EGB Networks
A New Generation of Blockchains Geared Towards Enterprise Solutions.
What is EGB?
Enterprise Graded Blockchains (EGB) is a new standard introduced by Coreum for blockchain networks specifically designed to provide the essential tools and infrastructure for enterprises of any size to build and run decentralized applications.

In compliance with ISO20022, some key elements EGB networks bring are security, scalability, interoperability, efficiency and compatibility with regulatory requirements.
What are the key attributes of EGB Networks?
Compliance with ISO20022 requirements.
Real-time settlements with transaction details while not exposing confidential details of parties/subjects involved.
Provision of an optional KYC feature on-chain: Possibility to operate within the required AML regulatory-frameworks while providing anonymous transactions by default when DeFi protocols and non-financial enterprises use the technology.
Immutability and irreversibility through cryptography: Information cannot be erased once entered.
Utilisation of triple-entry accounting and consensus systems to establish asset ownership. i.e virtual currencies, securities, etc.
Ability to set transaction-specific business rules.
Provision of 1500 transactions per second as a minimum.
Having on-chain interoperability capability and cross-chain bridge to other blockchains.
Use of a secure, electronic, and time-stamped transaction ledger database shared by all parties in a distributed network.
Comprisal of accurate and verifiable records for all transactions ever made: An auditable and irrevocable transaction history.
Cryptographic Peer-to-Peer (P2P) networks: Single source of truth and irrefutable proof of existence, process, and provenance.
Smart Contracts: Immutable terms recorded in computer language and automatically executed.
Why do EGB Networks play an important role in mass-adoption?

The traditional financial industry is witnessing a daily increase in advocacy towards the adoption of distributed ledger technology.

Blockchain technology, in particular, has shown immense potential. For financial institutions, it promises considerable savings in infrastructure, transactionality, and administrative costs. Moreover, it can disintermediate the digital transfer of financial assets, reducing the role of central counterparties' and can also improve trust, accuracy, and resilience in financial ecosystems.

So, why are we not seeing a broad adoption of blockchains within the traditional financial markets?

The short answer is:
”There’s a lack of a Layer-1 blockchain technology able to ease the financial markets' regulatory concerns while providing secure, fast, cost-efficient and scalable transactions.”

Everyone within the Crypto space agrees that all cryptocurrency transactions must remain "anonymous" and "P2P" without the need for a third party. Nevertheless, what if we have a new generation of blockchains that are able to provide an "Optional KYC" feature to financial institutions? By default they provide anonymous transactions when DeFi protocols and non-financial enterprises use them. This will lead to massive adoption of blockchain technology in both traditional financial markets and consumer-based decentralized applications.

What are some potential use-cases of EGB networks in financial markets?
Commercial Banking
  • New and competitive products and services introduction
  • Cryptocurrency denominated products (e.g., from Tinker, SolidX)
  • Asset and real estate tracking; physical asset registration (house, land, automobile)
  • Marketplace, P2P, and syndicated lending
  • Real-time loan funding and automated servicing via smart contracts
  • Personal financial management (PFM)
  • Liquidity management, cash reserve management, and intra-bank settlements
  • Customer acquisition and loyalty management
Payments
  • Micropayments / retail payments
  • Wholesale payments (correspondent banking network, cross-border FX)
  • P2P payments (BTC Jam, Coduis, BitBond)
  • Payments processing (e.g., Coinbase, BitPay)
  • Exchange offerings and virtual wallet (e.g., BitPesa, Bitreserve)
  • Currency exchange and cross-border remittances (Ripple, Kraken, MeXBT, Coinbase (Wallet))
Risk Management
  • Risk audit, risk underwriting
  • Counterparty risk management
  • Fraud risk management, identity theft prevention
  • Liquidity risk management; capital risk management
  • Systemic risk management (real-time global view)
  • Operational risk improvements
Trade & Supply Chain Finance
  • Real-time multiparty tracking and management of letters of credit, bank payment obligations, open account instruments
  • Debt servicing, insurance, and factoring
  • Receivables financing
  • Commodities trade finannce
  • Decentralized contracts execution
  • Document preparation services (trusted private e-doc exchange, real- time review, and approval of documents)
  • Interaction between import and export banks (eliminating the role of correspondent banks)
Capital Markets
  • Clearing and settlement (Hyperledger, Serica)
  • Trade execution (real-time transaction matching, automated DVP on cash ledger)
  • Post-trade (trade reconciliation, trade reporting, monitoring and surveillance)
  • Custody and security servicing (escrow and custodian services, asset documentation; record keeping)
  • Derivatives transaction
  • Asset documentation / registries / servicing / exchange
Regulatory Compliance
  • Automate compliance activities execution (e.g., CCAR-related, real-time regulatory control limits enforcement (e.g., for asset rehypothecation))
  • Regulatory process optimization (e.g., in AML, KYC, CDD); KYC, AML registries
  • Sanctions enforcement; tools for regulators (e.g., for parsing real-time feed from FIs, audit trail for compliance verification)
  • Regulator reporting automation (through smart contracts, DL as golden source, and unified regulatory reporting protocols)
EGB Networks can disrupt the traditional financial markets.

Central banks, commercial banks, stock exchanges, and many other FS players keenly explore blockchain’s potential. According to the World Economic Forum report published in August 2016, over 24 countries are investing in blockchain. Over 90 corporations are part of blockchain consortia, and over 2,500 blockchain patents have been filed over the past three years.

Additionally, over 90 central banks worldwide are engaged in blockchain discussions. In terms of funding, over the past three years, US$1.4 billion has been invested through venture capital to explore blockchain usage in the FS industry.

Recently, various blockchain technology platforms have been and are being developed. Over 300 technology startups, mainly in the UK and the US, have been working on enabling blockchain for the FS space – Kraken, BTCJam, HelloBlock, BlockCypher, Bifubao, Digital Tangible Trust, Ripple Labs, Coinbase, BitPay, and BitPagos to name a few.

Established technology vendors have played a vital role in the blockchain ecosystem. For example, R3, IBM, ConsenSys and Chain are the key players in the global blockchain technology market. Also, regulators and policymakers of FS have begun focusing on blockchain adoption. FinCEN, Commodity Futures Trading Commission (CFTC), and Securities and Exchange Commission (SEC) are just a few examples.

Some examples of the problems that EGB Networks can solve within the traditional financial markets:

Real-time Review and Approval of Financial Documents: Linked and accessible through EGB Networks thereby reducing shipment initiation time.
Reduced Counterparty Risk: Bills of lading tracked through EGB Networks. This eliminates the chances of double spending.
Transparent Factoring: Invoices accessed on EGB Networks enable transparent and real-time view into subsequent short-term financing.
Disintermediation: By facilitating trade finance via EGB Networks, banks do not need a trusted intermediary. This eliminates the need for correspondent banks.
Ownership Transparency: Title available inside EGB Networks offers transparency into ownership and location of goods.
Decentralized Contract Execution: As soon as the contract terms are met, status gets updated on EGB Networks in real time. This reduces the effort & time needed for monitoring the goods delivery.
Regulatory Transparency: Regulators are enabled real-time view of the essential documents to assist in AML and enforcement activities.
Reduced Transaction Fees & Automated Settlement: Contract terms that are executed through smart contract eliminate the need for additional transaction fees and correspondent banks.
EGB networks can solve the main technological risks and challenges of finance institutions.
Technological risks & challenges
Elaboration
Technological risks & challenges
Performance
Elaboration
  • Even as their adoption requires high initial capital costs, many blockchain applications have demonstrated poor scalability, high transaction processing delays, and latency issues, especially where permissionless ledgers are involved.
  • Owing to their very calculation-intensive cryptographic component, many DLs are significantly slower than the conventional databases.
  • There is a risk that blockchain applications designed for sophisticated multi-jurisdictional use cases may not be scalable, optimally functional, secure, and cost-effective.
  • Smart contracts are not fault-tolerant, and there are chances of coding issues. Reviews have found that large numbers of template contracts for Ethereum scripting systems contain significant vulnerabilities. Digital currencies have also shown that they are not always crash prone.
  • In the blockchain setup, when major FIs act as full nodes, there is a risk that the DL size may become unmanageable.
  • As smart contracts are created by humans, these are prone to human error. Correcting errors in smart contracts is relatively difficult as these need to be specifically created for updates.
Technological risks & challenges
Interoperability
Elaboration
  • Interoperability is crucial to maximise the power of DLs. However, today, there is a lack of consensus on policy and data interoperability.
  • Using different DLs requires data-sharing capabilities. However, currently, the data exchange protocols and formats are not mature enough. Rival blockchain technologies can undermine system interoperability.
  • Owing to difficulty in transposing different consensus protocols, transaction reconciliation between different DLs may be challenging.
  • There are challenges in using wallet software with separate DLs. Currently, most DLs have their own wallet software. Enabling common wallet for various DLs is difficult.
Technological risks & challenges
Standardization
Elaboration
  • There is a lack of industry alignment on certain key design points. For example, access requirements for completely open versus permissioned ledgers, interoperability between networks, improvement approaches, and governance processes.
  • Common DL and network protocols and standards are lacking. Users currently have their own mix of technology and back-office system stacks. There is also a lack of standard DLT tools or interfaces. This creates scalability and integration challenges.
  • There is a lack of consensus on effective international standards and versions of blockchain. There is division between myriad approaches, namely, private blockchains (e.g., R3, DAH) and open- ended blockchains (e.g., Ethereum).
References