Last night a group representing 40 banks, accounting firms and members of the media gathered for the public launch of Domus Tower, a whispered-about startup rumored to be developing a blockchain capable of facilitating more than 1 million transactions per second.
At the event on the seventh floor of Museum Tower in Midtown Manhattan, the company’s chief technical officer demonstrated an early version of the blockchain, though one admittedly not running at anywhere near its theoretic top speed.
But beyond the geeky tech demos, the startup with an unusual history and new approach announced it was in the early phases of launching a new trust-based blockchain consortium. The group would be dedicated to settling equities in the US and eventually comprised of five companies each representing a different sector.
The company's CEO Joe Forster said:
"By having an immutable recording device and public-private keys, you can develop the trust to straight-through process."
Focus on settlement
The blockchain itself, designed to render irrelevant a very specific division of the DTCC that provides clearing and settlement services, isn't composed of any revolutionary cryptographic tools, but rather public-private key functionality combined with hashing, much like the bitcoin blockchain.
By trimming fat elsewhere in the code, the company’s CTO, Rhett Creighton, said he’s able to transact blocks of 10,000 transactions each at a rate as high as more than 1 million transactions per second.
To be precise, the Domus blockchain — as the company calls it — has reached a top speed of 1.24 million transactions per second, according to numbers released in a white paper describing the technology's makeup and performance. The maximum transaction size in the test was 256 bytes, counting the size of signature itself.
The most heated part of the evening was when Creighton, a graduate of MIT, turned over questions from the audience to those with a particular bent for the more techy-side of cryptography.
Concerns arose about an apparent inability for the technology as it currently exists to deal in smart, or self-executing contracts, and concern over Domus' claim that it would replace bitcoin’s proof-of-work and Ripple’s federated voting with a trusted system where "participants know each other and independently decide who to trust," as the white paper puts it.
Two members of the audience representing one of the largest banks in the world countered: "We know our partners, but we don’t necessarily trust them."
Exit from stealth
Founded in 2014 by Ryan Singer, co-founder of the now-shuttered Tradehill bitcoin exchange, the company has had a long, drawn-out period of stealth. After going through several website incarnations, the site is currently completely offline, and Singer left in 2015.
Creighton, a graduate of MIT, then took over as lead blockchain developer, and Forster took over as CEO.
As part of last night’s coming out party, attended by representatives of JPMorgan Chase, BNY Mellon, Ernst & Young and more, Forster announced that the company was seeking a $25m investment, and would be forming a consortium of five companies from different sectors.
Instead of building the consortium out of different banks — as was the case with R3CEV — or a large group of differing companies — as was the case with Hyperledger — Domus Tower is seeking five consortium members: an accounting firm, a custodian, an investment manager, a broker dealer, and a stock exchange.
The $25m investment Domus hopes to raise would then be allocated to each member. In exchange for joining, the companies will receive a non-compete agreement for the two years Domus expects it will take to complete an industry-grade blockchain. During that period each company will be the only member of its sector to be given access to the developing software, with influence over the project's trajectory.
"We are a startup," said CFO Roy Epstein, during remarks to the audience. "But we’ll have an institutional veneer too."
As part of that veneer, instead of trying to put the established players out of business, Domus Tower hopes to work with them. Specifically, they plan to send daily batch reports to the DTCC. But there would be one exception – another branch of the DTCC, the National Securities Clearing Corporation, or the NSCC.
"The one casualty could be NSCC in this whole process. We're trying to work with all the existing participants except them."
Image via Michael del Castillo for CoinDesk