Basic Principles For Governance In Decentralized Systems

Decentralized systems, such as blockchain networks, come with some major challenges regarding their governance frameworks. Whereas centralized systems, such as typical enterprises, are typically organised as hierarchical structures with top-down processes, blockchains lack a central authority that sets the rules and acts as the ultimate policymaker. In a blockchain network, all participants (full nodes) decide upon the architecture and the processes in a decentralized way, defined by a governance model, set-up by the participants themselves.

Whereas public blockchains are open to the public, i.e. everybody can download a client and participate in the network, the members of private networks decide who can join as a new member. The consensus mechanisms are the rules that define how information is added and how the network’s participants can work together in the network. Many public networks rely on Proof-of-Work (PoW) that requires some work from the nodes, usually meaning processing time, in order to prove that effort has been invested to qualify for the right to decide what is the truth. In most private networks, other consensus mechanisms, such as Proof-of-Authority (PoA), or Proof-of-Stake (PoS) are used. In these cases, the network’s participants agree upon a governance model defining the processes within the networks. PoA and PoS don’t depend on nodes solving arbitrarily difficult mathematical problems, but instead use a set of authorities – nodes that are explicitly allowed to create new blocks and secure the blockchain (in the case of PoA), or the creator of the next block is chosen via various combinations of random selection and wealth or age – the stake (in case of PoS).

Governance of decentralized systems is a matter of hot debate on conferences and in technological, as well as political and sociological circles. Without claiming to discuss this topic in its entirety in this post, based on our practical experiences creating and working with blockchain networks, we want to point out three basic principles for governance models for decentralized systems:

1. Ability of self-regulation

Every decentralized system starts in a centralized way: an individual or a group of people have the idea to create the network and start by designing its architecture and processes. Given the human nature, even in the best case, this network will be designed based on the beliefs and convictions of its founding members – but not necessarily matching the requirements of its future members, let alone future challenges caused by social-technological change.

In order to design the network in a resilient, future-proof way, its most important design principle is an inherent self-regulation ability: based on the to-be-defined rules the network‘s members can re-define their rule set, beginning with the elementary governance principles. As important as the general ability to self-regulate, is the process that defines the conditions under which this self-regulation takes place. As in any democratic process, a major challenge lies in motivating the system‘s members to actively participate in the formation of opinion.

2. Based on accepted regulatory frameworks

Blockchain technology itself is quite new: with the advent of Ethereum‘s smart contracts, these distributed ledgers could be applied to industrial use cases. However, the basic functionalities of a database and a ledger are well known and are also provided by traditional software offerings.

When blockchains are introduced in enterprises, they come across their legacy forefathers – and – the legal and regulatory frameworks the legacy systems are embedded in. Some of these frameworks, such as the open source modelling framework Eclipse (EMF), are well known and accepted in their respective industries. Often, enterprises have invested significant resources to check which framework works best – in a functional, and in a legal sense.

For a wider acceptance of new breed of decentralized ledger technologies, it makes sense to adopt basic elements of existing and already accepted legacy frameworks. If a blockchain solution comes with a governance model based on an accepted model, they are easier to handle by the company‘s legal department. As so often, it‘s easier to sell innovation if it comes with a pinch of familiarity.

3. Integrated incentive scheme

Whereas the above-mentioned self-regulation and familiarity aspects are necessary conditions of decentralized governance models, a frictionless integrated incentive scheme is the sufficient condition: any decentralized system will exclusively work if a sufficient number of network participants feel permanently motivated to add their inputs to the system. In other words: each individual member must be incentivized to constantly add value to the network.

The essence of any efficient incentive scheme is a monetary incentive that is positively correlated with the respective participant‘s efforts: the more value I add, the more value I get. Ideally, the incentive evolves in parallel to the system; i.e. depending on the network’s development the incentive adapts, accordingly.

Of course, there are many other elements of efficient decentralized governance models. However, we regard the above mentioned as key aspects. In cooperation with a team of the European Blockchain Association, we have developed a blockchain-based governance model that inherits these elements. In our first 2019 Blockchain Meetup, on 22 January, we will present and discuss this model in public. Afterwards, the first clients can plug themselves in and make use of this model in a Governance-as-a-Service scheme.

XSC Wallet Driven Crypto Payments Available at the FI-Forum

The success story of the XSC Wallet continues as Datarella, for the second conference this year, offered visitors of the FI-Forum the possibility to use the XSC Wallet. This builds upon the our XSC Wallet deployment at the the DAHO.AM conference last July.

The Fi-Forum is the trade fair of Finanz Informatik, the IT service provider of the Sparkassen-Finanzgruppe. IT solutions, innovations and new services are presented there each year. There were also more than 90 speeches and a parallel hackathon with interesting topics to be addressed. 

At the fair, visitors got XSC Coins in their own private event-wallet which they could spend on merchandising products such as powerbanks, bags and notebooks, generously provided by partner ZEB (zeb.rolfes.schierenbeck.associates GmbH). To do so, the visitors only had to download the wallet from the App Store or from Google Play. They were instantly rewarded with XSC Coins which they could spend on the goodies. The ease of use and rapid transaction execution often opened a new and more positive view on crypto payment. Moreover people who didn’t spend all of their XSC were regularly asked by others to send them the unused XSC to their wallet in order to buy extra goodies. 

Together with ZEB, we held many discussions with prospects about topics such as blockchain-based financial systems, crypto payments and the future challenges of this technology.

A big thank you to the Finanz Informatik and ZEB for making it possible to help visitors explore the world of crypto payments by using the XSC Wallet on the Fi-Forum.

Krypto AG acquires stake in Blockchain Solutions Provider Datarella GmbH

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Munich/Berlin, 07 September, 2018

Today, Datarella is welcoming a new shareholder, Krypto AG (www.krypto.ag).

Krypto AG is a listed company in Germany which has its registered office in Berlin. The company is a reputable and leading infrastructure provider in the field of blockchain technology.

The combined goal of Krypto AG and Datarella is to support its customers in leveraging the technological benefits of blockchain as well as investors in investing in the new asset class cryptocurrency.

“The Krypto AG team adds valuable expertise in the field of cryptocurrencies and ICOs to the existing blockchain business of Datarella, especially in our strategic key areas, the mobility and finance industries.”, says Michael Reuter, CEO of Datarella. Tobias Schröder, Board Member of Krypto AG: “We are very happy to join Datarella with its unparalleled track record in real-life blockchain projects in order to strengthen our portfolio.“

Customers of Datarella and Krypto AG will immediately benefit from this unique combination of sound technological blockchain expertise and an in-depth knowledge of cryptocurrencies. With offices in Munich and Berlin, Datarella is present in Germany’s crypto hot spots and  addresses both, the vivid Berlin community and the powerful Munich area corporate business.

About Datarella:

Datarella develops bespoke blockchain-based innovations for and together with its clients, providing full service consulting, development and implementation for business applications based on blockchain technology. Datarella’s new operating system for banking, RAAY, enables players of the financial industry to create new financial products profiting from benefits of blockchain technology. RAAY is inspired by designing, building and deploying the blockchain-based accounting and payment system Building Blocks for the United Nations World Food Programme.

About Krypto AG:

Krypto AG is an investment group focusing on blockchain technologies and investments in the areas Technology & Development (Datarella GmbH, Helix Cognitive Computing GmbH), Advisory & Consulting (Krypto Management Consulting GmbH) as well as Education & Communities (KryptoEducation GmbH). The Berlin-based company invests in a broad portfolio and strategically develops its investments. Krypto AG creates value for its investors and contributes to the growth of the blockchain ecosystem.

Team Evan Network – Blockchained Mobility Hackathon

Mobility-As-A Service Platform

Q: Your project in 1 sentence?

A: Mobility as a service (MaaS) through connecting Ethereum smart contracts with Datastreams on IOTA.

Q: What problem does your project solve?

A: We wanted to develop a case in the field of autonomous urban air mobility, better known for example as the concept of air taxis. In order to implement such an autonomous mobility concept, you have to bring together different partners. Making an air taxi fly is actually a bit more complicated than sending an autonomous car into traffic. Because you need some very important permission before you are allowed to start.

There is, for example, the flight control that has to check all the details of your flight to make sure that there is no other vehicle on the same route. Or the weather forecast service telling you if the conditions are okay for your flight. In addition to the permits, there are also other stakeholders, who should be integrated into the process. What about the insurance company offering real time insurance conditions depending on how much passengers you have and how long your flight will take? Or the booking platform where everybody can book easily his flight in an air taxi? So, at the end, it just makes sense to involve all parties in smart contracts on blockchain to automate as much processes as possible. And this is what we did.

Q: What expertise and roles do your team members have?

A: In our team we were one designer and two backend developers with numerous experiences in blockchain projects.

Q: Which technologies do you use for which purposes?

A: Mainly we used all kind of Ethereum based smart contracts, to bring the different participants together on a decentralized network. To get real time data of the air taxi we used the data streaming technology of IOTA. In our case, we created a process that opens a new data stream automatically in the moment in which the air taxi starts. From this point on we push the data stream in our Ethereum based smart contracts. To show the connection between IOTA and Ethereum, we used the data of the battery of the air taxi. The battery will be a very critical point for every autonomous process in the future. Because, while the air taxi is flying, the partners around, like for example the market places where you can book your air taxi, need the information when the air taxi will be available again for the next flight. And that is highly depended on the current status of the battery. So, to know in advance how long the air taxi has to charge after the flight before it can go back in the air, you need real time information about the battery condition.

Q: How do you plan to proceed with your project?

A: We will use the developed demo to show, what type of use cases you can implement at evan.network.

European Mobility Players Are Getting Serious – Compete & Collaborate At BlockchainedMobility Hackathon

Blockchained Mobility Hackathon

Over the weekend of 20-22 July, heavy rain poured on the streets of Munich. Which did not prevent 20,000 people to demonstrate against xenophobia at Königsplatz, also went more or less unnotced by the 150 participants of the BlockchainedMobility hackathon who met to create blockchain-based mobility solutions. 

Hacker teams of leading European mobility players, such as BMW, Volkswagen Group, Bosch, Deutsche Bahn, Deutsche Telekom, Amadeus, and others mixed with freelance developers, designers and business experts to work on IOTA and Ethereum. On Sunday afternoon, the jury saw 18 project teams presenting a broad variety of mobility solutions, from specific applications, such as a EV charging station finder, to more generic solutions like a mobility API to match offerings of mobility providers with the needs of the end user.

Georg Eisenreich, Minister of the State of Bavaria

The hackathon started on Friday with a keynote by the Minister of State for Digital, Media and Europe, Georg Eisenreich, who highlighted the importance for collaboration of the State of Bavaria with on the one hand corporations, such as the hackathon‘s sponsors, on the other hand with the technology – or more specifically – the blockchain community. Minister Eisenreich emphasised the role of the State of Bavaria in providing a sound economical framework for blockchain startups and projects. He encouraged the participants to be creative and dare to found companies in order to foster Bavaria‘s and Europe‘s competitive advantage in the area of blockchain.

Michael Reuter (Datarella), Peter Busch (Bosch), Dominik Pietsch (BMW) Alisa Maas (IOTA) Klaus Schaaf (Volkswagen Group), Herbert Mangesius (Vito Ventures)

After the keynote, the representatives of the main sponsors Dominik Pietsch (BMW), Klaus Schaaf (Volkswagen Group), Peter Busch (Bosch), and Alisa Maas (IOTA) discussed the state of mobility and the expectations of the mobility players for the hackathon with Herbert Mangesius (Vito Ventures) and Michael Reuter (Datarella). At BMW, Volkswagen Group and Bosch, blockchain has obtained an important role within the areas of technology to work on. Dominik Pietsch, Klaus Schaaf and Peter Busch all agreed upon the importance their companies put in blockchain as a foundational layer for mobility solutions. Particularly in regard to the complex regulatory requirements for large corporations in any case of collaboration, blockchain serves as a neutral technological layer that allows for a joint use of mobility data provided by different players within the ecosystem.

Deutsche Telekom. Breakout Session

During Saturday and Sunday, hackers worked highly concentrated and steadily to create their applications they had to present towards the jury. Breakout sessions by the sponsor teams and Yoga interludes gave variety in the workflows. Some teams, e.g. Bosch and Deutsche Telekom, provided not only APIs but sensor-driven hardware the hackers could integrate into their projects.

Sunday evening, the jury announced 3 winners out of 18 projects, who received IOTA’s in worth of USD 5,000 (#1), USD 2,000 (#2) and USD 1,000 (#3) as well as 50,000 XSC (#1), 30,000 XSC (#2) and 15,000 XSC (#3). Additionally, Lewis Freiberg of the IOTA Foundation announced a special prize: the opportunity to receive USD 50,000 in IOTA tokens provided by the IOTA ecosystem fund for the best open-source project.  The hackathon‘s winners were:

#1
OMS – Open Mobility API: USD 5,000  + 50,000 XSC + the opportunity to receive USD 50,000 from the IOTA ecosystem fund

OMS – Open Mobility API

#2
AgentFinder – EV Charging Station Finder USD 2,000 + 30,000 XSC

AgentFinder – EV Charging Station Finder

#3
Pac-Man On Wheels – Crowdsourced Incentive Scheme For Privately Collected Driving Data USD 1,000 + 15,000 XSC

Pac-Man On Wheels

We will publish short interviews with each project team over the next few days.

After the jury‘s decision, the hacker crowd gathered for a few more hours to get themselves the last drinks and discuss next steps: since everybody enjoyed this weekend and we received so much positive feedback from the community, we have already started thinking about how to build upon the success of the BlockchainedMobility hackathon. Hopefully we – and new sponsors and participants  – will meet again, soon!

Tokenisation Of German Real Estate Fund – The First RAAY OS Application

Blockchain is a foundational technology, an underlying technology layer for applications built on top of it, allowing them to share a joint database and a ledger. It provides realtime access to an immutable and consistent data set. Based on our experiences launching the Building Blocks project on behalf of the United Nation’s World Food Programme (WFP) in May 2017, we launched its RAAY project in early 2018. 

RAAY’s goal is to become a new operating system for banking. Since the finance industry hasn’t changed much during the last decades, and financial crises followed by new stern regulatory frameworks have made banking even harder, banks are faced with a multitude of challenges, from a degenerated trust to inflexible and overcharged IT infrastructures and processes. For the RAAY team, blockchain provides the ideal basis for renewing trust and making IT more efficient for banking. Therefore, RAAY has been working on a new operating system to enable players of the finance industry with a blockchain-based technology layer to build lean, efficient, trust-less applications on top of it.

RAAY is partnering with a German bank to create a blockchain-based token representing the ownership of a German real estate fund. The token is part of an immutable, trust-less and decentralised system built specifically for the new RAAY operating system for banking. The token and the auxiliary system achieves an improved model for ownership of real estate by applying blockchain technology, secure and scalable identification solutions and tried-and-tested account management software. 

The token is characterised by a smart contract defining key functionality (transfers, rights, etc.) and listing properties (ownership, price, fund information, etc.). The token smart contract is linked to another smart contract which manages the different tokens and allows users to interact with various tokens in a simple way. Ownership of a token is proven by the possession of a private key. The corresponding public key is publicly listed in the smart contract. Building on the immutability and security of blockchain technology allows any token holder to prove ownership to anyone, in real-time, without doubt. 

The auxiliary system contains three main components: 

  • Identification, 
  • Application for Tokens and 
  • Fund-Connection. 

The Identification takes place according to applicable KYC-regulations with the addition of the creation of a blockchain identity, in effect a public-private key pair. The secret private key is much like a password and can be either downloaded to a secure offline-storage by the client or can be stored in a so-called cold wallet managed by a future RAAY-bank entity. If investment amounts exceed a certain limit, tokens are stored in a multi-signature wallet for additional security. 

The Application for Tokens is a protocol for converting any type of funds (fiat or cryptocurrency) into tangible asset tokens. It requires an account with a depository bank for fiat currencies. 

The Fund-Connection is the direct correspondence between existing tokens and shares of the fund in question. This ensures the validity of each claim that a token holder may have, on any ownership/access to dividends from the fund. 

This is the first step in RAAY’s strategy to create the new operating system for banking. It is a needed use case that will be operational and reduce costs for the fund deploying it. By going stepwise from one application area to another, RAAY will build a modular and configurable OS for banking that removes inefficiencies regardless whether the partner is a fund, a bank or a fintech-company.

REGISTER NOW: The Blockchained Mobility Hackathon 2018

THE BLOCKCHAINED MOBILITY HACKATHON @DAHO.AM

Compete and collaborate: The Blockchained Mobility Hackathon brings together the biggest players in Europe’s mobility ecosystem with the brightest independent developer teams for 2.5 days of blockchain mobility hacking! You’ll use bleeding edge blockchain tech to imagine and build prototype solutions for a sustainable mobility ecosystem. Network and innovate in an open sandbox with industry peers! All participants will get free tickets to the DAHO.AM Tech Conference in Munich on July, 24th2018 and the hackathon winner will receive prizes to be announced at the event.
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New: The Datarella Blockchain Weekly Newsletter

Email is dead? Not really. Beside billions of exchanged emails daily, many people have returned to newsletters when looking for valuble information within specific fields of interest. Especially short and concise newsletters that don‘t overstrain the limited attentions spans of today‘s readers are a good alternative to the necessity to look for valuable news yourself.

Our new Datarella Blockchain Newsletter – in German language – offers exactly what the interested reader is looking for: on a weekly basis, you can read a curated selection of the most relevant news in the blockchain ecosystem.
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Blockchain Meetup 13: Crypto Exchanges 2.0 – Secure Cryptocurrency Trading


In 2018, the cryptocurrency market has lost roughly 50% of its 2017 value. Some crypto exchanges had to close, others find themselves preventing regulatory bodies from shutting them down because of lacking KYC/AML procedures.

Tonight, we have banker Dr. Michael Hasenstab, CEO of ACON Actienbank AG, and crypto expert Johannes Angermeyer, kick-starting the evening with a joint introduction on ICOs vs IPOs. Then, representatives of crypto exchanges presenting their views on how to provide a secure, legally compliant, cryptocurrency trading for mainstream users.

Our first talk: Dr. Michael Hasenstab, ACON Actienbank AG & Johannes Angermeier, Black Pearl Digital AG
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