Sebastian Sinclair

IBM and Danish shipping giant Maersk are scuttling a four-year-old enterprise blockchain project designed to track global trade — another hint that distributed ledger solutions may not yet be viable in the wild.



TradeLens is a blockchain-based logistics platform aimed at digitizing supply chains. It was launched in 2018, a time when multiple economic sectors, including global shipping, sought to revamp various processes with centralized blockchain solutions — most of the time without associated cryptocurrencies.



Hundreds of major companies had signed on to TradeLens at its height. Those included intermodal carriers such as BNSF Logistics and major port operator MSC — the second largest shipping company after Maersk.



TradeLens will be ending by the close of Q1, 2023, the companies said in a Tuesday <a href="https://www.maersk.com/news/articles/2022/11/29/maersk-and-ibm-to-discontinue-tradelens" target="_blank" rel="noreferrer noopener">statement</a>.



“Unfortunately, while we successfully developed a viable platform, the need for full global industry collaboration has not been achieved,” Rotem Hershko, Maersk’s head of business platforms, said.



As such, TradeLens has been unable to attain the level of commercial viability required to continue operating. The project ultimately fell short of financial expectations, undermining its future as a standalone business.



TradeLens was built on IBM proprietary blockchain software which leveraged Hyperledger Fabric, an open-source framework from the Linux Foundation. 



Enterprise blockchain networks such as TradeLens are far more centralized than major protocols such as Bitcoin and Ethereum. They&#8217;re usually entirely permissioned (private), maintained and controlled by a small group of entities (and often just one), rather than hundreds or thousands of unrelated network participants all working together to maintain consensus.



Jointly built by IBM and GTD Solution — a division of Maersk — TradeLens&#8217; intention was to promote efficiency and secure global trade.



Maersk said it would continue efforts to digitize the supply chain and further industry efficiency using other solutions, without mentioning specifics. Blockworks has reached out for comment.



“We will leverage the work of TradeLens as a stepping stone to further push our digitization agenda and look forward to harnessing the energy and ability of our technology talent in new ways,” Hershko said.



TradeLens joins a number of other enterprise blockchain projects hitting a brick wall. Earlier this month, the <a href="https://blockworks.co/news/blockchain-not-bitcoin-is-dead-australian-bourse-cans-dlt-shift" target="_blank" rel="noreferrer noopener">Australian Securities Exchange</a> nixed a blockchain-powered system designed to replace its aging settlement layer after nearly three years of development, having spent around $170 million on the cause.



That followed Microsoft ending its <a href="https://azure.microsoft.com/en-us/solutions/blockchain/#overview" target="_blank" rel="noreferrer noopener">Azure blockchain service</a> last year. The platform was launched in 2015 to help companies to deploy their own permissioned blockchain networks.



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IBM, Maersk Snuff Blockchain Project Due to Lack of Interest

Macauley Peterson

<div id="highlights-block_616ff78c4051d" class="highlights">
 <ul>
 <li>A consortium of banks and financial institutions including BNP Paribas, HSBC and Société Générale participated, along with Agence France Trésor, the Debt Management Office of the French government</li>
 <li>Goal of the project was to look at how blockchain could reduce the overall cost and increase the efficiency of the capital markets</li>
 </ul>
 
</div>



The French central bank — Banque de France — embarked on a test of a digital euro in March 2020, to learn how a European CBDC could be used in the exchange and settlement of tokenized financial assets using a permissioned blockchain. A consortium of banks and financial institutions including BNP Paribas, HSBC and Société Générale participated, along with Agence France Trésor, the Debt Management Office of the French government.



According to <a href="https://www.euroclear.com/content/dam/euroclear/news%20&amp;%20insights/Format/Whitepapers-Reports/settlement-french-government%20bonds-in-cbdc-with-blockchain.pdf" target="_blank" rel="noreferrer noopener">a report</a> published by Euroclear, a Belgium-based financial services company that led the project, the experiment “showed the capacity of blockchain platforms to coexist and interoperate with existing settlement infrastructures.”



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“By attracting more direct market participants on a common ledger for post trade operations, blockchain could also reduce the overall cost and increase the efficiency of the capital markets,” the report states.</blockquote>



An embrace of blockchain, Euroclear concludes, provides opportunities for the market to “change the way it organised so as to reduce trade to settlement cycles, increase direct market participation and reduce reconciliation efforts.”



These are advantages — in short, speeding transaction settlement and reducing costs — that have been long championed by advocates of DeFi, but they can also serve public and private institutions that rely on more centralized infrastructure.



<h3 class="wp-block-heading">A permissioned blockchain</h3>



The French project is not operating on a public blockchain, such as Ethereum, nor do they regard a public blockchain as desirable for the intended use case, where “a framework of control, privacy and confidentiality” were requirements. Instead, with IBM as a technology partner, a <a href="https://cms.blockworks.co/ethereum-steps-up-as-rails-for-new-capital-markets/" target="_blank" rel="noreferrer noopener">permissioned blockchain</a> using Hyperledger Fabric was employed to run the experiment via just three network nodes. (For comparison, Ethereum&#8217;s mainnet has about <a href="https://www.ethernodes.org/history" target="_blank" rel="noreferrer noopener">3,740 nodes currently</a>.)



The parties were aiming to simulate real market activity at scale, with Agence France Trésor issuing securities tokens and Banque de France issuing CBDC tokens using the IBM-built blockchain. The securities’ had an International Securities Identification Number (ISIN) generated by smart contracts, which also managed the auto-collateralization on settlement flows.



In a video <a href="https://www.youtube.com/watch?v=0cSOcoLSBgc&amp;t=36s" target="_blank" rel="noreferrer noopener">posted to YouTube</a> by Eurorclear, Guénolé de Cadoudal, of Crédit Agricole, said, “the tested on-chain business logic demonstrated the benefits of an automatic cash and security liquidity pool by leveraging on-chain portfolios as collateral.”



The participants also found that a token-based approach proved to be just as efficient as an account-based one, with the former better able to facilitate cross-border funds flows.&nbsp;



Euroclear’s Philippe Verriest calls the experiment a success that “demonstrates that a broad range of post-trade operations can be run on blockchain,” adding that, “we believe the blockchain technology could increase the overall efficiency of post-trade operations.”



While blockchain aficionados and industry participants are likely to read this as restating the obvious, it is important to see major public and financial institutions acknowledge the technological merits.



The next step will be to compare these experiments to those running on public infrastructure. Société Générale <a href="https://cms.blockworks.co/major-french-bank-wants-to-back-the-dai-stablecoin-with-40m-in-bonds/" target="_blank" rel="noreferrer noopener">has recently undertaken</a> to embark on one such effort by posting real estate bonds as collateral with MakerDAO.



For now, the reports’ authors conclude:



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“It does not seem possible for a public blockchain model to meet all the regulatory requirements to run post-trade activities.”</blockquote>



Perhaps as the technology matures, French institutions can reassess which is more compatible with the principles of liberté, égalité, fraternité.



This story was updated on October 20, 2021, at 10:13 am ET.

French Central Bank Trades Debt Securities on Private Blockchain

Casey Wagner

<div id="highlights-block_6102bba17a24a" class="highlights">
 <ul>
 <li>Jesse Proudman and Raney first formed a hedge fund, Strix Leviathan.</li>
 <li>In an attempt to take what they built with Strix and make it accessible to the broader market, Raney and her team launched Makara Digital. </li>
 </ul>
 
</div>



From working at Deloitte to electrical work, Makara Digital co-founder Sadie Raney has had anything but a traditional career path. 



“After college, I started working at Deloitte, and then actually left to go work for my father&#8217;s company,” said Raney. “He had someone quit unexpectedly and he needed some help.”&nbsp;



At her father’s electrical company, Raney was working in accounting and handling other office work when she decided she had to get out in the field herself.&nbsp;



“I didn&#8217;t know what I was working with, when I was doing the accounting,” Raney said. “I decided just to go actually learn what the whole process was about, so I went and learned how to wire houses.”&nbsp;



Raney eventually went back into the corporate world, working at a variety of companies, including managed services company Aramark and Grand Big Yachts, a boutique yacht manufacturer in Singapore.&nbsp;



<h3 class="wp-block-heading">Getting educated</h3>



She went back to get her MBA at the University of Washington and her longtime love of entrepreneurship reignited. Since she was 18, Raney said, she had a fascination with helping people build companies, and now she had the education to back it up.&nbsp;



“I became the person that somebody would take out for beers and say, ‘hey, I want to start this business, but I don&#8217;t know what to do or about finding a license,’” said Raney. “I was kind of the operations nerd that would say ‘okay, here’s what you do.’”



When she finished her MBA, she started working for Blue Box, a private cloud startup in Seattle. The company’s founder, Jesse Proudman, went on to become Raney’s co-founder at Makara. Blue Box was acquired by IBM a year later.&nbsp;



After the acquisition, IBM had Raney leading the accounting, finance, and operations integrations, but it wasn’t a great fit, Raney said. She liked IBM and decided to take on a&nbsp;technology-oriented role.&nbsp;



“My team worked on working through the product, the whole product lifecycle, from engineering all the way through to sales, and then on to accounting,” Raney said. “We would identify gaps in the process and areas where the teams were misaligned, things like that.”&nbsp;



At the same time, Proudman, also at IBM, became a distinguished engineer at the company. He was placed on the blockchain team.&nbsp;



“He was going to build a blockchain accelerator, but then the funding was cut by IBM,” Raney said. “He reached out to me and said, ‘hey, I&#8217;ve got this idea I want to talk to you about,’ and so we started talking about this idea he had and then I said, ‘sure, why not?’”&nbsp;



The two decided to start their own company. It was late 2017. When it came down to deciding to leave IBM, Raney said, it was the technology that swayed her the most.&nbsp;



“The technical capabilities of the blockchain and what it can actually do to the financial system is definitely the thing that attracted me to it once I really started to dig into the layers of it,” she said.&nbsp;



Back in her Blue Box days, Proudman’s company Raney joined after completing her MBA, the marketing team had an idea to do a bitcoin giveaway. It was still the early days of crypto, one bitcoin was worth maybe $500, Raney said. The winner of the giveaway never collected their bitcoin, so the currency was still sitting with Blue Box when the IBM acquisition occurred.&nbsp;



“IBM acquired us, and they had a policy where they didn&#8217;t they didn&#8217;t allow cryptocurrency to be held, so they asked us to spend it, and at the time, I was just hardly anything you could spend BTC on,” Raney said. “I had to start researching bitcoin more to convince the treasury department at IBM that it was okay to have it. That was my first introduction to what BTC was.”&nbsp;



<h3 class="wp-block-heading">The blockchain solution</h3>



Raney had first hand experience seeing how inefficient traditional financial systems could be, too, and blockchain seemed like the perfect solution to many cross-border payment issues.&nbsp;



“In high school, I worked at a company that had a lot of migrant workers and it used to drive me really crazy that when we would issue them paychecks, these workers would go down to the bank and they would cash the paycheck, and they would all pay a fee,” she said. “Then a lot of them then went over to the money gram and sent most of the paycheck to their families back home, and then they paid another massive fee there. And that always bothered me, just thinking that four hours of their labor went to fees to get and send the money.”&nbsp;



Proudman and Raney first formed a hedge fund, Strix Leviathan, and created a software platform to trade crypto, not an exchange, but an internal software platform that algorithmically trades the markets.



“We launched a hedge fund at the same time that we had the software up and viable, literally putting our money where our mouth was on crypto,” said Raney. “We&#8217;ve been trading that fund now for almost three and a half years. The software, since its inception, has just built out to be a really highly functional platform for everything from pricing ingestion to executing our algorithms.”



The fund was limited to qualified purchasers, though, due to regulatory constraints.&nbsp;



“It&#8217;s always been something that&#8217;s just nagged at us, that our friends and family can&#8217;t participate in what we&#8217;ve built,” Raney said.



<h3 class="wp-block-heading">Educating the masses</h3>



In an attempt to take what they built with Strix and make it accessible to the broader market, Raney and her team launched <a href="https://makara.com/about/the-founding-of-makara" target="_blank" rel="noreferrer noopener">Makara Digital</a>. It’s a platform designed for people who are interested in investing in crypto but lack the time to do deep dives on their own. 



“Education is a huge piece of that, making sure that people can learn about what cryptocurrency is, learn about investing in the space, but at the same time not have to spend eight hours on a weekend trying to figure out what to do next,” said Raney. “For example, we have a DeFi basket, so you can go on and read about all the tokens in the basket and then you can allocate to that basket. You&#8217;re not buying any index, you&#8217;re not buying a share of something, you&#8217;re actually buying those underlying assets, which are held for you at a Gemini account.”&nbsp;



Most of the misconceptions around crypto, Raney believes, come from a lack of understanding. Investors and regulators need to do their due diligence, but this asset class is not something to stay away from.&nbsp;



“It&#8217;s so early, that there&#8217;s still a lot of bad actors that take advantage of insufficiencies and gaps in security from companies, so of course those are the ones that make the news,” she said. “We have investors that we&#8217;ve talked to for years before they decide to invest, and we are okay with that. We believe that we believe that this asset class is here to stay in the long term, but we also believe there&#8217;s a lot of stuff to stay away from.”&nbsp;



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