1.2 Institutional Requirements for Hybrid DLT Solutions
Institutional treasuries currently navigate a critical trade-off between maximizing yield and ensuring organizational security and regulatory compliance. Public DeFi, while innovative, has historically lacked the necessary privacy and auditability required by regulated entities.
Canton Network: The Bridge Between TradFi and DeFi
Canton Network is specifically designed to act as the regulated bridge between traditional finance (TradFi) infrastructure and decentralized protocols. It provides:
Enterprise-Grade Infrastructure
Built specifically for regulated financial networks, featuring:
- Inherent compliance frameworks
- Institutional controls
- Privacy-preserving execution
Confidential Smart Contracts (Daml)
At the core of Canton's capability are Confidential Smart Contracts written in Daml. These contracts enable:
- Privacy-preserving execution with synchronized ledgers
- Confidentiality while maintaining continuous auditability
- Fine-grained access control with need-to-know visibility
DeFi Yield Automation
This mechanism underpins services like Stratos's DeFi Yield Automation, allowing sophisticated, automated strategies to be deployed as transparent, yet self-contained, smart contract vaults.
Real-Time Regulatory Transparency
The system supports real-time regulatory transparency through the supervisory node concept, where:
- A regulator can be permissioned as an observer party on relevant Daml contracts
- Eliminates the need for burdensome periodic data requests
- Provides continuous, immutable audit trail
- Maintains commercial privacy for sensitive strategy details
Key Requirements Met
| Requirement | Canton Solution |
|---|---|
| Privacy | Daml contracts with stakeholder visibility model |
| Auditability | Immutable ledger with cryptographic proofs |
| Compliance | Real-time supervisory nodes and observer parties |
| Governance | Role-based access control and multi-party approvals |
| Data Protection | Minimal data exposure on public chains |
| Interoperability | Cryptographically signed intents to public chains |