Concrete use case (B2B, factoring)

(Sai Tam) #1

I am completely new to Corda, but I find it interesting because it focuses so much on the financial aspect.

Currently I am working with Ethereum on a factoring solution and I was wondering whether Corda is a better choice for it. We have exclusive data in the field of supply chain movements and we use this data to execute automated payments.

We have 2 tokens in our ecosystem:

  • USDT ERC20 (issued by - this is a stable value token which is tethered to traditional USD.
  • A security token (Issued by us) - its use is getting rewards from every transaction (our factoring solution) with USDT.

Unfortunately I can’t tell too much about it and I hope you can get an idea of it. My questions are:
How would look such a structure on Corda?
Can I use currency?
Which currency would be used?
Is it real USD & EUR or do I have to exchange it?
Can I issue a security token and send (automated) rewards to it from every transaction with the actual currency?

Many thanks and best regards

(Henry Roxas) #2

Hi Sai Tam,

Glad to hear you are taking the plunge into learning more about Corda!

Ethereum is great for several use cases, but when it comes to factoring, documentary trade, open account transactions, Corda is really purpose-built for these scenarios.

Banks and corporates only want to share data with those that are party to a transaction. With Corda, there is no broadcast: all communication is point-to-point. Data is shared on a need-to-know basis and known peers only see what they need to see. So a debtor can be confident that a competitor doesn’t have a copy of the invoice being sold. Similarly, a factor can be confident that data is not broadcast to other competing trade finance providers. To avoid double spending, we utilize a notary, which will check if a state object (e.g. an invoice) was previously consumed (we use the UXTO model). The notary can be run by any organization: a regulator, an auditor, a group of banks, etc. There can be multiple notaries on one business network.

On Corda, you could model a factoring by creating state objects to represent different documents: the sales contract between the buyer and seller, the invoice, the factoring agreement, etc. Each document would be an input to a transaction, would undergo verification logic and be signed by the relevant parties.

Corda doesn’t have a built-in cryptocurrency, but we can model cash on-ledger and there are some basic cash smart contracts we provide in the open source version.

The currency would depend on the specific use case. It is more likely, however, that payments would call a off-ledger payment API service in the initial phases of a POC or pilot.

Hope that helps.