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Introduction
In a world where blockchain technology is booming, it’s evident that more and more companies and organizations are keen on exploring this technology. Anyone that has been following blockchain industry for a while would have probably heard about Ethereum.
Featuring its cutting-edge technology, Ethereum has piqued the public curiosity, and many of us know it as a blockchain network with DeFi, Metaverses, and NFTs. However, Ethereum has a second, less known private permissioned version of its network called Enterprise Ethereum, which is increasingly being embraced by organizations and enterprises all over the world.
This is because the public properties of Ethereum, with it being entirely permission-less with no data privacy has kept Ethereum away from the reach of many enterprises. However, with the introduction of Enterprise Ethereum, this has started to change.
This article will dig a little deeper into the core of Enterprise Ethereum.
Enterprise Ethereum
Source: consensys.net
What is Enterprise Ethereum?
Enterprise Ethereum is the private or permissioned blockchain version of the public Ethereum codebase. As the name suggests, permissioned blockchain requires access to be part of. In a permissioned chain, a control layer runs on top of the blockchain and supervises the actions taken by all of the authorized participants, and as such does not sacrifice the authority aspect seen in the traditional centralized systems.
The public nature of Ethereum's network has kept them out of the hands of many corporate or governmental institutions, and Enterprise Ethereum is a very effective method for penetrating and capturing a market share in the enterprise world.
Enterprise Ethereum's objective is to accelerate the adoption of blockchain technology among enterprises, by providing major organizations with the ability to leverage both Ethereum-based private chains and the public mainnet. The Enterprise Ethereum is maintained by the Enterprise Ethereum Alliance (EEA), a membership of blockchain and incumbent businesses from around the world.
Enterprise Ethereum Alliance
Source: medium.com/consensys-media
The Enterprise Ethereum Alliance (EEA) is a global, non-profit, member-led industry organization whose objective is to drive the use of Ethereum blockchain technology as an open-standard to empower all enterprises in their day-to-day business operations. Specifically, to deliver an open, standards-based architecture and specification to accelerate the adoption of Enterprise Ethereum.
The EEA, launched in February 2017, brings together various start-ups, Fortune 500 companies, technology vendors, academics, and Ethereum subject matter experts to work on Ethereum as an enterprise-grade technology.
The founding members of the EEA include Accenture, Banco Santander, BlockApps, BNY Mellon, CME Group, ConsenSys, IC3, Intel, J.P. Morgan and Microsoft.
Source: entethalliance.org
Currently, the EEA has over 100 member firms that work together to develop Ethereum implementation across different industries and sectors. The members of EEA represent varied businesses from every region of the world, including technology, banking, government, healthcare, energy, pharmaceuticals, marketing, and insurance.
With a focus on solving real-world challenges of deploying Ethereum at enterprise-scale, the Enterprise Ethereum Alliance is an important initiative in the adoption of blockchain and decentralization.
How Does Enterprise Ethereum Work?
Enterprise Ethereum modifies already existing Ethereum clients according to the need of the enterprise, whether it's performance, privacy, governance or scalability. In essence, Enterprise Ethereum can change its network size, block size and gas limit. As a result of that, all of the private networks would have different outcomes based on the requirements of an enterprise.
This means that Enterprise Ethereum won't have the same challenges as the public Ethereum currently does, such as high fees or low transactions per second. Moreover, all of the transactions would remain private if required to, due to the added permission features along with identity management.
Enterprise Ethereum will evolve in parallel to the public Ethereum and any updates in the public version will automatically be on the private blockchain as well. Furthermore, decentralized apps on public Ethereum will support Enterprise Ethereum.
Enterprise Ethereum Utilizes Private Chain Technology
Source: docs.blockapps.net
In essence, private chain is a separate blockchain anchored to Ethereum mainnet but executing transactions off-chain with its own consensus mechanism for block validation.
Private chains connect their own private transactions to the main chain by putting a secure hash of a transaction into a block's transaction data. This allows the transactions and data on a private chain to be recorded on the main chain, but not identifiable by non-members.
A user that does not have access to a private chain will only see the hashed data of the private chain, but the data will have no other indication of what transactions occurred on the private chain, or any other information about the chain such as its members or chain ID. This hash acts as an encrypted "stub" of the transaction on the main chain, indicating a transaction exists, but no more details are visible.
As per diagram above, private chains are created as "children" of other chains. Children chains are also referred to as "nested chains" since they are nested below the current chain. A private chain is created as a child of a chain by declaring its parent chain when creating it. Data can be isolated between chains at the same level/depth to create entirely different membership groups.
How Does Scalability Improve?
Since private chain is a separate blockchain anchored to Ethereum mainnet, it means the main blockchain doesn't need to verify all transactions. Instead, transactions can be processed off the main chain, freeing nodes from having to validate every transaction.
Off-chain computation is necessary since private chains can optimize for speed and cost. For example, a private chain may use a single "operator" to manage the ordering and execution of transactions. With just one entity verifying transactions, processing times on a private chain become substantially faster than on the Ethereum's mainnet.
While private chain executes transactions off-chain, they are settled on the main Ethereum execution layer in order to benefit from Ethereum's security guarantees. Finalizing off-chain transactions without knowing the state of the private chain would break the security model and allow the proliferation of invalid transactions. This is why the operator, the entity responsible for producing blocks on the private chain, is required to publish "state commitments" on Ethereum periodically.
Advantages of Enterprise Ethereum
Ethereum is the most actively developed blockchain in the world. Enterprise Ethereum offers hybrid implementations of the Ethereum codebase for business applications and because of its flexibility and extremely secure architecture, EE offers unique advantages to businesses that are considering blockchain solutions:
Permissioned Networks - organizations will get a fully private network with all of the best features of the public Ethereum mainnet.
Private Transactions - EE can achieve different levels of privacy utilizing private transactional layering protocol.
Cost - all enterprises will get a blockchain implementation at a lower cost.
Finality - all transactions are settled immediately.
Size - capability of handling large network sizes.
Scalability - with customized consensus, EE can scale to hundreds of thousands of transactions per second.
Tokenization - Ethereum’s native tokenization capabilities allow businesses to easily fractionalize large assets, expand their line of products, and unlock new incentive models at both the consumer and institutional levels.
Smart Contracts - Ethereum’s smart contracts provide limitless formats to hard-code business logic directly into the protocol, helping enterprises automate reconciliation, compliance, reporting, and etc.
Ethereum Enterprise Solutions in Action
Below are some of the widely used Ethereum based private chains by the real world enterprises.
Quorum
Source: consensys.net
Quorum is an open source protocol layer that serves as a foundation for businesses to build public or private Ethereum-based enterprise solutions. Quorum is made up of four layers of open source codebase: client software, private transaction management, external transaction signing, and additional tooling.
Who's Behind Quorum?
Quorum is ConsenSys’ Enterprise Ethereum solution. ConsenSys is the leading Ethereum software company, which product suite include likes of Infura and MetaMask, serves millions of users, handling billions of dollars in digital assets. Joseph Lubin, who is a Co-Founder of Ethereum, is the Founder of ConsenSys.
Major shareholders of ConsenSys include JP Morgan, Microsoft, SoftBank, Temasek among several others.
Projects Live On Quorum
The following blockchain applications have been launched on Quorum, and are actively utilized by major corporations for real world use cases. The list is by no means exhaustive.
Supply Chain - Covantis
Source: covantis.io
Founded by ADM, Bunge, Cargill, COFCO, Louis Dreyfus Co, Viterra and launched in February 2021, Covantis is a platform that improves efficiency, transparency, and information-exchange in global trade by utilizing blockchain technology. Its platform is focused on digitizing global trade processes to make them more simple, secure, and efficient. Its goal is to minimize operating risks while increasing market efficiency for the agricultural trading and shipping industry.
Covantis platform streamlined collaboration between 45 legal entities and 500 users across 16 agri-groups executing 35 million tons of cargo volume around the world by automating 60% of execution tasks, reducing 80% in error rates and increasing transaction speeds by 70%.
Recent highlights:
Since launching in North America in February 2022, over 50% of all chartered vessels out of the United States have been executed in Covantis’ platform.
In 2022 Covantis captured in Brazil a market share of 70% for Soybeans, Corn and Soybean Meal. Covantis has been used for execution of over 1’600 vessels from Brazil origin.
Luxury - Aura
Source: auraluxuryblockchain.com
AURA, a platform that aims to serve the entire luxury industry with powerful product tracking and tracing services, based on Quorum/Ethereum blockchain technology. The Aura Blockchain Consortium was created in April 2021 by LVMH, Prada Group and Cartier, part of Richemont.
AURA makes it possible for consumers to access the product history and proof of authenticity of luxury goods — from raw materials to the point of sale, all the way to second-hand markets.
Source: auraluxuryblockchain.com
The Aura Blockchain Consortium Board is currently composed of the following highly regarded representatives of the Founding Members LVMH, Prada Group, OTB, Cartier, part of Richemont and Mercedes-Benz.
Finance - Komgo
Source: consensys.net
Based on Ethereum/Quorum, Komgo is the world’s first blockchain-based platform for the commodity trade ecosystem. Komgo acts as a single source of truth, allowing traders, carriers, banks, and other authorized participants to securely transact in a highly efficient, digitized way, resulting in industry-wide simplification of operations and standardized documentation.
Even today, commodity trade, a $4 trillion market, is almost entirely transacted via physical paper and email. Komgo is revolutionizing that by creating standardization in documentation and providing a secure way of communication and transaction settlement between the various actors.
Just one year after its public launch, Komgo supported close to $1 billion of financing channeled by network members. In October 2019 Rabobank transacted it’s first commodity trade on Komgo - a Standby Letter of Credit was issued over the platform for the purchase of biofuel.
Source: komgo.io
Komgo is backed by 15 of the world’s largest global banks, trading companies, and oil giants, and is adding new members at a rapid rate. Some of these include ABN AMRO, BNP Paribas, Citi, Crédit Agricole, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Shell, SGS, and Société Générale.
Healthcare - Prescryptive
Source: prescryptive.com
Prescryptive is a healthcare tech company that brings transparency to the prescription drugs market. It provides a prescription intelligence platform for managing prescriptions via a blockchain. The platform records in the blockchain a prescription transaction that identifies a prescription that has been written for a patient.
Its platform uses artificial intelligence, blockchain, and mobile to provide a transformative, personalized, and compliant experience for its pharmacy benefit manager (PBM) clients. The company’s mobile-first products connect consumers, pharmacists, and employers, providing people with the information they need to make informed decisions and take control of their health.
To date Prescryptive has partnered with 50,000 pharmacies, including specialty and mail-order.
Healthcare - Synaptic Healthcare Alliance
Source: synaptichealthalliance.com
Synaptic Health Alliance was founded in 2018 by Aetna, Humana, MultiPlan, Quest Diagnostics and UnitedHealth Group. Its goal is to create a blockchain platform that puts the patient at the center of the healthcare system. One that sparks innovation and reduces administrative friction.
The US Healthcare System spends more than $2.1B annually to maintain its demographic data. This is because individual organizations all keep separate databases. These are time-consuming and difficult to keep accurate.
The group noted that provider databases are frequently out of date and incorrect, making them a pain point for both patients and providers. If the databases were connected with a blockchain, an update to one database could update the others, improving the accuracy of information.
Oil - Vakt
Source: vakt.com
VAKT is digitizing the global oil trading industry, creating a secure, trusted ecosystem, powered by blockchain.
VAKT was formed in 2018 by a group of oil majors, traders, and trade finance providers who have recognized a problem that required collective action: the physical post trade process was reliant on manual, complex, repetitive and therefore error-prone processes.
Source: shell.com
Energy giants BP, Equinor, Shell, Gunvor and Mercuria are participating as the platform’s first users.
Cross-Border Payments - Partior
Source: partior.com
Partior, built on the Ethereum-based Quorum is an open blockchain-based clearing and settlement platform backed by the Singapore government, with DBS and J.P. Morgan as founding members. It aims to become the world’s ledger for banks
Partior is at the most institutional end of the spectrum when it comes to blockchain-based financial plumbing. The platform is now live with the two banks transacting across one currency corridor, Singapore dollar and US dollar. Furthermore, the company will begin to add more currencies, including other G10 units, while the Chinese Renminbi and the Indonesian Rupiah are reportedly on the drawing board.
Insurance - State Farm & USAA
Source: statefarm.com; usaa.com
In 2019, State Farm & USAA announced advanced testing of a blockchain solution to automate the time-consuming and paper-heavy processing of subrogation claims. Subrogation is used by insurers to recover money when settling claims between their customers. Since then, the solution has been extensively tested using historical data and is now in full production according to the official statement issued by State Farm on January 26, 2021.
Every year, about 75,000 subrogation checks are exchanged between State Farm and USAA. With the move to full production, the companies hope to see other carriers sign-on to participate throughout 2021.
“We are actively seeking other insurers to join us in this subrogation blockchain solution,” said Robert Yi, chief claim officer at State Farm.
About State Farm
State Farm and its affiliates are the largest providers of auto and home insurance in the United States. Its 19,200 agents and 59,000 employees serve approximately 84 million policies and accounts – over 81 million auto, fire, life, health and commercial policies and over 2 million financial services accounts.
About USAA
The USAA family of companies provides insurance, banking, investments, retirement products and advice to more than 12.8 million current and former members of the U.S. military and their families.
Other Ethereum Enterprise Solutions
STRATO
Beyond Quorum there are other private blockchain solutions built on Ethereum. One such example is Blockapps' STRATO.
STRATO is a full stack technology that allows enterprises to build smart contract enabled applications. BlockApps' STRATO platform is also based on the Ethereum blockchain protocol.
STARTO offers three distinct products to enterprises - TraceHarvest, TraceCarbon and NetworkGov.
TraceHarvest
Source: blockapps.net
Bayer Crop Science partnered with BlockApps, to create TraceHarvest, a blockchain powered agricultural business network. Bayer Crop Science is part of Bayer AG, a German multinational pharmaceutical and biotechnology company and one of the largest pharmaceutical companies in the world with €44 Billion in annual revenues. The company is a component of the Euro Stoxx 50 stock market index.
In collaboration with the Crop Science Division at Bayer, the platform has been built and tested to the highest industry standard for traceability and provides a first and best-in-class solution for the grain industry. Farmers, manufacturers, distributors and processors can selectively share and review data within a single, secure platform, making activities available to the entire chain. This streamlined engagement and real-time information exchange allows all parties to identify and address product tracking and integrity issues faster than previous manual processes allowed.
Bayer used TraceHarvest over the course of several growing seasons to track the life-cycle and status of the company’s highest-value agricultural products, including soybeans and corn, from sale and planting through to harvest.
Member farmers, manufacturers, distributors and processors use the same TraceHarvest network to track where their products are going, providing them with full visibility into the source of their crops.
TraceCarbon
Source: blockapps.net
TraceCarbon is a blockchain enterprise application that enables compliance and transparency through the traceability it provides for the CO2 ecosystem, including corporate reporting, project effectiveness and product lifecycle analysis.
NetworkGov
Source: blockapps.net
NetworkGov is an integrated blockchain network for asset accounting that tracks assets and key events across vendors and agencies. NetworkGov creates a blockchain network of public records and tokenized assets.
City of Reno
Source: flickr.com
Announced in February 2022, Reno Mayor Hillary Schieve has introduced the City of Reno’s Biggest Little Blockchain – the first city-run and resident-focused blockchain platform in the United States. The blockchain application, built by BlockApps, creates a single ledger, documenting consecutive transactions in a designated process.
Once the technology launches later in the summer, the public and all relevant city departments will be able to access the same record through an online platform, providing clarity and transparency. Additionally, blockchain technology creates and stores records that cannot be lost or changed, providing increased government accountability to the public.
Projects Built On Ethereum Enterprise
Digital IDs - Uport - City of Zug, Switzerland
Source: play.google.com
uPort is a way of registering identity on the Ethereum blockchain. It enables users to identify themselves and send either information or value to other users in a clear, transparent way.
eZug App
Source: apps.apple.com
City of Zug in Switzerland leveraged uPort, a decentralized identity platform to create the world’s first live implementation of a self-sovereign government-issued identity project on the Ethereum blockchain.
In the summer of 2017, the city launched a pilot program to register resident IDs on the public Ethereum blockchain. As part of the pilot 350 citizens have registered successfully by created a digital ID. 70 citizens participated in voting on the presence of fireworks at an upcoming festival. Users skipped the cumbersome login process, logged in with their uPort account, voted, and logged off without heading to a polling station. It was possible to verify who voted without reliance upon intermediaries or vote-counting infrastructure. The pilot demonstrated that user-controlled identities support the modernization of e-voting initiatives, which could save the city millions in people and productivity costs.
After the pilot program, City of Zug officially launched the program in November 2017.
Project i2i - Philippines' Union Bank
Source: i2i.ph
The Philippines is a rapidly emerging economy with a population of over 100 million. However, one third of its population remains unbanked. To address this problem, UnionBank of the Philippines, one of the largest banking institutions in the country, created an inter-rural bank payment platform, 'Project i2i', using Enterprise Ethereum.
Project i2i implemented Enterprise Ethereum to create a decentralized, cost-efficient, real-time inter-rural bank payment platform that operates autonomously outside of existing payment infrastructures and intermediaries such as the Philippines’ PhilPass and SWIFT.
The Project i2i platform works to connect rural banks as well as national commercial banks to the central bank, helping remote banks integrate with the domestic financial system while also improving banking access for local citizens.
Source: Rural Bank of Tayabas - commons.wikimedia.org
The Philippines' 500+ rural banks play a critical role in the countryside where commercial banks have limited presence in. They service farmers, fisherman, and local businesses bringing progress to communities. However, due cost and other barriers, rural banks are excluded from national automated clearing houses (ACHs) and international payment networks such as SWIFT.
The i2i platform launched in April of 2019 with 35 rural bank partners with 150 branches and 250,000 accounts nationwide, aiming to service millions of previously unbanked Filipinos. In August 2019 alone, transaction volume on i2i was at over USD 1 million with 335 transactions performed that month.
Today, i2i continues to connect over 1,900 financial institutions, non-financial institutions, merchants, remittance centers, platforms and agents in over 7,000 locations in the country.
UnionBank also piloted near real-time cross-border transfers using tokenized fiat from OCBC Bank in Singapore to an i2i rural bank. This is a game-changing service for families of millions of overseas Filipino workers as it reduces the cost of sending money back home and increases access to bank-grade remittances.
BBVA - Loans
Source: commons.wikimedia.org - Luis García
Spanish banking giant BBVA negotiated a €220 million sustainable loan for the Madrid Government using blockchain. Over the past year, BBVA has arranged many different types of loans using its blockchain loan platform, such as term loan for Porsche, syndicated loan for Red Electra (Spain's electricity grid company), revolving credit for Repsol (Spain's energy company), corporate loan for ACS (Spain's civil engineering group) and etc. After issuing the loan, details of finalized loans are hashed and recorded on the public Ethereum mainnet.
Malta - All Educational Certificates
Malta is the first nation-state to implement blockchain-based credentials across their spectrum of educational providers to facilitate smooth transitions from being a student into joining the workforce. One of the central points of friction has historically been transmitting and verifying official records. So, various types of training programs across Malta — higher education, skills training, government programs — are issuing records of achievement to graduates that can immediately be used for job applications.
CargoX
Source: cargox.io
CargoX platform offers sending documents of title or any other highly sensitive documents to their business partners or customers to broad spectrum of industries - manufacturing, trading, finance, energy, and services, among many others. It's based on an Ethereum blockchain, which enables an audit trail of events only to the participants involved - while preserving total confidentiality and full data, identity, and business connection privacy. The CargoX Platform currently serves approximately 87,000 companies worldwide, including governmental entities.
Breitling
Source: breitling.com
In October 2020 Breitling went live with Ethereum-based system to put all new watches on the blockchain. According to Antonio Carriero, Breitling’s chief digital and technology officer, it will allow expensive watches to come with electronic certificates of authenticity and international warranty, as well as a standardized way to transparently track the service history and repairs to any watch.
Verizon
Source: Verizon News
Verizon is an American wireless network operator with over 2,300 retail stores, announced that it’s implemented a blockchain-based record for its press releases. The new system, called 'Full Transparency', is a blockchain-based, press release-recording system “designed to raise the bar for corporate accountability.” It verifies that press releases haven't been altered.
Verifying News - ANSA News Agency
Italy's leading news agency ANSA has launched a news tracking system based on blockchain to bring more trust between the company and its readers. Called ANSAcheck, the blockchain-powered tool purportedly allows users to verify the origin and history of news published on its platforms,
The ANSAcheck system is based on Ernst & Young’s proprietary EY Ops Chain Traceability solution, which is based on the Ethereum blockchain.
Tokenizing Assets - Taurus
Source: taurushq.com
Taurus makes it possible to digitize and tokenize any type of assets. Credit Suisse has tokenized shares in adventure sports company Alaïa SA, which owns chalets and a hotel in the Swiss Alps. Credit Suisse is working with Switzerland-based crypto custody and trading platform Taurus to create tokens in accordance with Swiss Capital Markets and Technology Association (CMTA) standards.
Summary
When considering all of the above and whether blockchain is the ultimate solution here, one might be thinking, "why not just utilize a shared database?".
The answer to this comes down to the "who" dilemma – which is the main challenge of any network governance. Consider that the governance in a distributed database shared by numerous organizations/governments boils down to four major questions:
1) Who owns the data?
2) Who ensures that the data has not been tampered with?
3) Who in the corporate network has the power to update or remove data?
4) Who develops and maintains the application layer that allows all parties to validate the most recent transactions?
A blockchain overcomes the "who" dilemma by building a shared network in which all users agree on ownership and engagement. Members of a blockchain network host it collectively and equitably in a decentralized manner.
Enterprise Ethereum benefits from the amount of innovation happening on public Ethereum, which is inevitably faster due to more participation with hundreds of thousands of developers building applications on Ethereum, making it the most real-world tested, resilient, and advanced smart contract blockchain in the world.
DISCLAIMER: The information contained in this article is for educational purposes only and does not constitute any form of advice or recommendation by Wheatstones, and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.