THE EPG OBJECTIVE
(Culled from the Encocoin White Paper)
The main objective of EPG (Encocoin Payment Guarantee) will be to replicate the issuance of banks’ trade finance instruments such as Letters of Credit, Guarantees, Indemnities, Insurance Bond etc and implement a transparent and secure way to undertake global trade.
All intermediaries who are party to a trade cycle must be in the encocoin network and authenticate transactions as a node to make the EPG system successful. Other than banks, agencies such as Customs, Shipping companies, freight forwarders, clearing Agents, Insurance companies, respective manufacturers, suppliers, warehouses, traders, merchants etc would also be available on the network.
With all parties to the Federated Consensus updating and authenticating real-time information on the status of the goods and other relevant data, the buyer can plan the further movement of goods once received in his warehouse and also manage his funds flow effectively.
EPG provides cost-effective and simple solutions to execute various trade finance instruments and bring the benefits of blockchain technology to international/cross border trade. We are working round the clock to achieve this objective in quick time and integrate the various modules into the XNK blockchain for the following instruments:
1. Standby Letters of Credit
2. Guarantees & Indemnities
3. Clean Collection Bills Management
4. Factoring & Forfaiting
5. Pre-Shipment & Post Shipment Finance
6. Trust & Delivery Receipts.
7. MSME & SME cross border financing.
Payment Process:
Instructions to release payment for final settlement can be made only after all the respective nodes such as the buyer, the seller, the banks and other agencies in the network arrive at a consensus that transaction so far is authentic and genuine. This ensures that all the parties themselves know if their interests have been protected at each stage of the trade cycle.
Federated consensus between the nodes happens naturally within the system through effective deployments of the consensus, off-chain or on-chain, however, consensus always happens on-chain when both parties submit non-contradictory claims supporting the contract. If all parties arrive at the consensus and approve, the contract will terminate correctly and liquidate itself with payments distributed amongst the parties as previously agreed. In case one or more of the nodes are in disagreement, the federated consensus is not achieved and shall wait for all the nodes to come to an agreement.
Technological scalability
We have agreed to build the EPG on hyper ledger fabric which permits handling transactions of over 1 million per second. The project is still in evolving stage and can expect further advancement which will ensure scaling.
Hyper Ledger Fabric
Hyperledger Fabric is a blockchain framework implementation and one of the Hyperledger projects hosted by The Linux Foundation. Intended as a foundation for developing applications or solutions with a modular architecture, Hyperledger Fabric allows components, such as consensus and membership services, to be plug-and-play. Hyperledger Fabric leverages container technology to host smart contracts called “chain code” that comprise the application logic of the system.
Advantages
Third-party trust:
The blockchain is built on the concept of sharing information across parties without a central authority to manage and processes using federated consensus during transactions. All the data recorded in the ledgers are available to all the nodes taking part in a transaction but we have designed the EPG accessibility to be limited to each participating nodes or access levels.
Updation of books:
Since the transactions are peer to peer and ledgers are updated in real time, there is no need for an additional reconciliation process. A transaction will be completed only if all the consensus is validated and the defined rules are satisfied. Each transaction will be completed with absolute finality.
Transparency:
Maintaining an immutable record of the transaction with events in a chronological order being the main pillar of its architecture, Blockchain system guarantees much-desired attributes to banking and financial transactions such as immutability and finality. The ledgers are open and can be validated by each node at any time. For example, the seller will be aware of the issuance of LC and its terms and authenticity and can track it till he receives the same. On the other side, the buyer will be aware of the movement of the goods from procurement till it reaches his warehouse. Likewise, banks and other institutions also will be in the know always.
