A Blockchain-Based Platform for Automating Bond Issuing Worth $10M
Brief results of the collaboration:
- Delivered in just six weeks, the solution integrates with the depository, digitizes bond placement, and enables secondary market activities.
- Built on Hyperledger Fabric, the system ensures transaction confidentiality relying on a blockchain architecture.
- The platform allows for issuing any securities, while providing new possibilities for a product through smart contracts.
National Settlement Depository (NSD) is a central securities depository of the Russian Federation. The company is the largest securities depository by market value of equity and debt securities held in custody. NSD is part of the Moscow Exchange Group (MOEX)—the major exchange organization operating trading markets in Russia.
The customer wanted to develop a blockchain-powered prototype platform for issuing bonds of one of the largest mobile network operators in Russia. The solution was to connect three parties: NSD (the depository), MegaFon (the bond issuer), and Raiffeisenbank Russia (the investor). The aim behind the project was to automate bond placement and accounting with blockchain, while minimizing risks of reconciliation and ensuring transparency. Hyperledger Fabric was chosen for its support of confidential transactions and resilience in the production environment. Furthermore, both MOEX and Altoros are members of the Hyperledger Foundation since 2016.
Under the project, the team at Altoros had to address the following issues:
- Though Hyperledger Fabric met the needs of the project better than other blockchain platforms available, it has no REST interface yet. This makes it difficult to integrate the platform with web applications. Fabric also does not support cross-channel transactions.
- It was important to ensure a resilient blockchain setup across members’ data centers, as well as secure cross-datacenter communication.
- It was required to enable confidential transactions.
- The system needed to be integrated with the third-party service, which validates compliance with government regulations.
As there are no ready-made solutions for Hyperledger Fabric to use as a REST interface, developers at Altoros delivered a Node.js-based API to simplify web apps integration with blockchain peers. As the REST API can be implemented as part of other projects, it was open-sourced.
Using Docker Compose, experts at Altoros significantly reduced the complexity of the blockchain network setup in members’ data centers, while ensuring secure cross-datacenter communication.
With Node.js, our engineers also developed a clustered back-end component that orchestrates smart contracts in separate blockchain channels, thus, enabling the confidentiality of transactions.
To ensure security, developers at Altoros relied on the Hyperledger Fabric’s cryptolayer, which supports secure, verifiable multi-party transactions via tokenization, digital identity, and digital signatures.
Finally, our team provided integration with the third-party service, which validates the solution’s compliance with government regulations.
Partnering with Altoros, the customer developed a blockchain-based solution that automated the issuing of bonds worth $10M. Compliant with government regulations, the platform ensures transparency across bond placement, enables the confidentiality of transactions, as well as maintains secure cross-datacenter communication. Minimizing fraud in a secure trusted network, the system also reduced expenses of the bond issuer. Thanks to Hyperledger Fabric, the prototype was delivered in just 6 weeks.
“NSD was among the first to experiment with blockchain in Russia, one of the reasons is enormous interest from our partners and clients. The ultimate goal of NSD is to build blockchain infrastructure for any innovative financial product to operate on. Once the infrastructure is created, the technology holds potential to deliver a large variety of financial products and services operated by a smart contract.”
—Eddie Astanin, Chairman of Executive Board at NSD
Server Platform – Linux, Ubuntu, CentOS, Red Hat Enterprise Linux
Technologies – Hyperledger Fabric, Docker Compose, AngularJS, Node.js, WebSockets
Database – LevelDB