How to Leverage Web3 to Improve the Security and Increase the Value of Your Financial Market Data.
The Importance of a Comprehensive Web3 Strategy
Web3 refers to the next generation of the internet based on blockchain technology and taking the form of ‘read-write-execute’. This follows Web1 which was ‘read-only’ and Web2 which was ‘read-write’ and often focused on social networking.
Web3 and its underlying blockchain technology provides financial market data producers with enhanced monetization opportunities as well as increased security.
The importance of Web3 and how it will impact financial markets cannot be overstated or ignored.
Blockchain, Tokenization, Smart Contracts and Oracles
Over the next decade the majority of financial and real-world assets will be ‘tokenized’ and traded on blockchains. Smart contracts will automatically execute, control and document legally relevant events and actions according to the terms of a trade.
Smart contracts will need to reference ‘off-chain’ information such as real world market prices derived from market venues to execute and settle parts of the trades. To link the off-chain real world with on-chain smart contracts the concept of an oracle has developed. Oracles have been developed to connect real world data with on-chain smart contracts, serving as a data bridge.
Blockchain oracles are entities that connect blockchains to external systems, allowing smart contracts to execute depending on real-world inputs and outputs. Oracles give the Web 3.0 ecosystem a method to connect to existing legacy systems, data sources and advanced calculations.
Key benefits of tokenization include increased liquidity, faster settlement, lower costs and improved risk management.
An example of this is Mirror Protocols mAAPL, which is tokenized Apple equity. As a consequence of tokenization, a large amount of market price data will need to be available to be consumed and paid for on the blockchain.
The limitations of the Web2 model for financial market data
The current Web2 model usually involves the monetisation of financial market data through centralized intermediaries (such as Bloomberg), who make a large profit through reselling the data to financial institutions. This Web2 approach does not allow for the interaction of Smart Contracts to facilitate on-chain financial transactions.
Additionally there is a part of the data produced that cannot be monetised due to sensitivities around trade details and counterparty identities - institutions do not want competitors knowing what they are doing in the market.
The limitations of public blockchains
Public blockchains have two major limitations for financial market data producers. Firstly, the very nature of the public blockchain means everyone can view the data that is stored. Secondly, blockchains are not designed to handle big data sets such as those produced in a liquid market for a financial instrument, especially where latency is vital.
Introducing Weavechain
Utilizing Weavechains solutions allows market data producers and vendors to seamlessly integrate the benefits of Web3 into the institution's existing procedures and protocols. Forklifting data out of secure environments isn’t an option.
Some highlights of Weavechains Web3 pioneering solutions include:
Enterprise secure, off-chain data - data remains in its current location where security cleared it to be. It does not exist on a public blockchain.
High throughput, low latency - Weavechain currently achieves 280,000 transactions per second so delivers Web3 technology with the speed to support big data sets.
Maximize data value - bring your data assets to tokenized economies
Any Database - 24 major databases supported, and more on our roadmap
Any Blockchain - 8 blockchains supported, and more on our roadmap
Fully Integrated - connect easily, and leave consumer protocols to us
Improve profitability with Web3
Additional Revenue
Making financial market data available on blockchains increases the financial transactions that can be agreed on-chain. Smart contract developers will build financial products using that off-chain data as the reference for execution and settlement. Consumers will pay directly each time that data is ‘called’ by the smart contract.
Confidential Computing
Another feature of Web3 is that zero knowledge proofs can be used to build Confidential Computing algorithms for sensitive data.
For example, a quantitative fund can develop a trading algorithm and test it versus a set of highly sensitive data that cannot be shared in a traditional manner. The algorithm is able to return the result without ever seeing the data underlying it. Web3 security on that data means that the results can be trusted without ever having to access that data.
This allows for the monetisation of data that could not previously be utilized. Now, Monetization becomes a feature of confidential data.
Reduce Costs
Web3 means cutting centralized middlemen who take their slice of the revenue, driving up costs and lowering margins. By making data available for consumption directly by Web3 users, data can be delivered and monetised more cheaply.
Enhance security with Web3
Web3 delivers better security for financial market data in a number of ways.
Immutability
One of the attributes that the blockchain is often associated with is its immutability. In its technical nature, Blockchain is an immutable database, and you cannot manipulate data that's already in the blockchain.
The immutability of blockchains can enhance the current trust and audit system. It can reduce the time and cost of audits since verifying information becomes much simpler or effectively redundant.
Data Lineage
Financial Services and other industries need a way to ensure data integrity from start to finish.
Weavechain allows you to conduct business in modern, zero-trust environments with confidence. You can show your stakeholders every step of your data's lifecycle with cryptographic guarantees, from simple movement between applications and servers, to transformation, to use in complex ML models.
Immutable Forensic Data
Any enterprise benefits tremendously from the ability to tamper-proof security logs: your security team will never again wonder: "is this really what happened?"
Weavechain offers seamless integration with existing SIEM systems, a speedy solution to decrease the mean time to detect and ensure that professionals always have proven forensic data accuracy.
In Summary
As Web3 technology becomes mainstream, traditional companies are struggling to tap into new networks without ripping and replacing existing structures. As customer needs evolve, businesses must prepare for a new reality where demand to interact via smart contracts becomes the new normal.
Weavechain offers a simple way for companies to engage with Web3 without spinning up in-house smart-contract API engineering teams. Anyone can use our friendly interface to reap the benefits of blockchain technology.
By using smart hashing technology and a bit of magic, you can make your business’ data future proof. Weavechain can connect your financial data to 20+ blockchains and 26 databases.
Financial data won’t be on a public blockchain. Instead, you can reap the benefits of Web3 without having to rip and replace your current solution.
If you are not adopting Web3 into your business model, your competitors have already started.
Interested in modernizing your financial data services and learn more about how Weavechain can help your organization?
Drop us a line at hello@weavechain.com
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