flexibility and by immutability by design. The oracle bridge replaces the need for manual monitoring and data entry. They automate the provision of external data to smart contracts that trigger events when predefined conditions meet, reducing error, intermediaries and execution time. Furthermore, through the Digital Asset Custody solution, we securely safeguard digital assets legally and cost-effectively and eliminate IT- and non-IT related risks like insider attacks and business continuity threats. Our self-managing smart contract products, Auto Broker and Trading Bot, automate the process of asset management using algorithmic management and auditability by design. The usage of smart-contract technology enables near-instant clearing and settlement, on the one side democratising access to a broader audience, and on the other side providing immutable trust by design. It automates risk mitigation and improves access to transparent and reliable data. Using DLT, DFS automates flexible (semi-private) on-chain reporting that is easily accessible to regulators, reducing costs and execution time.

Initially, BlockState will operate as a technology facilitator for existing financial institutions. With the establishment of a B2B platform, an open financial ecosystem can be created, where multiple SME can be enabled to innovate with our legal framework as a white-label solution. Later, BlockState will become a fully-fledged investment bank with a broker-dealer license for white-label asset tokenisation and a diverse range of products.

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