Approaching Non-Disruptive Distributed Ledger Technologies via the Exchange Network Architecture

Abstract

The rise of distributed ledger technologies, such as R3 Corda, Hyperledger Fabric and Ethereum, has lead to a surge of interest in digitalizing different forms of contractual cooperation. By allowing for ledgers of collaboration-critical data to be reliably maintained between stakeholders without intermediaries, these solutions might enable unprecedented degrees of automation across organizational boundaries, which could have major implications for supply chain integration, medical journal sharing and many other use cases. However, these technologies tend to break with prevailing business practices by relying on code-as-contracts and distributed consensus algorithms, which can impose disruptive requirements on contract language, cooperation governance and interaction privacy. In this paper, we show how our Exchange Network architecture could be applied to avoid these disruptors. To be able to reason about the adequacy of our architecture, we present six requirements for effective contractual collaboration, which notably includes negotiable terms and effective adjudication. After outlining the architecture and our implementation of it, we describe how the latter meets our requirements by facilitating (1) negotiation, (2) user registries, (3) ownership ledgers and (4) definition sharing, as well as by only replicating ledgers between stakeholder pairs. To show how our approach compares to other solutions, we also consider how Corda, Fabric and Ethereum meet our requirements. We conclude that digital negotiation and ownership could replace many proposed uses of code-as-contracts for better compatibility with current contractual practices, as well as noting that distributed consensus algorithms are not mandatory for digital cooperation.

Keywords

• Digital negotiation
• digital cooperation
• digital contracts
• smart contracts
• distributed ledger technology
• blockchain