Data is the Missing Link

[Music] good afternoon everyone my name is Sam Chadwick and I am in the innovation team at Thomson Reuters and I am accompanied by Tim Nugent who is in our research and development team and we thought we'd spend today talking about some of the things that Thomson Reuters has been doing over the last two years in the etherium space but we thought we'd start because over the last couple of days I've realized that not a lot of you know what or who Thomson Reuters are we are famous for our Reuters news agency that delivers news to over a billion people around the planet every day but what you may not be aware of is that the majority of our business comes from three business units where we are a trusted information provider for professional services across financial and risk tax and accounting and legal so our journey here started a couple of years ago because I'm based in zhuge which as you port mentioned has been coined as Krypto Valley now and I'd gone back to study a degree at Oxford and was hunting for a dissertation topic and Vitalik paper came out and a lot of the people or media were picking it up saying well this is going to disrupt the financial services tremendously and given that a large proportion of our revenue comes from the financial services business the question was well how's that going to impact us so of course not knowing where aetherium was based I reached out to vitalic these were the days before he was famous so he was very happy to answer my email fortunately and we met up for a coffee and Zook I had no idea that he lived two kilometers down the road from me he more or less said very quickly you guys need to be an Oracle the financial services industry trusts you you're an information provider and we need to bring those capabilities to aetherium so the journey really started there and as I was looking at the space the question became so what part of financial services is like me to get impacted first so we put together a model that we call the three V's model volume value and venue you can't see the venue axis that's going in and out of the page but it's essentially the difference between centralized and decentralized venues but on the axis that I've decided to talk about today you've got value on the y-axis and volume of transactions on the x-axis so if you look at the top right corner so this is the global capital segment for an exchange public equity exchanges government bonds these are incredibly sophisticated markets today decade's worth of improvements yes people point at them and say they work inefficiently but actually the time and effort it's going to take to migrate those industries and those markets is quite considerable so we're not saying it won't happen we're just saying that probably that won't be the place where it starts first so if you go to the opposite end this is the retail space peer-to-peer lending music royalties gambling you've seen a lot of startups that's starting to attack this space it's really interesting there's a lot of activity here it's not really a space for Thomson Reuters it's not one that we play in today so in the bottom right you've got the Machine age and this I think will be a huge opportunity for blockchain technologies Internet of Things we're already seeing companies like Gollum with distributed computation and I expect downstairs so for us we felt this was a bit early we started doing this analysis as I mentioned most two years ago so the question became what about this last segment these are the big-ticket items high value low volume transactions venture capital private equity over-the-counter derivatives syndicated loans this was where we decided to focus our effort this was the markets these are the markets that we believed were going to move first so having sat down with Vitalik and him having told me well we really need an Oracle I thought that rather than just believe him outright let's have a think about what data would be needed from an off chain provider like us so looking at the conditional transaction dependencies you can obviously create lots of smart contract opportunities using on chain data doesn't really need an Oracle the data is already there that you can reference but as we looked more and more we realized that he was indeed right which I probably shouldn't have doubted him and the majority of opportunities are actually those that require off chain data and I think in the last two years since we did this that hypothesis has been validated over and over so we looked at all of these and thought you know the probably the space to start is benchmarks and values for derivatives given that that fell squarely into that top left quadrant from the previous slide so we created a capability that we've called block 1 IQ block 1 IQ is an Oracle it's in beta but it's live and it works and it's compatible with both quarter and aetherium we've been talking with the JP Morgan guys about making extending compatibility to quorum as well but that shouldn't be very much effort at all and the data sets we've started with that share prices so exchange public exchange equity data for an exchange data corporate actions which are things like mergers buybacks stock splits dividends coupons anything where there's a change cryptocurrency rates from our partner company crypto compare financial benchmarks so these are things like Libor rates that a lot of the derivatives around the world today reference and then the knowledge graph which I won't discuss now but I'll come back to you later so the problem facing us was slightly different to some of the other Oracle players that are following us later today in that they needed to create trust first but customers already trust us we're the trusted information provider for the majority of the financial services industry so our problem was slightly different it's been around enabling the etherium community with high quality trusted data so this is the place we've chosen to start we can only support today non-production POCs run on private ledgers I know this is a limitation we're working on this but a majority of the problems for us reside around content licensing barriers so when you look at block 1 IQ we asked for you to think about creating a consortium a group of organizations that are going to use this as opposed to just reaching out to try and kick the tires and I should add that it's free we're not charging anything for this we want to enable you guys to see what you can do with them so with that I'm going to hand over to Tim who's going to show you a bit more about the capabilities right thank you Sam so this is essentially the landing page for block 1 IQ at the moment so if you visit this site you couldn't download some architectural schemes api's documentation and some other downloads and actually and so this is the the thomson reuters develop a convenient community website and if you click around actually there's some links to some other api's that we offer so last year i demonstrated and are there offering something called block 1a ID which is essentially an identity resolution system which connects aetherium addresses with OAuth 2 credentials so if you click around you can also find that so have a look around this website when you're ready to sign up you'll be faced with this page we ask that you sign up to certain terms and conditions most of the data that you will have access to is proprietary and in many cases we license it from third parties so fill in all the all the details tell us a little bit about your project and your your your plans and when you click Submit I think Sam will get a notification there'll be some legal documentation that may need to be attended to if everything goes through you will receive access and they login to our self-service system so this is our self-service system it's very much a work in progress but this allows us to do some sort of onboarding and whitelisting of your contracts so very simply just add a few users you can do that here by adding names emails and setting whether they are a user or an admin for example do that and then you you click through you get to this bit where you can configure your deployment so I think as Sam mentioned this service is only available for private chains at the moment so put in your deployment name are the details for example our PC host our PC port a default account click through and you can see what the configuration looks like now from this page it gets a bit more interesting if you hit the orange button this allows you to add a contract to say you have a trade contract you couldn't click that button putting the address of that contract and what essentially happens here is is that address is being whitelisted with our service so our Oracle contract will see that the request for data has come from a white listed contract and as long as it's on that white list we will be able to send data back to you you can also click on the contracts button and you can see the list of the contracts you've added and you can edit that once you've set a lot set that up the Oracle contract address will also be visible so you will know the address to hit with your requests there's also a little test interface so you can test requesting and receiving data so we've got a very small sample of the of the different requests you can make so end-of-day prices intraday interest rates cryptocurrency rates so select your your symbol from the Joc from the drop down hit submit and a block later that the data will come back and here it's simply represented as a JSON object if you go and look at our API you can you can be quite selective with with exactly what you request and exactly what is returned and you can tailor tailor that to the needs of your smart contract so that's pretty much the self-serve it's quite straightforward on our roadmap is to provide an API which will expose most of this functionality such the registering smart contracts and with our will be done quickly off chain so just to make this a little bit more tangible a couple of examples of some some assets that we've modeled to demonstrate interactivity with our Oracle so this is this is an equity swap contract it essentially has two legs an interest rate leg in an equity leg so there are two sort of streams of payment here one is based on the performance of an equity so here the S&P 500 or in equity index as the case may be and on the other leg it's typically based on an interest rate which in this case is LIBOR so when the contract is instantiated by either party a or party B at the moment the request to the oracle was made on chain but we're adapting our functionality so that could be made by a signed message off chain but at the point of instantiation a request is sent to our or record in this case it will request two symbols the sp500 SPX and also LIBOR and you can configure how regularly you want the the response data to come back it could be an end-of-day or it could be a single point in the future so when this data is delivered by our Oracle the two values the SPX and LIBOR are updated and these values are used to calculate the value of the two legs so with the equity leg this will be based on the notional which is a trade parameter you can see in the bottom left hand corner and it will be the notional multiplied by the percentage change in the S&P 500 for the interest rate leg that is essentially LIBOR plus basis points which is another one of these trade parameters and the ten or here is essentially the duration of the trade so using the values from our Oracle the value of these two legs can be calculated and here we have a very simple ERC 20 settlement so you can see how the prices that arrived from our Oracle further down the line drive the movement of these tokens to set all these two legs slightly more elaborate one here so this is a a RC 20 token basket so this might be an actively managed contract or basket of ERC 20 tokens so the bottom left you have a manager the manager will assign weights to the tokens held within the basket at the point of assigning these weights this request is sent on chain or off chain to our Oracle saying essentially this this contract requests the price the values of the specific tokens so these tokens and other cryptocurrency values come from crypto compare us our mentioned when those values arrive they are those those values are used in combination with the allocations that are currently held to call this evaluation function and using this valuation function we can we can come up with a we can calculate a value for the overall token basket depending on performance whether things go well or go badly investors who are these parties ABC down at the bottom can either invest or withdraw ether and depending on on that investment using a hook out to your favorite decentralized exchange protocol tokens can either be purchased or sold to keep the allocation in check right so that's it from me I will pass back to Sam who will talk about some of our learnings from these experience experiences and also a little bit about our future roadmap great thanks Tim so as you mentioned I think going through this over the last couple of years Tim was here this time last year or in Shanghai rather talking about block one ID and this was one of the biggest learning points as we set forward into looking at how we make our content available and for those of you that weren't here last year this is block 1 ID it was a capability that we had to create in order to honor the content licensing and permissioning arrangements that we're responsible for as we distribute content that we aggregate through to the ultimate consumer block 1 ID is essentially an address mapping service so slightly different to some of the other identity capabilities that you've heard from but it means that we can take an OAuth address like Google Twitter Linkedin and map it to an aetherium address and therefore we know and DAP developers know when a user is returning there they are through a pop-up asked to authenticate themselves and then you know that that's the same user coming back even if they have different aetherium addresses that they're using so this was the first step it was around identity of users in order to honor content licensing the second learning point was around identifiers so if I asked you what the ticker symbol C stands for today then you would be right if you answered Citigroup but if I dance Q that same question in 1998 the answer would have been Chrysler and the problem is that these tickers across the financial services industry get recycled and if you're writing small contracts using these that's an absolute nightmare because you can't change your smart contract so we created an open capability it's called a perm ID and you can all access it today at perm ID org it essentially creates permanent identifiers for entities which means you could always reference that number and always have confidence that it's going to return the information that you require even if the industry symbols are recycled so take a look at perm ID or --g doesn't have to be blockchain related this is open and works for everything and it's available under a Creative Commons license so I'll finish in the last minute with what's next so firstly we're looking to expand data coverage I mentioned a few earlier but we're already having organizations come to us now and saying can you please add electricity prices natural gas prices are the commodities information we've had interest in supply chain in general and so is my request out to you or my first request out to you is if you have needs for other content sets then do come and talk to us it's not limited to what we've shown in this first beta that was just a place to start and secondly we have a capability called kyc as a service we do this for all the banks already and one of our hypotheses is can we be a kyc service for investors for initial coin offerings for advisors for law firms can you take advantage of the capabilities that we have that we would traditionally use in banks and use those same capabilities and data and information in your identity activities so if you think that's appealing please come and talk to me because that's something that we're thinking about working on right now [Music]