Hyperledger Foundation Hyperledger and #NFT, 11 Jun 2021

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From YouTube: Utility NFTs on Hyperledger Fabric - Dr. Muhammad Ali Khan, Staque

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Utility NFTs on Hyperledger Fabric - Dr. Muhammad Ali Khan, Staque

Non-fungible tokens (NFTs) have taken the market by storm. However, all notable examples - music, sports, digital art - can be classified as "design tokens" (dNFTs) as they primarily gain value through aesthetic or emotional appeal. We believe there is a whole untapped market for "utility tokens" (uNFTs) that would derive value from functionality and utility certificates. While dNFTs are easily minted on public blockchains with contract-oriented programming support, the complexity of uNFTs requires chaincode execution in a general language, and often, in permissioned settings. This makes Hyperledger Fabric a perfect fit for our use cases which include uNFTs for compiling and trading provably valid data, tokenizing machine learning models with performance certificates, and using the above for lifecycle management of ESG projects attached to green and sustainability bonds. The second application will be demonstrated, and the rest discussed during the talk.

Sessions Details & Slides (if available)- https://sched.co/j3c4
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A

Okay, so thank you so much for joining me today and super excited to be talking about the stack blockchain and the exciting work we're doing in the nft space. So, let's dive in a little bit about me. Here's me without my covert beard and my social media, I have background in computer algorithms.

A

I have been working in c-suite and faculty positions for a while. You know more than a decade long experience uh right now spearheading the development of some exciting tokenization protocols and the rest. You can read on the event page, so I won't bore you with the rest of my bio. So nft is non-fungible tokens.

A

What comes to your mind when you hear the word nft, probably digital art, trading cards, ethereum, openc and maybe environmental concerns. So hopefully this talk will help, expand that narrative a little bit more. So, let's see the way I think about nfds, I I classify them into two categories. There are the design nfts and there are the utility nfts now. What do I mean by design nfts well primarily, design assets that gain value based on aesthetic or emotional appeal?

A

And those are your typical nfts that you see on ethereum, typical, smart contract programming languages are enough to capture them. Erc 721 is the go to protocol and most of these nfts live in ethereum or ethereum like blockchains examples. Well, there are a ton, literally every nft that is being traded on openc or other marketplaces.

A

So then this really begs the question are design nfts, the nfts? That's it or is there something else? So that's where stack comes in and we have built a new asset class utility, nfts or unfds, it's a new protocol that we have developed. So what is it? It's, basically an nfd that has a certificate of utility built into it, which is dynamic and it updates over time and provides a proof of functionality.

A

Okay, so why do we need this protocol, then, basically for any assets that require performance guarantees such as software packages, machine learning, models, data sets and, if you think, about business, world projects, companies financial assets, so you want to monitor their performance and prove that they are doing what they're supposed to do and that's what utility nfts do? Okay now, that being said, these applications require a more robust and general purpose, programming, language and often permission blockchains, and that's what makes hyperledger fabric a perfect choice for us.

A

So we built our blockchain uh based on hyperledger fabric and we built our technology around it. Okay, so we'll dive into these use cases a little bit more later. But first let me say that I don't consider unfd dnfd as an exclusive divide. You know there can be tokens that can fall in the intersection.

A

Unfortunately, right now we don't have any uh good examples that fall right in the intersection of the two classes. I mean something close would be a design asset that has some access features, but these assets won't have any dynamic certificate of utility. So, unless until we do, we don't really have something that falls right in the intersection of the two classes.

A

Right now stack blockchain would be the only one to have unfds, so we are pioneers.

A

Okay, so use cases, so stack has looked at primarily these use cases for unfds, and today I won't be on time as limited right, so I'm not going to dive into all of them.

A

I'm going to treat software and machine learning as a single use case and describe it a bit and then I'm going to treat project tracking and financial instruments as another use case and describe it in quite a lot of detail. So let me do that rather than addressing these cases here.

A

So let's talk about machine learning and software, so there's a growing trend of using off-the-shelf software and machine learning, components and products, but then the problem is that usually the buyer and the vendor aren't really testing these systems on this under the same environment. You know not they're, not working under the same dev, environment or the testing environment, and that can lead to discrepancies and a lot of risk for all the parties involved.

A

So how stack solves this problem is through unfds. So what can happen? I mean there are a number of scenarios and I'm not going to provide.

A

I mean I cannot provide a lot all the details here, but the basic idea is that the vendor can create a unfd and deploy it on the stack blockchain and then the unft tests and monitors the performance of the software of the machine learning model and updates the proof of utility pretty much in real time. The software can be executed on chain or off chain, depending on the nature of the software, and when a client comes along, they can test the software under the same conditions.

A

They can see the data in the unft and then the purchase can take place.

A

So it's a very oversimplified description of a complex scenario, but hopefully you get the idea and if you would like to discuss more details, just reach out to me or fill out the contact form on stack dot, io our website and we'll be happy to discuss more okay. So the other use case that that we're really excited about as well is the financial markets use case, particularly esg, so there's a growing market for environment, social governance and sustainability bonds.

A

It's already a multi-trillion dollar market and we feel excited about it because we are passionate about nfts and about sustainability and what better way to dispel some of the concerns environmental concerns around nfts by actually using nfds for sustainability right so yeah. This is one of the primary use cases that we are focusing on.

A

uh So what is the use case? Well, uh there are investors, institutional investors that have a mandate to invest in esg initiatives, and now companies can use this capital by issuing green bonds or sustainability bonds. They get access to capital to work on green projects that otherwise would go unfunded and that's a great situation for everybody.

A

But there's a caveat that these investors would like more accountability and transparency for the project and the funds and right now there is no trustless or frictionless information sharing system where all stakeholders, you know, can share facts and be on the same page, and that creates a lot of risk. I mean it's not ideal to rely on quarterly reports right. So that's where stack comes in and our solution is that use unfds.

A

You know the company, that's issuing green bonds can issue a unfd that captures the project that's being funded. So what happens? Is that unfd will monitor the progress or the performance of the project and the project will act as an asset, basically that's being monitored and the performance can be monitored in terms of impact in terms of financial spending in terms of the issuance criteria and all these things, all of that can be built into the unfd and the data gets populated in real time and all the stakeholders can access the data.

A

That's the short description so where we are at is, uh we are the first organization in the esc space. Obviously we have completed our poc and seed round. We are doing a series a raise right now and there is going to be an ico in future. If you want to get your hands on stack coins, that's going to happen in future.

A

So if you're interested in any of this, please contact my co-founder and ceo of stack, brent libert. You can find his contact details on stack dot, io, okay. So how do we solve this problem? And I give a very high level description, and maybe I can expand a little bit on that in the remaining time.

A

So our solution at a very high level looks like this. Okay, so what's happening here. So there is a credentials management step. Okay- and there is a know, your customer know your asset step. Okay. So what happens is that the project that is to be funded or the initiative that is to be funded is fully mapped out in terms of its digital and physical infrastructure?

A

Okay and that's recorded on the blockchain and then the issuing company, the company that wants to issue the bonds, uh the bond underwriter and industry professionals work together under uh international standards to build a performance matrix for the project. How the project's impact and other criteria will be monitored. That's all going to be built into the blockchain and it becomes part of the unfd. Basically performance matrix is what defines the utility certification process in the nfd okay.

A

So once the unft is issued, it starts monitoring the project performance, okay and then a bond can be issued and it can be traded on the usual exchanges. So we're not we're not building an exchange at this point for the bonds. But the good thing is that all the investors lenders or any stakeholders can just hop in to stack blockchain and access all the data about the project through one single point of contact: okay, everybody works with the same set of shared facts and that's the ideal situation here. So there's a lot of other components.

A

There's an ai component here as well, but you know I'll, just skip it because we're running out of time here, okay, so esc token lifecycle, I kind of described it already. So I'm not gonna. Basically, it's a five to six step process.

A

You know which I've already described when I was talking about the solution architecture, so maybe I'll skip ahead and talk about the business model a little bit. We have three revenue streams for the esc use case right now, I'm focusing on the esc use case and of course there is the software use case as well, but for the esc or pretty much for all of them. These are the three revenue streams, but the breakdown changes depending on the use case. The esg use case is a I mean it doesn't involve.

A

A lot of transfer of ownership, like the unfd that will be created, will typically stay with the company and it won't be transferred a lot unless there is a merger and acquisition type scenario.

A

So, in this case, our primary revenue will be coming from data management and tokenization services- okay, anyway I'll maybe skip ahead, because I do want to present a video demo. Okay, so in the time remaining I'm going to go through an esc token time lapse. That's what I call it.

A

Over from powerpoint to my video okay, so this is not a stack blockchain demo, because that would require me to have you all sign, ndas, okay, so what I did was I created a time lapse of how esc tokens work on my system and you're going to see a command line? Interface. Okay, so don't worry if you see a lot of because when the fun stuff begins, I will.

A

I will explain, what's happening, okay, so right now, what you will be seeing is a hyperledger fabric network being created on my machine. So while this is happening, you know and the peer organizations are being added to the network, I'll explain what the scenario is so what's happening. Is there are two organizations org one and art two or one is trying to find their green project?

A

Maybe it's a maybe they want to reduce emissions from their facility and they want to do that through issuing a green bond and now they're creating a unfd on our blockchain.

A

So the unfd can monitor the emissions from the project in real time and then they can show any investors and lenders that the pro that the project is actually performing so org 2 is a potential lender or investor or a buyer of this asset, and they will be joining this network to monitor the performance of the project.

A

That's the scenario that we're dealing with here, so I'm going to skip ahead a little bit because right now what's happening is that the network is being set up and a channel is being created and the two organizations are joining this channel. That's what's happening right now. The next step would be the the token manager. Smart contract will be installed. Yeah that's happening right now. The chain code or the smart contract is being installed.

A

So I'm going to skip ahead a little bit and I'm going to go to the token issuance.

A

Both organizations are joining the channel.

A

Okay, admin user is created, and here we go. The unft has been issued right at the bottom of your screen. You see a unfd with an id address, creator, owner metadata and proof of utility, which is emissions reading and you are seeing there. You know the unft is updating, so the proof of utility is updating. You have first emissions rating 1872, something then you have 1874 1873 things aren't really looking up and oh here we go so the readings have gone down so we're using an emissions api right now to monitor.

A

So this is an actual api that we're using to populate the data here. Since it's a time lapse, I'm accelerating the process. Typically, you would be updating the proof of utility every day or every week or every month, depending on the project, but what's happening here is you're you're, seeing uh updates to this proof of utility in real time.

A

Okay. So after a few updates, what will happen? Is you know I'm doing a transaction here as well, so just to show that the token is transferable, maybe r2 acquires arg1 and as part of the acquisition, the token gets transferred to r2 and that's pretty much the demo.

A

But I'm gonna show one last thing here: you know you can use hyper ledger explorer to see what's actually happening in the blockchain through a visual interface, so I'm not showing you the stack visual interface, I'm just showing you the hyperledger explorer and if you look at yeah, the chain code is deployed and the transactions. Let's take a look at the last transaction.

A

Okay, let's see the what has been written to the ledger in the last transaction.

A

This is the final state of the token, with all the proof of utility, updated and all the readings recorded and the ownership transferred to arg2 okay. So that's it with the presentation and the demo and thank you so much for being here and send me an email or contact brent. You know if you want to discuss more, you know just hop on to stack dot, io and we'll be happy to have a discussion, so we're a little bit over time, but I'm gonna stay on here for a bit.

A

You know to answer any questions that you might have. Okay, so now I can see the chat and I can answer any questions.

A

So so there's one question I see here: are you using any specific token standards for metamodel for unfd? It's our protocol. Basically it's our standard. We haven't published it yet because it's proprietary and we are considering the option of making it open source versus other options, but right now it's not published but it, but there will be more details coming so I intend to write some blog posts and articles about it. So yeah stay tuned for that.

A

uh How can we validate the value of an nft? It depends so unfd is less of a transactional.

A

I mean unfd itself is capturing an asset that already has a value in the market right, so our focus is on unfds and they actually already have a value associated with them. Okay, so anyway, I'm gonna, I'm gonna, stop sharing, because I think I'm over time here any more questions please get in touch with me later. Thank you. So much.