Yesterday, Bloomberg reported that enterprise blockchain company R3 had held preliminary discussions with representatives from Ava Labs (affiliated with Avalanche), the Solana Foundation and Adhara about a possible minority investment in the business, joint venture or outright sale. R3’s Corda DLT is one of the most widely used enterprise blockchains. The company declined to comment on the Bloomberg report.
R3 has a roster of high-profile lenders, including several systemically important banks. These include HSBC, Bank of America, Wells Fargo, Barclays, UBS, ING and Itaü Unibanco, which were among 40 companies that participated in a $107 million funding round in 2017. The following year , the company raised an additional $5 million from central FX counterparty CLS. Since then, it has not announced a formal funding round, but the company made a significant windfall estimated at around $240 million in 2019 from XRP crypto tokens.
R3 had an agreement with Ripple to promote Ripple to R3’s banking customers. As payment, he received options on XRP tokens. The two companies argued over the deal, but ultimately reached an agreement. Although the settlement amount was never announced, we estimated the value of the XRP involved to be at least $240 million.
Meanwhile, a year ago, R3 confirmed a series of layoffs. Over the past few months, new team changes have taken place with the departure of some senior employees. Founding CTO, Richard Gendal Brown, now only works for the company part-time. “He continues to play a central advisory role to R3’s CEO and operating committee, while continuing to represent R3,” a spokesperson told Ledger Insights.
One of the largest enterprise blockchains
The company’s Corda DLT is one of the most widely used permissioned blockchains in the institutional sector with over 60 live solutions. These include SIX Digital Exchange which hosts the Swiss National Bank’s wholesale CBDC, Euroclear’s D-FMI tokenization platform, and collateral mobility company HQLAᵡ. The guarantee company is backed by BNP Paribas, Deutsche Börse, Goldman Sachs, HSBC, JP Morgan, UBS and others.
Another example is Japanese security token platform Progmat, founded by MUFG, whose investors include NTT Data, SMBC, Mizuho, SBI and others. NTT Data is also involved in another large-scale initiative: it helped Italian banking association ABI Lab develop Spunta, used for nightly interbank reconciliations by around 100 banks.
Bloomberg reported that some of Corda’s highest-profile projects had been shut down. This is true, but the same can be said for all major blockchains, permissioned or non-permissioned. This is the nature of innovation.
Initially, Corda made significant progress in the areas of insurance and trade finance, with two major projects in each sector. Insurance consortium B3i closed in 2022 and the Institute’s RiskStream insurance blockchain initiative distanced itself from Corda when it failed to raise a major funding round. Last year saw the closure of two major trade finance joint ventures, Marco Polo and Contour.
The appeal of permissionless blockchains
The appeal of cryptocurrencies and public blockchains has encouraged some companies to hedge their bets by adopting Ethereum-compatible Hyperledger Besu, which can be used as a permissioned enterprise blockchain or on the Ethereum network without permission. The downside is that Besu’s privacy is weaker than other enterprise blockchains, including Corda and Canton. For example, the Brazilian CBDC project DREX adopted Besu and was delayed while the central bank continues to analyze the progress of developing privacy solutions.
Meanwhile, sources told Ledger Insights that the London Stock Exchange has changed its preferred technology from Corda to Besu. That said, the exchange is yet to launch any DLT production projects.
In the future, blockchain networks will likely be more open, but some applications will remain on permissioned blockchains. Customer-facing applications are more likely to be on permissionless chains, often including a layer of permissions in the token’s smart contracts.
As a sign of convergence, some public layer 2 blockchains are essentially permissioned chains. Some public channels, including Avalanche, support allowed subnets.
Despite this news, R3 continues to win major new projects. For example, it was recently selected as one of the key technology providers for the Regulated Liability Network (RLN), the tokenization collaboration involving major UK banks, led by UK Finance. The RLN is one of several projects that constitute the current institutional push to adopt tokenization in traditional financial markets.
