Key takeaways
- Achieving on-chain capital markets requires addressing settlement finality and privacy concerns.
- Canton faces criticism due to its successful partnerships, not its operational model.
- Misconceptions about Canton being a centralized database are unfounded.
- Criticism of Canton’s execution and objectives often stems from misunderstandings.
- Partnerships with traditional finance institutions highlight Canton’s integration efforts.
- Canton lacks some foundational blockchain properties, raising questions about its classification.
- Atomic composition of smart contracts with privacy is a unique feature of Canton.
- Canton prevents double spending using a UTXO model similar to Bitcoin.
- Super validators on Canton act as a decentralized ordering service.
- Super validators coordinate and timestamp transactions without seeing them.
- Understanding the role of super validators is crucial for grasping Canton’s transaction processing.
- Canton offers unique capabilities not achievable on other blockchains.
Guest intro
Yuval Rooz is co-founder and CEO of Digital Asset, a New York-based enterprise blockchain company that provides infrastructure for institutional-grade financial systems. Before founding Digital Asset in 2014, he managed an algorithmic trading desk at DRW Trading and worked as a trader and developer at Citadel, where he built computer models during the financial crisis. Rooz played a pivotal role in developing the Canton Network, a privacy-preserving public blockchain now used by JPMorgan, the DTCC, HSBC, and other major financial institutions globally.
Overcoming challenges in on-chain capital markets
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To achieve on-chain capital markets, it’s essential to address the challenges of settlement finality and privacy for issuers.
— Yuval Rooz
- Convincing issuers to move their records on-chain requires solving settlement finality and privacy issues.
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You need to be able to convince issuers to move their books and records to be natively on chain.
— Yuval Rooz
- Privacy concerns are a significant barrier for issuers considering on-chain solutions.
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How do you give settlement finality and get an issuer to be comfortable if they don’t want their books and records to be public?
— Yuval Rooz
- Integrating traditional financial records with blockchain technology is complex.
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Understanding the complexities of integrating traditional financial records with blockchain technology.
— Yuval Rooz
- Addressing these challenges is critical for the adoption of on-chain capital markets.
Misconceptions and criticisms of Canton
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The criticism against Canton is largely unfounded and stems from its successful partnerships.
— Yuval Rooz
- Successful partnerships have led to criticism of Canton, not its operational model.
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If people really had those topics deep in their heart and really said that this is not good for the industry, I would say that those topics would have come about.
— Yuval Rooz
- Misconceptions about Canton being a centralized database are incorrect.
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Some of the things that have been said, Canton is a centralized database with a coin on top of it, are all things that are not true.
— Yuval Rooz
- Understanding what constitutes a centralized versus decentralized network is essential.
- Criticism often stems from perceived biases against certain projects.
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This insight provides a strong viewpoint on the nature of criticism in the crypto industry.
— Yuval Rooz
Execution and objectives of Canton’s project
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The criticisms faced by our project stem from a misunderstanding of our execution and objectives.
— Yuval Rooz
- Misunderstandings about Canton’s execution lead to criticism.
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I would love to understand how what we’re doing is so existential for this industry and is so terrible compared to other things.
— Yuval Rooz
- Partnerships demonstrate Canton’s commitment to integrating traditional finance with blockchain.
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We just announced a partnership in Japan with Mizuho and Nomura and JPX around tokenized JGBs.
— Yuval Rooz
- Execution of partnerships is a key aspect of Canton’s strategy.
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Last week it was HSBC Payments, and we’re just executing on those things.
— Yuval Rooz
- Bridging traditional finance and blockchain is central to Canton’s approach.
Canton and the definition of blockchain
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Canton is not truly a blockchain despite its claims, as it lacks the foundational properties that define blockchain technology.
— Yuval Rooz
- Questions arise about Canton’s classification as a blockchain.
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It’s really about the properties when you say blockchain, you’re tapping into more than a decade of an industry with certain values.
— Yuval Rooz
- Understanding fundamental blockchain characteristics is essential.
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This insight challenges the definition of blockchain and critiques Canton’s claims.
— Yuval Rooz
- The debate on Canton’s classification highlights differing views on blockchain technology.
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I believe and like I would like to understand it better in this debate that Canton is not really a blockchain.
— Yuval Rooz
Unique features of Canton
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Canton enables atomic composition of smart contracts with privacy, which is not achievable on other blockchains.
— Yuval Rooz
- Atomic composition with privacy is a unique feature of Canton.
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That’s what you can achieve on Canton that you cannot achieve on other blockchains.
— Yuval Rooz
- Canton’s UTXO model prevents double spending, similar to Bitcoin.
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The issuer of an asset can be a real-world issuer or a decentralized party like Bitcoin.
— Yuval Rooz
- Understanding the UTXO model is crucial for grasping Canton’s mechanics.
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This claim provides insight into the operational mechanics of Canton.
— Yuval Rooz
Role of super validators in Canton
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Super validators on Canton act as a decentralized ordering service rather than validating the business logic of assets.
— Yuval Rooz
- Super validators differ from traditional validators in their role.
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They behave more like ISPs on the internet.
— Yuval Rooz
- Understanding super validators is key to understanding Canton’s operations.
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They act as an ordering, a decentralized ordering service, but they’re not validating the actual business logic of the asset.
— Yuval Rooz
- Super validators coordinate and timestamp transactions without visibility.
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The super validators purely act as a coordination layer and a timestamping layer.
— Yuval Rooz
- Their role is crucial for transaction processing in Canton.
