Making the Global Economic Network a reality
Editor's note: Yuval Rooz is Digital Asset's Co-founder and CEO
Nine months have passed since we secured $120 million in Series D funding, and as we begin the new year, I’ve been reflecting on our incredible growth as a company. In under a year, our employee base has grown by more than a third, with key hires across sales, marketing, product, and engineering. Some of the world’s largest financial institutions, including Deutsche Börse, Goldman Sachs, and Nasdaq, are turning to Digital Asset to streamline communication between core systems, synchronize disparate asset silos, and drive real business value. We have continued to refine and develop Daml, our core technology, and with it, we have seen profound success in helping our customers solve persistent, real-world business problems caused by issues around dispersed and inaccessible data, complex operations, and unclear workflows that span multiple types of organizations, drain resources, and inhibit growth.
As our ecosystem of clients and users continues to grow, they are increasingly looking to unlock the control of value from legacy silos into an open business environment, in which information and value are shared efficiently and transactions occur seamlessly. At Digital Asset, we call this the Global Economic Network (GEN): An emerging ecosystem of interconnected global networks that provides for the distribution of assets across disparate silos of value, creating an array of nodes in a digital financial system where institutions of all sizes can efficiently access new markets. As assets are brought 'online' into an open ecosystem and transactions of all types occur seamlessly, friction decreases, enabling value to grow exponentially. I’d like to explain how we’ve designed Daml to realize this vision and show you how our clients are already making this a reality.
Addressing the problems of data silos and aging technology
The legacy software systems that underpin the global economy are isolated, disconnected, and inefficient. The first wave of digitization saw companies move outdated internal processes into the new, digital era. But this was only a temporary fix: The world has since become much more interconnected, with transaction and innovation occurring at an accelerated pace. The systems and processes that enabled companies to innovate faster 20 years ago are now a liability, as they struggle to keep up in the globally connected economy.
As a result, markets worldwide suffer from fractured, disjointed, and outdated structures that stunt innovation, multiply operational inefficiencies, and keep the cost of doing business extremely high. Consider the cost of payments taking days to clear, on both the micro level (think individuals and remittance) and the macro level (entire financial systems). Or, consider the cost of unclear ownership structures on securities, and the resulting pain-points and inefficiencies. Broadly speaking, the societal tax is massive when you consider this minimum, natural latency of our existing infrastructure and the risks associated. These still-existent fragmented silos and the inherent friction slow or even block the development of applications and services that could streamline and automate large sectors of global commerce.
We saw firms begin to grapple with these challenges in the late 2010s by adopting blockchain systems and their promise of a more efficient and transparent future, particularly in financial services. However, we have learned that simply layering blockchain onto historical business models does not solve the actual problem; while today’s blockchains provide a partial solution to the problem of siloed data by synchronizing transactions among participating users, boundaries still remain between various systems of record. This results in missed connections between creators, issuers, investors, and end-users. Indeed, in most cases, enterprise blockchains have been deployed alongside existing infrastructure, resulting in additional, bigger silos.
These boundaries might not exist if every enterprise agreed to re-platform onto a single blockchain. As you’d imagine, this is not a realistic trend to expect. Further, many legacy systems haven’t—and won’t—move to blockchain infrastructure at all. As a result, we have witnessed the ad hoc creation of solutions for one particular class of problems, like digital payments, that only serve to further entrench information silos on a grander scale. This is similar to the problem that surfaced in the early days of computer networking. Universities and research institutions developed wide area networks (WANs) to connect their growing clusters of machines together, which created incompatible protocols driven by the specific needs of each network. The solution was the Internet: A network-of-networks that stitched them all together. The Internet today now carries over 97% of telecommuted information, proving that such interconnected network solutions can be forged.
Our vision: The Global Economic Network
What is needed to overcome these market and technological hurdles is a new interconnected network paradigm, not unlike the Internet, that links together disparate silos of value while retaining an easy-to-use interface to enable rapid innovation. This is the Global Economic Network. While the opportunities are seemingly limitless, embracing the GEN will require more than simply plugging in yet another system: Just as the Internet created new business models and technology choices that enabled rapid disruption of incumbents, the GEN will require organizations to adapt or risk falling behind.
This adaptation and evolution will require a new generation of technology that can facilitate the flow of value between global communities and their assets. Daml, Digital Asset’s core technology, enables this interface across networks, connecting the transactions where global commerce takes place while syncing each entity's unique system of record. It is the first system to fulfill the key requirements of a network-of-networks for global commerce, including privacy, scalability, and interoperability. As evidence of these capabilities, Daml solutions have been selected for production rollout at several of the world’s top exchanges, and already power the daily processing of tens of billions of dollars in financial transactions.
Connecting our global economies and the people who transact across the underlying systems is not only essential to the realization of the Global Economic Network, but also can be transformational for our global economic systems. We have seen what happens when major institutions attempt to “lift and shift” into new technologies. For example, mobile banking apps enhanced convenience for customers, but did not necessarily change how people transacted or exchanged value. But once PayPal, Square, Stripe, and Plaid achieved critical adoption, online banking was revolutionized. The result was the connection of creators, issuers, investors, and end-users across a more open network, thereby enabling a seamless, rapid transfer of value and freeing up time, resources, and capital for every participating entity. The Global Economic Network will enable us to mobilize these types of digital transformations on a similar scale, and connect the dots between many transformative projects we’ve seen take hold over the past decade.
How do we get there?
The Global Economic Network will require organizational adaptation. Building it requires an update in strategy and a technical architecture to match. The most successful organizations will be those that can identify the legacy constraints that no longer apply, and evolve their technical architecture and business models accordingly.
We call this resulting enterprise and technical shift the Open Business strategy. Consider its core tenets:
Your application is discoverable by anyone in the network. Any user in the network can find your application—similar to how they can find virtually any website in the world—and ask to join. Your authorized users’ nodes can connect to your app without special connectivity and can reuse the same node to connect to any app in the network.
Users become owners (again). Your customers control their own identities, own their assets, and can initiate workflows to move their assets according to the appropriate authorizations. In exchange, your service will become more valuable as customers connect their emerging products and services to yours.
Your app is embedded in the broader ecosystem. Your application should expose the non-proprietary rules and APIs of your system via smart contracts. This allows other applications in the network to build on top of what you’ve started, increasing velocity of innovation and assets.
Working with our customers, partners, and the open-source community, Digital Asset is building and connecting the core services that will bring the world’s assets together. Within the Global Economic Network, applications are not the sealed, one-size-fits-all solutions common to the current enterprise software market, but rather tools and building blocks for connectivity and innovation. Put most simply, in building the Global Economic Network, we are working to transform the digital rails that underpin global commerce and speed up the development of related products and services. In doing so, diverse global markets can become more cost-efficient, true asset ownership can return for the end-user, and ultimately, this network-of-networks can drive a more stable, sustainable, and equitable global economy.
We are building towards a future of seamlessly interconnected networks, in which systems of record know how to share information securely and with built-in permission guardrails—not only within organizations, but also across competitors and other players in the broader market. We’re helping enterprises spend more time on product innovation, grow operational efficiencies, and cut costs, all with the ideas of scalability and security at the very core.
The Global Economic Network is the future of the global economy—one that unlocks economic value and enables that value to flow freely and securely across interconnected systems. With Daml, our clients are expanding the boundaries of collaboration. Together, we are building that future. You can learn more about the Global Economic Network and how it can transform the way businesses connect with each other and with customers here.