Distributed ledger technology (DLT) company R3 has unveiled the next generation of its Corda blockchain platform, which it says will deliver better availability, scalability and interoperability with other enterprise DLT networks.
First rolled out in 2017, Corda enables businesses and technology firms to build applications to solve complex multi-party workflows. It allows for the seamless, immutable and secure transfer of assets, records and value between counterparties, while maintaining privacy and security.
With Corda 5, the latest iteration, R3 says it is making “a major update” on Corda 4, which has been on the market since February 2019. Among improvements are optimisation for scalability, which means it can handle more transactions per second than previous versions; enhanced security, including support for confidential identities and encrypted transactions; simplified development to make it easier for developers to build Corda applications; and integration with other platforms.
“As a trusted partner to global financial market participants, we are committed to enabling an open, trusted and enduring digital economy – and the next generation of Corda is the next step in delivering on this mission,” says R3 co-founder and chief strategy officer, Todd McDonald. “We believe this economy will be built upon an interconnected ecosystem of multiple DLT platforms, where apps will transact seamlessly and securely across networks – not isolated or walled gardens of ‘public’ or ‘private’ networks.”
The challenge of attaining critical mass
R3, which was initially set up as a consortium of banks, quickly saw traction build for Corda within the US$5.2tn global trade finance ecosystem, with the development of Voltron – which later became trade finance network Contour – and open account trade finance initiative Marco Polo Network. It also won over projects built on rival blockchain framework Hyperledger Fabric, with Singapore-headquartered fintech firm dltledgers, fraud mitigation fintech Monetago and the Blockchain Insurance Industry Initiative all migrating to its system.
However, while blockchain technology seemingly addresses the pain points that have plagued trade finance for so long, once the industry started to move from small-scale proofs of concept towards live global activity, problems began to emerge.
Blockchain-based trade initiatives, among them the Corda-based Marco Polo Network as well as TradeLens and we.trade, which ran on Hyperledger, found themselves unable to reach the necessary scale to achieve financial viability – a concern cited by R3 client MonetaGo when it moved its system off the Corda network in a surprise decision last year, choosing instead to use secure cloud technology.
In an interview with GTR at the time, Jesse Chenard, MonetaGo’s founder, pointed to the fact that each participant in a trade network needs their own node as an important stumbling block: “R3’s Corda has emerged as a leader in the financial services space, and deservedly so, but the cost component in terms of licensing across multiple different customers becomes a barrier once you reach a certain size.”
“Once you get to global volumes in trade finance, blockchain ceases to be a competitive technology with respect to performance and cost,’’ added Neil Shonhard, MonetaGo CEO. ‘’The infrastructure required is just excessive, especially in our case.” The company also found that not all financial institutions have the in-house expertise or resources to be able to host a blockchain node, and that in order for its solution to achieve critical mass it would need to lower the technological barriers to entry.
Speaking to GTR in 2022, David Sutter, then-chief product officer at Marco Polo Network, which has since filed for insolvency, echoed this sentiment: “A blockchain ecosystem’s value is greatest at scale. The problem is, it is very difficult and expensive to build a network like that, and people underestimate the time and money required to reach critical mass.”
R3’s new update to Corda solves for this issue, explains Milan Khan, the tech firm’s lead product manager. “We offer the same sort of multi-party workflow consensus solution as Corda 4.0, but the backend is a lot cleverer,” he tells GTR. “It’s scalable, is redundant, and what is really exciting is the concept of a virtual node. You can have a single instance of Corda 5.0 and within that Corda instance, an operator like Contour can load that up with hundreds of virtual nodes. We think this is a game-changer. When it’s not running, when it doesn’t have any flows to process and virtual nodes to instantiate, it’s idle. This should result in an enormous reduction in the cost of ownership for those running larger networks.”
“Anecdotally, the different architecture of Corda 5.0 allows a different cost structure for scaling applications,” adds Alisa DiCaprio, R3’s chief economist. “Over the past six months, this different structure has resulted in some of our major new clients telling us that they are only interested in building on Corda 5.0, which validates that this new iteration really addresses a market need.”
Too little, too late for trade?
Although R3 has found new use cases for Corda since the advent of central bank digital currencies – it is currently deployed in over 16 such projects across the globe – whether this improvement will enable trade finance networks to ramp up their reach is a different matter. Not only does it come too late for the Marco Polo Network, which ran out of cash before it could achieve its aim of speeding up open account trade finance, but it also comes a year after Contour developed and launched its own identity framework, which enables organisations to add multiple identities – or transacting parties – to a single node.
Furthermore, as is the case with any systems update, networks built on the previous edition of Corda will have to rustle up tech spend budget to move over – potentially a big ask given the straitened financial situation many fintechs are finding themselves in.
“While we do not have any immediate plans to make the switch as we have significantly invested in developing our application on the existing generation of Corda, including capabilities for multi-identity nodes, we will start the planning process in the next year to assess this next generation and what would be required to make a full migration,” Carl Wegner, CEO of Contour, tells GTR.
However, he is more enthusiastic about R3’s move to launch a Hyperledger Foundation Lab, which aims to accelerate the development of interoperability protocols and create what it refers to as a “regulated network of networks” to solve for the problem of digital islands that cannot connect to one another.
“We are delighted to see R3 continue to invest in next-generation enterprise blockchain technology,” he says. “One of the new features we are excited about in this next generation of Corda is a new approach to interoperability, which is a key requirement for our industry. If this new approach can attract and enable new complementary solutions to be built on Corda, we look forward to enabling interoperability with Contour and expanding the overall trade ecosystem.”
While the next generation of Corda is now live, R3 has committed to continuing to provide support for Corda 4 for the next three years, which should give users enough time to work through the necessary change management processes. “At some point, there will be a sunsetting cycle, but there’s product support through 2026 and beyond if there’s a need,” says Khan. “This will be a gradual, managed change, and we anticipate that there’ll be a natural movement, because people will see that the advantages of Corda 5 outweigh the investment in change management.”
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