Digital Asset and ISDA to Bring Smart Contracts in Derivatives Trading

Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term startup Digital Asset has joined hands with the International Swaps and Derivatives Association (ISDA) to develop a Smart Contract Smart Contract A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist Read this Term-based tool for derivatives trading.

According to the April 9 announcement, both the firms are working on an open-source reference code library, which will ease the implementation of ISDA’s Common Domain Model (CDM), a standardized solution providing market participants with a common digital representation throughout the lifecycle of derivatives trade.

Commenting on this, Kelly Mathieson, head of the enterprise solution at Digital Asset, said: “Following our success at the Barclays DerivHack in London last year, we have been working closely with ISDA with the joint goal of standardizing processes across the derivatives industry."

“We are very excited to now make this reference implementation available to users via our DAML Software Developer Kit and the Rosetta Portal, enabling financial institutions to be in control of their own data.”

ISDA first proposed CDM in 2017 to standardize the process of derivative trading in a digitized environment. According to the company, the introduction of blockchain-based smart contracts in the system will allow a superior level of automation of the derivative management.

Proprietary Language for Smart Contracts Development

The solution is written in DAML, a smart contract modeling language, and has been open-sourced by the company on April 4.

“Digital Asset’s reference code library complements the ISDA CDM by allowing developers to unambiguously construct lifecycle events with a machine-executable specification. Furthermore, this reference code library specification allows the ISDA CDM to fully integrate with DAML,” the announcement noted.

“The ISDA CDM establishes a common set of representations for events and processes that can be used by everyone, improving efficiency and facilitating greater automation. We’re pleased to work with Digital Asset to help implementation of this important standard,” Ian Sloyan, director of market infrastructure and technology at ISDA, added.