DZ Bank and ABN AMRO executed a smart contract for an international over the counter derivative, with all the data and triggers automated on-chain. For futures contracts, the derivative is usually marked to market daily, with the profits and losses paid between the parties. During the ten days of its duration, the smart derivative contract (SDC) triggered instant SEPA payments daily, one of the few aspects that was not on-chain, with account balances were reported back to the distributed ledger-based smart contract.
The payment methodology was less critical because the process was designed to be agnostic about the mode of settlement. The smart contract aims to automate the entire lifecycle, including data and valuation. “With the SDC, we are creating a blueprint for fully digital financial instruments that generate added value – in the case of the SDC, this is the reduction of counterparty risks,” said Matthias Bergner, DZ Bank Head of Treasury.
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