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OpenLaw: Bringing Multi-Trillion Derivative Market To Ethereum

OpenLaw, a ConsenSys-backed blockchain project with a focus on legal compliance, has set its sights on transforming the multi-trillion dollar derivative market by bringing the contracts onto the Ethereum blockchain to be structured and executed. Using a brief video to showcase an Interest Rate Swap contract that has already been tested on the network, OpenLaw is demonstrating how these smart contracts can be used as an actionable and enforceable legal agreement.

OpenLaw and the #olestack is poised to transform the $12 trillion derivatives market (yes, trillion dollar) 🤑 Lots of work to do, but check out the first steps below: And hit us up if you’re at the @ISDA Technology Forum in London💥#chainlink #ETH — OpenLaw (@OpenLawOfficial) November 6, 2019

Founded by software engineer David Roon and Aaron Wright, chair of the Enterprise Ethereum Alliance Legal Working Group, OpenLaw is intended to be a collaborative platform for lawyers to standardise contract templates and access legal technology tools.

Transparency to an Opaque Market

While a derivative is basically something that derives it’s value from the performance of an underlying asset, index or entity, the role derivatives play within the current global financial system cannot be overstated.

Although OpenLaw quote a figure of $12 trillion, this may just be intended to apply to the Interest Rate derivative market. The Bank for International Settlements (BIS) have published a higher valuation of that particular segment and other sources have suggested the entire value tied-up in the derivative market as a whole is anywhere between $533 trillion to $1.2 quadrillion, dwarfing all of the world’s bond and stock markets.

One of the reasons there is such a wide spread between the figures is no-one has yet published accurate data to reflect the multiple layers of derivatives in circulation. It is an opaque market that is perhaps best portrayed by a scene in...

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