21 April 2024
COLDSKY.CN – Despite disputes about crypto- currency, which uses distributed ledger technology as the backbone technology, Deloitte’s “Crunch

COLDSKY.CN – Despite disputes about crypto- currency, which uses distributed ledger technology as the backbone technology, Deloitte’s “Crunch time” report points out that “Blockchain has the potential to reshape processes that are defined inside finance, primarily because of its cost and control benefits.”

The report said blockchain can be used to improve almost any finance process: procure-to-pay, accounts receivable, accounts payable, general ledger, reconciliation, and even payroll, either as standalone solutions or combined with other technologies, such as automation or artificial intelligence, to reimagine an entire end-to-end process.

I become interested in reading this report after learning some progress by the blockchain team of Du Xiaoman Financial, the independent fintech arm of Baidu. Du of courses means Baidu, and Xiaoman, one of China’s 24 solar terms, means “Lesser Fullness,” referring that the seeds from the grain are becoming full but are not ripe.

As this graphic from Deloitte report shows blockchain involves efforts on many layers. Du Xiaoman Financial has made progress in both the infrastructure and applications in consumer finance and the distributed finance in border sense. 

At the infrastructure and framework layer, the team has launched the BAAS service platform https://chain.duxiaoman.com, the public chain  https://public-chain.duxiaoman.com , the SAAS platform https://federal-chain.duxiaoman.com and ABS platform https://aaas.duxiaoman.com with applications in many financial scenarios. (I don’t understand these platforms because I’m just starting to learn.)

One classical application is a program called Guaranteed Plan, Anxin Jihua in Chinese, for the loan service, especially for educational sector. 

Think about this situation:

In the traditional model, a student applies for an education loan and upon approval the educational agency receives the money in a single payment. In practice, this model is fraught with many problems, including a lack of mutual trust between students and the agency. An agency may shut down and disappear with user’s money or a student cuts classes and refuses to pay back the loan. Domestic financial institutions have frequently suffered losses due to such problems. 

The key reason is a lack of effective means to establish mutual trust and also maintain efficient, precise control of risks for both agencies and borrowers. (The advantages of blockchain.)

An integration of blockchain and installment loan allows borrowers, agencies and Du Xiaoman Financial to forge an alliance on the principles of near real-time transparency in funding, financial behavior and mutual supervision. Upon approval, a loan is not paid in full to an agency, but kept in the Guaranteed Plan program. Money will be transferred to the educational agency only after a student completes a lesson and makes a confirmation, with the full amount withheld until the service is completed. 

Traditional educational service providers build the reputation through hard marketing and years of efforts. This new approach uses blockchain to underpin a model based on technology and consensus among multiple stakeholders. This solution, particularly suitable for SMEs, has attracted the participation of 100+ agencies, proof of its recognition by the industry, according to Du Xiaoman Financial. 

To date Du Xiaoman Financial has supported scores of ABS projects, increasing their efficiency by 30 percent and involving assets of 50 billion yuan. Since the launch of the Guaranteed Plan in October 2019, it has won the support of many agencies and users, attracting the patronage of 100+ agencies and actual applications by 70+ agencies within a single month. The deals involved total loans of 100+ million yuan and data of 80,000+ users stored in the blockchain. It also plays heathy role in boosting trust, addressing discredit issues for agencies and individual users, and increasing customer acquisition for educational service providers.

The team has also proposed the first DOTA (DeFi-Oriented Technical Architecture) for the sector with details and potential applications unveiled to the public amid efforts to promote the innovative use of blockchain in digitalization, assetization and new finance. (details here https://blocking.net/28191/du-xiaoman-releases-defi-white-paper/, Again, it’s very hard for me to understand.)

DOTA is not a software or a tool. It is a set of proposed technical architecture for distributed financial scenarios and applications, and it is also a set of specifications and standards for DeFi applications and scenarios. For such a new field, the team so far has suggested implementation of the DOTA-Passport, a distributed financial identity, DOTA-Core framework. 

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