The ACTUS standard with blockchain technology has the potential to transform financial services. Ralf stated, "We believe that ACTUS is very important in conjunction with blockchain and the Casper Association, when it comes to finance, is quite involved with ACTUS and is also implementing the ACTUS open source standard on the blockchain."

He further explained the importance of open-source finance, noting, "At Casper, we believe that finance should be open source and that the key ingredients of finance should also be open source, specifically financial contracts. What you are entering, even in a DeFi environment, it's still finance."

Discussing the broader implications for blockchain technology, Ralf mentioned, "We truly believe that what is generally referred to as real-world assets, which typically include financial assets, tangible assets, and intangible assets like patents and so on, will in the future mostly live on blockchains."

Ralf also discussed specific upcoming technologies, such as ODRA, "First, you may or may not have heard of ODRA, which is an abstraction layer for smart contract development. It has been developed over the past year, and we have alluded to it in a few calls already on the technical side in some of our communications. It will be rolled out and announced around the Consensus 2024."

Allan Mendelowitz reminded the participants about the ACTUS Conference. “We have a conference coming up in Washington on the 15th of May, which is one week from today. It's an all-day conference and it focuses on applications of the ACTUS algorithmic financial contract standard."

He then discussed the genesis of the ACTUS standard, rooted in the financial crisis of 2008, emphasizing the confusion and regulatory challenges that followed major financial collapses: "The history behind the ACTUS algorithmic financial contract standard started in the 2008 financial collapse. And it was clear that the regulators didn't know what was going on. They didn't know how to respond. They didn't know who was related to who when financial institutions like Lehman Brothers collapsed."

Mendelowitz explained the primary goals of the ACTUS standard as a response to these challenges: "The objective behind the ACTUS standard was to create a standard for granular financial contracts and transactions positions that would enable a precise understanding of who owed whom what and when and equip regulators with the ability to conduct forward-looking financial analytics."

He criticized the inadequacies of traditional financial data systems, highlighting their limitations: "Much of the data that financial regulators collected was accounting based. It was static, it was backward looking, it enabled you to do a good autopsy when an institution collapsed, but it did very little to give you accurate information going forward."

Mendelowitz pointed out the fundamental changes needed in how financial contracts are understood and managed: "The interesting thing about this project is that the concepts that we have embodied in the ACTUS standard are built upon the insights that Willi Brammertz developed originally in his doctoral dissertation and the recognition of the central role that cash flows play in the financial world."

He also detailed how the ACTUS standard could transform regulatory practices and financial analytics: "We started with this objective of creating a granular financial contract standard in the first instance to make a significant transformation in the data that the regulators collect and equip them to do far better analytics and in particular forward-looking analytics."

Mendelowitz concluded by connecting the ACTUS standard to broader financial operations and its potential in blockchain and DeFi applications, emphasizing its utility in ensuring precise and reliable contract representations: "And there we have these fundamental ideas, the payment obligations associated with financial contracts should be represented algorithmically. Secondly, one of the essential observations that Willi had that went along with this was the recognition that while there are thousands of different financial contracts and instruments out there... there's less than three dozen cash flow patterns that can represent everything that's widely used in the financial world."

We recently hosted a Q&A session with Allan Mendelowitz. Definitely give it a read for an in-depth look at ACTUS.

Willi Brammertz said: "If the blockchain does not adopt the ACTUS standard, we could say a standard like ACTUS, then the blockchain will inherit the mess which we have already in the financial world." He highlighted the existing chaos in financial systems due to the lack of standardized financial contract representations, which could be exacerbated by blockchain's openness if not properly standardized.

Brammertz stressed the potential for blockchain to replicate the disarray of traditional finance unless a clear standard like ACTUS is implemented: "If we don't have a standard for financial contracts representation on the Blockchain, then we don't have thousands of representation. We have millions because everybody can program something like that. And that's almost a doom. That means these instruments are non-understandable."

He articulated the importance of ACTUS in reducing complexity and preventing blockchain technology from becoming a chaotic reflection of existing financial systems: "ACTUS takes away a lot of headaches and helps the Blockchain not to become a mirror, a picture, like a horror picture, of what we have already in the banking."

Brammertz also shared insights into the origins of the ACTUS framework, tracing it back to his doctoral thesis which focused on financial analysis and the pivotal role of cash flows in understanding financial exchanges: "I wondered what are we analyzing here? And then quickly I came to the idea to the knowledge that we are looking at streams of cash flows, payment streams." He emphasized the revelation that the complexities of financial contracts could be significantly reduced by focusing on the fundamental cash flow patterns.

He further explained the practical application of this revelation in standardizing financial contracts: "Once you focus on cash flows, it becomes much reduced, much reduced, you can reduce capacity to a complexity, to a manageable level." Brammertz highlighted that while simplifying these complex agreements into standardized patterns isn't trivial, it is feasible and highly beneficial.

Brammertz concluded by discussing the historical evolution of ACTUS and its practical applications in finance, positioning it as a necessary standard for both traditional and decentralized finance to ensure that financial contracts are represented clearly and algorithmically.

The audio recording of this special X Spaces community call with Actus is available to listen to here.

And that’s a wrap for this month’s X Space community call. Be sure to join us for the developer community call on Google Meet if you fancy some technical discussions about Casper.