Participating Projects

Corda Network

Project Description

What are the purposes, goals, or scope of the project? If there are metrics to measure success, what are they?

Corda software is available as both open source and enterprise versions, and open source can be amended by anyone via GitHub: https://github.com/corda/corda. Most up to date information is available at https://corda.network/.

The Network is intended as a global internet of Corda nodes, to facilitate transactions between real legal entities across the world. In other words, Corda Network aims to enable businesses of all sizes to transact easily together with known counterparties - with privacy and transaction finality – whether that’s via exchanging smart contracts, digital assets, cash or otherwise. Transactions typically happen within business networks or “consortiums” - groups of legal entities which transact together via a shared CorDapp. Any transaction on the network is ‘notarised’ using a service called the notary which may be run by R3 for the Foundation, or also by third parties.

Metrics for success include:

  • Number of nodes, business networks, CorDapps and transactions on the network, and growth rates of each over the years
  • Whether the Service Level Agreements for services provided are being met / exceeded
    • (how quickly transactions get notarised; how quickly new joiners are issued participation certificates and get added to the network map; whether the services are available for use)
  • If key decision-making is fair, open and shared across network participants (rather than controlled by one / a small group of parties)
  • [Later on] Whether it is financially independent
What, if any, are the coordinating entities, and what are their functions? (For example, a foundation, software development corporation, DAO, etc.)

Corda Network Foundation Stichting was set up in December 2018 with two R3 directors, and in February 2019 the first ‘Transition Board’ was appointed, which has 9 Directors who are all early customers of the Network: https://corda.network/governance/board-election.html

The mission of the Foundation is twofold: to help the network grow and make sure the Network is stable and secure. This includes reviewing SLAs, performance, how new enhancements and upgrades are rolled out, whether its tracking to budget, as well as planned product roadmap. While the first Transition Board is in place, the new Board will be democratically elected in February 2020. Anyone who is a participant (runs a node) can vote for, or stand for, the Board.

R3 has a number of important roles: it set up the Network and the Foundation before giving it away to the Foundation; it has provided an initial loan to the Foundation, and it’s developers help support the software which runs the network. Finally, as Network Operator on behalf of the Foundation, R3 communicates updates and changes about the network on the mailing list (https://corda-network.groups.io/g/main) and public slack (#corda-network on https://slack.corda.net/). Maintenance, network parameter updates and any other technical updates are communicated on https://cordanetwork.statuspage.io/. Changes to the Corda software are implemented and agreed on Github: https://github.com/corda/corda. Currently, social media is not used regarding the network and the Foundation, although once the network grows this is likely to change in 2020.

How are participants and users of the project identified? (For example, by public/private cryptographic keypair, wallet number, government ID, etc.) Are there restrictions on who can participate? If so, how are they implemented?

Known identities of all Network participants (nodes with certificates) is a key part of the network’s initial design, by intention[1]. Through a certificate they use on Corda Network, all participants are identified via their x500 name: which contains at a minimum a legal entity name, country and location.

Before granted access to the network, the network’s Identity Manager checks this information is correct and are not on a Sanctions watchlist. Once the participant joins the network, this information is listed in the Network Map. In future, this may change via a feature called accounts.

[1] https://www.corda.net/content/corda-technical-whitepaper.pdf - see Chapter 3 in particular

Stakeholder Groups

Does the project’s software code delineate groups with particular functions? (For example, those who can propose changes, arbitrate disputes, or vote tokens on behalf of others.)

No.

Are there other important groups either constituted informally, specified through contractual arrangements, or based on geography/choice of law?

Corda Network Foundation - governs and runs the network. Sets all the policies. All participants who join the network sign legal agreements (Terms of Use) with the Foundation. Any participant can vote for or stand for the board. Next elections will be on or around January 2020.

R3 in three roles:

  • Network Operator - runs the services and infrastructure. In theory, another network operator could exist but in the early stages, it’s better to have R3 run it. Includes critical network services: Identity Operator, Network Map, notary - although 3rd parties can also run notaries (so far, in segregated sub-zones which are offshoots of the network)
  • Funder - a loan has been provided which enables the network to survive and not charge very high fees to its participants from day one, until its financially independent due to low fees which it charges network participants
  • Developers who have developed and continue to develop key software used to run the network: the network map, identity operator and notary.

Outside of these, there are participants of two types:

  • Sponsoring participants - participants who may ‘sponsor’ other nodes onto the Network: they sign a legal agreement for them and their sponsee nodes; they cover any fees; and they do identity checks for them.
  • Direct participants - participants who sign a legal agreement directly with the Foundation, cover costs themselves, and have their identities checked.

Business network operators may / may not be sponsors. These are groups who coordinate a business network and may also develop and run a CorDapp. While, these are not explicitly referred to in the legal structures, they play an important role in network governance. In theory this is not blocked to anyone, so long as they can still enter the network (if relevant) and convince others that they should operate business networks for them. These will be primarily legal agreements / relationships built on top of CN.

CorDapp developers - if a business network operator does not have the technical expertise, they may commission a third party to set up and run a CorDapp.

Node operators also exist - these are third parties who operate nodes on behalf of participants. Participants and the Foundation will still have the primary relationship (unless they are sponsored on).

Network Users – participants who have a node on the network. Some of these are also running their own notaries which is also a network service. Any legal entity can join, so long as you are not on a sanctions watchlist. The joining fee is free currently, and will be until December 2021. Leaving is freely allowed within their legal contract. Leaving the network (including extracting their data from their node) will be up to the participant to define in detailed steps.

There is a seven-step process for anyone to join the network, which is outlined here. We are currently optimising our joining steps. https://corda.network/participation/index.html.

We have explicit diversity criteria in our Articles of Association for the Board of the Corda Network Foundation, to encourage diversity across all groups.

Goals and Implementation

What behaviors does the project seek to encourage, or discourage? How are such behaviors incentivized?

The participant Terms of Use incentivizes honest, non-criminal behaviour. People can transact as much or as little as they would like.

If you commit crime intentionally on the network, on extremely rare outcome would be that your participation certificate is revoked. This is a powerful incentive not to do so.

Other than that, participants are incentivised to join and transact on the network because it performs well compared to other technologies.

Once a number of participants (users) have joined Corda Network, and are transacting live, the idea is it will make business transacting so much easier than what’s gone on before. Their skin in the game will be that it helps their ability to do business a lot easier, with a huge range of parties.

Service providers (CorDapp developers, Business Network Operators, software partners who help people deploy nodes) have skin in the game as they have a financial incentive which grows with the “network effect”.

(For operational projects): How well are the incentives and governance mechanisms functioning in practice? Are there metrics to measure the effectiveness of governance?

It is still quite early to tell what is working and what isn’t. We will need to continue to monitor this closely.

Are there systems to pay for infrastructure, protocol upgrades, development work, network enhancements and/or other work deemed to be in the interest of the network? If so, how do they operate?

All of the above are provided by the Network Operator, which is currently one company, which is contracted and paid for by the Foundation on the basis of low transaction fees which it’s gaining from any participants on the Network.

Governance Powers

What makes a governance decision associated with this project legitimate or illegitimate?

The Foundation was set up and given the network to govern, legally speaking. Time will tell if participants continue to respect its authority and legitimacy – for now this hasn’t been properly questioned much.

Who has power to introduce governance proposals, and how does that process operate?

(a) – any proposal can be proposed by any participant (node) on the Production Network. This is outlined in the Foundation’s By-Laws.

(b) – the only way this could be withdrawn would be by the Foundation deciding to withdraw it, but as the Foundation’s Board is full of participants it’s unlikely to happen.

Who has policy-setting (“legislative") power to decide on proposals, and how does that process operate?

The Foundation’s Board decides on proposals via Mandatory Governance Events and Constitutional Governance Events. In some circumstances, the Network Operator can make changes via Advisory Governance Events.

Generally the board will make decisions about the network’s future. However, in certain circumstances the dispute resolution framework can be evoked, in case participants on the network disagree

Who has implementation (“executive”) power to execute proposals once decided upon, and how does that process operate?

The Network Operator and node operators typically will execute changes, but certain proposals may be implemented by the Foundation itself.

Who has interpretive (“judicial”) power to resolve disputes over application of a policy to a specific instance, and how does that process operate? What can the interpretive power be used to mandate?

I believe this is also the Foundation and it will have a Governance and a Technical Committee to advise it.

What checks and balances, or systems of accountability, exist among these governance powers?

The Board is democratically elected. In future, it will also have committees to advise itself, both a Technical and Governance Committee. It has a staggered Board which means elections will frequently occur.

Minutes for the Foundation will be published on an ongoing basis on its website, corda.network.

Governance Procedure

Governance Procedure

Are there systems for non-binding signals or binding votes on governance decisions? If so, please describe them in detail.

As outlined on our website, the following constitute how decisions are made about Corda Network:

Two kinds of votes are enacted by the Foundation’s Board of Directors:

  • All changes to the Articles of Association and By-laws as well as the change of the Operator are defined as Constitutional Governance Events;
  • All changes to the Network membership criteria, charges, budgets, change management process and other business areas reflected in Clause 8.3 are defined as Mandatory Governance Events. The board shall vote to accept or reject all such Mandatory Governance Events, and the outcomes are binding on Participants and the Operator for implementation;

One kind of event is decided by the Network Operator:

  • All changes to technical parameters and notary criteria reflected in Clause 8.4 are defined as Advisory Governance Events. While the Operator can implement these without board approval, it may ask the board to provide an advisory (non-binding) vote. Conversely, the board may require that it is given the opportunity to provide an advisory vote.

2/3 of the board must be present. Constitutional events: 75% of 8/11 must vote for it; Mandatory: 66% of 8/11 must vote for it

All participants on the Network (anyone with a Corda Network node x500 certificate) can vote for and stand for the Board. Our next election is in February 2020.

We want as much of this information as possible to be available on the Corda Network website; details on minutes, votes aswell as upcoming governance events. Not enough of these have happened yet, to provide evidence – but here is an example: https://corda.network/governance/events.html

Are there distinctions between decisions made by ordinary processes (for example, majority votes) and those which require extraordinary processes (for example, supermajority votes)? Or are there non-standard processes you would, or have, used in emergency situations? Explain as appropriate.

The majority of things to be voted on are by ordinary processes: anything from technical upgrades schedules to pricing, marketing etc; performance reviews and budget approval / reviews.

Extraordinary processes are required for the decisions outlined here (section 10): https://corda.network/governance/bylaws.html

  • 2.1 Changing the governing body of Corda Network to be anything other than the Foundation.
  • 2.2 Increasing the Network fees by more than thirty per cent. (30%) in one year.
  • 2.3 Changing the Foundation’s legal status to be anything other than a not-for-profit foundation (stichting).
  • 2.4 Changing the number of R3 directors to less than two (2).
  • 2.5 Selling the Foundation.
Are there aspects that can never be changed through governance processes, short of a contentious hard fork of the network? If so, how is that ensured?

No.

Are there mechanisms that make changing the project easier or harder?

As described above, while the first Transition Board is in place, a new Board will be democratically elected in February 2020. Anyone who is a participant (runs a node) can vote for, or stand for, the Board.

What revisions to governance mechanisms have been made, or are under consideration, and why?

N/A

Other Information