Deep Dive: AllianceBlock, The Global Financial Bridge
AllianceBlock is working to become the bridge between the legacy system of traditional finance and the new disruptive decentralized finance infrastructure through their innovative yet compliant products and services for wishing participants around the world.
Mission Statement
Through building the foundation of their ecosystem with a combination of entities within the traditional legacy markets along with the new emerging decentralized finance. Building a globally compliant yet decentralized capital market to interoperate all sectors and asset classes as the future tokenization of assets continues to further develop. While additionally also serving as an agnostic cross chain solution to allow for liquidity and options to scalability of multi chains.
AllianceBlock understands these issues of the emerging decentralized finance space ironically having restrictions within institutions restricting the mass adoption and growth of this space. As once institutions such as pension and investment institutions allocate capital within this asset class, its likely it’ll surmount the paradigm of a heavily speculative investment as participants begin to realize the utility and innovation with technological advancements and economical inclusion.
As AllianceBlock works to be fully compliant within traditional finance yet still bringing the new exciting features of decentralized finance, while taking the innovative approach of a borderless society of crypto markets.
Some features AllianceBlock improves upon or solves consists of,
Simplify Cross Border Trade
From trading within different stock markets respective to physical jurisdictions, to connecting with family halfway across the world. The bordered economy is slowly fading away, as technological advancements are breaking down those walls. However there are still many physical barriers within the financial industry discriminating against other wishing participants who may be within differing jurisdictions. Such restrictions can consist of limited cross border activity or a complete lack of access within certain markets. With compliance measures varying from country to country it has resulted to firms within traditional finance unable to consistently do business with foreign clients in a compliant manner.
AllianceBlock aims to solve this issue through their three layered protocol with their Cross Border Regulatory Compliance Layer (CBRCL). With varying rules across countries, regulations will be coded within smart contract logic and is then voted between compliance and legal entities before the rule is being integrated. As smart contracts can be amended by authorities who reach authority consensus across the protocol to update with changing regulations.
With how dispersed capital has continued to be allocated around the world, there lies thousands potential opportunity costs of residing out of many participants geographical reach. Through compliance, partners along with the transparency and immutability of blockchain technology, AllianceBlock is turning the idea of a decentralized market that includes the aggregate global economy.
Compliant Securities Offering
One of the largest issues within crypto regulations has been due to the lines between what is defined as a security and what isn’t. Due to this lack of clarity, many crypto projects have taken the approach to abstain from public capital raises and relied primarily on private entities.
Ironically, while the cryptocurrency markets are facing clarity issues behind what may be a security. The idea of digitized securities to be traded within a blockchain has become a hot topic with examples of synthetic equities, or security tokens. However, securities face a large issue within following compliance with regards to the inefficient time consuming procedure they must adhere to. From legal documents, to due diligence checks, to clientele, all the way to corporate actions and many other steps according to regulations all require tremendous amounts of time and capital expenditure.
AllianceBlock has built a system in which firms can offer tokenized securities and assets in a compliant manner, while cutting out many of the inefficiencies within the current procedure through their own regulated procedure.
Open Finance Solution
Open Finance refers to the usage of open APIs allowing third parties to develop programs such as applications and services for banks and other financial institutions to utilize. As AllianceBlock aims to be the bridge between traditional & decentralized finance, the AllianceBlock protocol will allow for developers to build open finance products while allowing participants to maintain privacy and control over their own data.
While the concept of open finance is still quite a novel term across the world of finance there appears to be positive feedback and curiosity of the concept within financial institutions as it allows for a much more efficient process of financial products such as investments, mortgages and insurance.
Through the utilization of the AllianceBlock protocol, open finance solutions can allow for compliance yet a globally interoperable and decentralized ecosystem of financial applications. Through connecting financial services and third party developers around the world to allow for the creation of such applications, while also allowing the usage of API’s to ensure compliance yet maintaining control of investor privacy and data.
Fund Distribution
After the great financial crisis in 2008, regulations have stiffened to where financial managers must carefully comply with the long list of regulations, such as some financial instruments being available only within certain jurisdictions. Additionally the amount of intermediaries that are still within finance has caused an issue for high amounts of fees in regards to customer satisfaction and communication.
As a global market, AllianceBlock aims to solve this issue through the use of their CBRCL ensuring instruments must be regulated before they can be offered within the ecosystem. Additionally, through the use of their trustless KYC, customers only need to be verified on the AllianceBlock platform once in order to access the applications available to them, as the collected data for KYC will be automated for every application. Fees have also been concern as the amount of third parties and intermediaries within finance are still apparent within procedures that are arguably redundant, while they may seem minimal at first glance, these fees begin to add up over time and can take chunks out of investors returns, AllianceBlock is countering the issues of intermediary fees by rather than taking cuts out of clients investments, the $ALBT token can be used as payment for network fees along with a majority of the services on their platform ranging from management fees for mutual funds to custody and communicating with legacy systems.
Digitized Derivatives
As firms are growing more eager to access this space, it doesn’t appear regulators and policymakers are working at a sufficient pace to satisfy their needs. AllianceBlock aims to solve this issue through complying to the regulations of policymakers while still creating a platform to offer identical products to the ones in decentralized finance to institutions that are required to follow every rule through the usage of regulated digitized derivatives.
AllianceBlock will be converting any asset, digital or legacy available on their platform into a digital derivative. Meaning commodities like oil or corn can be traded as a fungible and bankable derivative through the platform, but also the creation of new creative indices and indexes that give clients variable exposure to crypto markets.
While this aspect of AllianceBlock is still a work in progress, some innovative possibilites of digitized derivatives could be an index relating to big data with the underlying assets consisting of equities, digital assets, along with some commodities or maybe a lower risk derivative basket of market indexes such as the NASDAQ, while also allocating some exposure to the majors in the crypto space, and some risk aversion with some diversification into bonds and real estate.
P2P Lending
In the modern world of finance, the best investors and traders understand the importance of leveraging debt to optimize returns. AllianceBlock aims to add a compliant peer to peer lending platform for participants to lend and borrow funds and assets without the need for intermediaries.
Through a structured loan mechanism integrated alongside a fiat gateway for legacy system assets to be leveraged within decentralized finance for services such as loans, insurance or mortgages. Firms within either decentralized or traditional finance can now offer their own products within their respective asset classes while also given the option to implement the other side of finance within their respective sector.
Through building a fiat gateway to our legacy systems, AllianceBlock is able to collateralize real world assets which would otherwise be a very niche and commonly unaccepted form of collateral. An example could be jewelry that becomes digitized as an NFT that can be put up as collateral for loans or just to be traded as an asset on the blockchain.
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Product Overview
Here are some of the regulated products AllianceBlock will be offering to build out their vision while also integrating some unique features for an optimized user experience along with further token utility and overall network demand,
Data Tunnel
To fully execute the mission AllianceBlock is envisioning, the need for Oracles to extract real world data will be essential. AllianceBlock has built their data tunnel to operate as an oracle aggregator to use real world and on chain data through their partnerships with a plethora of other oracles such as, Chainlink, API3, DIA, DeFi Terminal, DIA, Ocean Protocol, Covalent, Aikon and Parsiq.
Additionally the Data Tunnel will allow serve as a marketplace for participants of either traditional or decentralized finance to publish, monetize and trade data without the technological background. Any data that becomes tokenized as a tradable asset will require $ALBT as a payment, but can also be paid in fiat which will then be converted into $ALBT for users to utilize their tokens on the platform.
There will also be a complementary feature to the Data Tunnel, named the Data Quasar. The Quasar will act as an API that can aggregate data from other chains enriching the data to ensure all financial institutions that plug into the Quasar will receive consistent and accurate data through the tunnel.
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DeFi Terminal
The DeFi Terminal will serve as AllianceBlocks “one stop shop” for cross chain activity along with being fully audited and chain agnostic. The Terminal allows for managing assets across multiple blockchains while also allowing liquidity mining as a service (LMaaS) for decentralized finance projects wishing to build a secure yet efficient manner for these projects to launch liquidity & staking pools in a reliable interface.
Some features of utilization within the DeFi Terminal consists of an interface where users can access advanced statistics and portfolio management tools to optimize their investments while also ensuring projects are able to release staking or mining products that are trusted and optimal for users to participate in. Additionally projects that are wishing to utilize this white glove service by AllianceBlock will be required to add an $ALBT liquidity pool pairing with their native token.
AllianceBridge
AllianceBridge will be AllianceBlocks solution to blockchain interoperability for decentralized finance applications across other chains to communicate and work with each other. Currently the AllianceBridge supports applications on Ethereum, Binance, Avalanche, and Polygon as the team continues to look for other blockchains they believe would be beneficial to build and bridge out to (Pun Intended).
While enabling decentralized and secure swaps across chains, users can access other parts of decentralized finance in ways that were previously impossible. The $ALBT token will be required to pay the fee of 1 $ALBT. Additionally AllianceBlocks partnership with Hedera Hashgraph will allow for the usage of the Hedera Consensus Service to create immutable and verifiable message logs allowing for increased transparency and security of transactions through the bridge.
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AllianceDEX
The AllianceDEX will be an automated market maker and will serve as AllianceBlocks main decentralized exchange. Though what will separate the AllianceDEX from every other decentralized exchange will be the combination of all their other products playing in perfect synchronous when operated together. With attributes of decreased risks in liquidity mining through minimizing impermanent losses.
AllianceBlock will be integrating their own mathematical framework to build their automated market maker in a method that would fit their clients best interests. With current popular AMM’s such as Uniswap having potential for impermanent losses of up to -80%, causing wishing participants hoping to provide liquidity to help their favourite decentralized exchange to think twice about allocating capital due to the risks, AllianceBlock is working to create a solution to this learning curve to allow even new participants of this ecosystem to assist with providing liquidity.
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Trustless KYC
To be truly compliant and used within institutions, KYC and verification of identity to avoid money laundering schemes will be required. While slightly contradictory to the ethos of decentralized finance, its very unlikely financial institutions can enter this space without knowing the safety and directions where their funds are flowing to.
Users will be required to do a one time trustless and secure KYC to utilize the applications on AllianceBlock. GBG is a traditional finance service which works to verify identities has partnered with AllianceBlock as the primary KYC operator. Though unlike traditional KYC processes, GBG will be generating signed KYC documents which will be stored on-chain to be reusable for future private sales or other applications.
Cross Border Compliance
As mentioned in their platform use-cases, AllianceBlocks cross borer compliance layer will allow them to operate globally while still complying to the various differentiating regulations set around the world. Through the combination of a one time KYC and their CBRCL, AllianceBlock is given the freedom to operate as a global marketplace, as compliance has been built into their protocol.
With the varying regulations in regards to jurisdictions, asset managers operating on the AllianceBlock platform have the option to choose which geolocations can access their products. Afterwards the financial instrument will only be available to those located in areas where the underlying asset is complying to their respective regulations.
The more globally available an asset is, the more regulations it’ll have to abide by. AllianceBlock aims to simplify this problem as their CRBCL allows the process to be seamless and efficient for both investors and asset providers alike through having regulations set and coded within the smart contracts of their ecosystem.
Fundrs
AllianceBlock will be building an individual platform and interface for their peer to peer system. Allowing lending or borrowing of funds and assets while also enabling early stage startups to gain access and raise capital through retail and institutional investors.
This brings benefits to both parties, as now investors regardless of status can invest within early stage projects that would otherwise require an accredited investor title resulting in a far higher potential rate of return than legacy markets have to offer. Startups no longer have to go through complicated private equity sales or the inefficient process through publicly listing after approval from the SEC, as AllianceBlock has ensured compliance is written in their code both figuratively and literally.
Additionally the Fundrs platform will have a reputation system in the form of a tier list; of basic, bronze, silver and gold. With the reputation system taking participation within their products, ecosystem and community. Benefits of these tier lists can include access to exclusive products, increased voting power and the chance to be nominated as a DAO member.
Overview
So to wrap it up, we can see how AllianceBlock has been built up with the integration of a wide array of other products. Ironically many of these individual products would be seen as a quality project such as the Data Tunnel or the AllianceDEX yet AllianceBlock didn’t stop there, they have the vision to combine all these separate products and combine them into being the a globally compliant financial market that is ready for the tokenization of assets and securities within both the crypto and legacy markets.
The next few years for the entire AllianceBlock community will likely be exciting to watch and even more exciting to be a part of, as the team works to be at the industry leader in providing a sophisticated solution for institutions to access the other side of finance. Additionally with the vision AllianceBlock has they’ll likely be partnering up with many big names in both sides of finance for optimal global coverage and exposure of all accessible markets around the world to add into their ecosystem.
So I’ll leave it at that, AllianceBlock definitely has a lot of room to grow with the scope of their mission being much more than just building out a decentralized exchange or building an oracle to track real world data.
I believe this is what the peak of blockchain technology and crypto should look like and possibly what Satoshi visioned to a certain extent (No, not Bitcoin Satoshi’s Vision) . A globalized economy that allows for financial inclusion to all wishing to participate, while also providing innovative solutions to issues and inefficiencies within legacy markets such as intermediary fees and lack of clarity with regulations, while also looking to solve issues within the evolving digital asset ecosystem by providing liquidity mining as a service and the inevitable tokenization of every asset to be instantly settled and accessible through being traded on a blockchain.
*None of the information listed is financial or investment advice and should only be taken as entertainment or educational as I’m not a financial advisor*
About Me
Hey, thanks for taking the time to read my work. I’m your average 21 year old, currently in school for Economics and Finance. Some of my hobbies consist of sports, working out and staring at price charts.
I initially began interested in the crypto space after frustrations with legacy markets. From the second I read about the Ethereum ecosystem, I fell in love. An entire ecosystem built on one platform that anybody can access? Unheard of, until now.
With how fast this space is developing, I try and find projects within this industry that show promise and potential to disrupt our modern world. All this fundamental analysis not only helps me better understand these projects better, but hopefully gives you guys some newfound information!
If there are any projects you’d wish to suggest me take a look into, I’m always available on Twitter and YouTube
