ActaChain: Revolutionizing Bond Trading with Blockchain and DocuSign

Inspiration

The bond trading market particularly bilateral trading is evolving, with blockchain technology offering new opportunities for automation, transparency, and security. However, the adoption of these technologies is hindered by:

High Legal Costs: Blockchain and smart contracts are complex and often require extensive and costly legal review.
Time-Consuming Processes:Drafting contracts, ensuring compliance, and navigating the technical complexity of signing transactions often delay execution. Moreover, the average person typically lacks the knowledge or familiarity to operate a wallet or sign transactions in the Web3 space efficiently.
Limited Accessibility: Smaller issuers and traders are often priced out of the market due to the legal and operational overhead.

The so|bond protocol introduced blockchain-based bond trading with tokenized assets, leveraging smart contracts to automate trade execution. However, the adoption of so|bond has been slow due to the complexities of drafting and validating legal contracts, as well as the steep learning curve of blockchain workflows.

ActaChain was born out of the need to bridge this gap by integrating DocuSign; a platform trusted by millions for digital contracts; with blockchain technology. By enabling issuers to sign legal contracts, collect signatures, and seamlessly execute blockchain-based smart contracts, we’ve created a solution that reduces costs significantly, simplifies workflows, and increases accessibility for all market participants.

Understanding so|bond and Terminology

To fully appreciate our solution, it’s essential to understand so|bond and key concepts in this space:

What is so|bond?
So|bond is a blockchain-based framework for tokenizing and trading bonds. Bonds are represented as digital tokens, enabling decentralized ownership transfer between participants. It is an open source framework that can be consulted at: GitHub: so-bond
Smart Contracts in so|bond:
Smart contracts are pre-programmed protocols that execute transactions automatically when specified conditions are met. In so|bond, these are used to transfer tokenized bond ownership once trade terms are agreed upon.
The Problem:
While so|bond simplifies bond trading, it still requires legal contracts to be signed between parties before executing the smart contract. This process is often manual, expensive, and time-consuming due to the legal reviews required for each transaction. Moreover, the average person typically lacks the knowledge or familiarity to operate a wallet or sign transactions in the Web3 space efficiently.

Our solution bridges this gap by integrating DocuSign with so|bond. It automates the legal process, triggering smart contracts on the blockchain once both parties have digitally signed the agreement.

What it does

Our solution simplifies and automates the bond trading workflow by:

Simplifying Generation of Legal Contracts:
- When a Seller requests to trade bonds, the Issuer (B&D) generates a customized legal contract. Previously, these legal contracts required a blockchain-expert legal team to draft it, adding cost, complexity and delays. Now, with standardized legal contracts that are pre-vetted, regulatory-compliant, and trusted, the process is streamlined. These contracts, customized with trade-specific details (e.g., buyer, seller, bond terms), are signed using a reliable and trusted method DocuSign, eliminating the need for specialized blockchain expertise.
DocuSign Integration:
- The Issuer uses DocuSign platform to send the legal contract to both the Buyer and Seller for review and signatures.
- DocuSign ensures a smooth user experience, leveraging its platform that users already trust and are familiar with.
Blockchain Smart Contract Execution:
- Once both parties sign the legal contract via DocuSign, ActaChain automatically triggers a rewritten smart contract on the so|bond blockchain.
- This smart contract ensures the tokenized bond is transferred from the Seller to the Buyer securely and transparently and instantly after the docuSign signature event is triggered!
Recordkeeping and Compliance:
- The signed legal documents, along with transaction details, are securely stored for audit and regulatory purposes.

5.Real-Time Trade Tracking
We have developed a user-friendly Tracker that seamlessly integrates blockchain technology and the DocuSign API. This tracker provides live updates on the status of the trade, ensuring transparency and allowing all parties to monitor progress in real time, from contract signing to final trade execution.

6.ActaChain Registry and Oracle Integration:

ActaChain Registry: A smart contract deployed once to store hashed information about all trades and successful signatures. This reduces costs for issuers by eliminating the need for repeated deployments and acts as a single source of truth for all trade-related data.
Oracle (Using Chainlink): Adds an extra layer of security by validating signatures and contract details via the DocuSign API. The Oracle ensures data integrity by fetching and verifying off-chain data securely. Once validation is complete, the Oracle triggers the so|bond Smart Contract to execute the trade.

Workflow

Here’s how ActaChain works step-by-step:

Trade Initiation:
- The Seller approaches the Issuer (e.g., a Bank) to initiate a bond trade.
- The Issuer drafts a legal contract using pre-vetted templates in DocuSign and includes the trade details (buyer, seller, amount, terms).
Electronic Signatures:
- The Issuer uses DocuSign to send the contract to both the Buyer and Seller for electronic signatures.
- Both parties can review, sign, and finalize the contract on DocuSign’s platform.
Webhook Trigger:
- Upon signature completion, DocuSign triggers a Webhook to notify the ActaChain backend.
- The backend verifies the event and triggers the blockchain smart contract to:
  - Validate the signatures.
  - Execute the bond trade, transferring the bond to the Buyer and the payment to the Seller.
ActaChain Registry and Oracle Verification:
- The Smart Contract requests verification from the ActaChain Registry.
- The Registry delegates the validation request to the Oracle.
- The Oracle queries the DocuSign API to validate the signatures and contract details.
- The Oracle returns the validation results to the Registry.
- The Registry stores the hashed validation results and notifies the Smart Contract of successful verification.
Smart Contract Execution:
- The Smart Contract transfers tokenized bonds to the Buyer.
- The Smart Contract transfers payment to the Seller.
Completion and Audit:
- The Backend fetches the certificate of completion and envelope from DocuSign via a Webhook.
- The signed contract, certificate of completion, and envelopes are stored for audit purposes.

Key Updates to the Workflow

To further enhance security and reduce costs, we’ve introduced two critical components:

ActaChain Registry:
- A centralized smart contract deployed once to store hashed information about all trades and successful signatures.
- Reduces costs for issuers by eliminating the need for repeated deployments.
- Acts as a single source of truth for all trade-related data.
Oracle (Using Chainlink):
- Adds an extra layer of security by validating signatures and contract details via the DocuSign API.
- Ensures data integrity by fetching and verifying off-chain data securely.
- Once validation is complete, the Oracle triggers the ActaChain/so|bond Smart Contract to execute the trade.

The workflow can also be easily understood from the following Sequence Diagram:

ActaChain Sequence Diagram

How We Built It

Technologies Used

DocuSign API: For contract management, electronic signatures, and Webhook notifications.
so|bond Protocol: Blockchain infrastructure designed for tokenized bond trading and automated execution.
Custom Smart Contracts: Re-designed so|bond smart contracts to integrate signature validation and enable automated execution.
Backend Infrastructure: Handles DocuSign Webhook events, validates data, and communicates with the blockchain smart contracts.
Demo Interface: A simple user interface showcasing the trade process with milestones such as:
- Awaiting Signatures (Buyer and Seller Paths)
- Signatures Completed
- Trade Execution
- Transaction Details (Hash and On-Chain Information)

Implementation Process

Webhook Event Handling: Developed a backend that listens to DocuSign Webhooks and triggers smart contracts upon signature completion.
Smart Contract Validation: Adapted so|bond’s existing contracts to validate signatures and execute trades securely.
User Experience Optimization: Focused on leveraging DocuSign’s familiar interface to minimize complexity and ensure user adoption.
Front-End and UI Development: Created a user-friendly front-end interface and a UI tracker that integrates blockchain technology and DocuSign API, providing live updates on trade status and enhancing transparency.

Challenges We Ran Into

Smart Contract Adaptation:
- Modifying so|bond’s smart contracts to handle off-chain signatures while maintaining security was a key technical challenge.
Webhook Integration:
- Ensuring reliable event notifications from DocuSign required rigorous testing and error handling.
Balancing Simplicity and Complexity:
- We had to simplify the legal and blockchain workflows while ensuring compliance and transparency.
Cost Optimization:
- Reducing costs for smaller issuers while maintaining high standards of security and functionality was a critical focus.

Accomplishments That We’re Proud Of

End-to-End Automation:
- Fully automated the bond trading workflow from legal agreement to blockchain execution.
Cost and Time Savings:
- Eliminated the need for expensive legal teams, reducing entry barriers for smaller issuers.
User-Centric Design:
- Leveraged DocuSign’s platform to provide a familiar, easy-to-use experience.
Blockchain Integration:
- Successfully integrated a trusted legal platform with cutting-edge blockchain technology.

What We Learned

The Importance of User Familiarity:
- Integrating with platforms like DocuSign ensures that users can adopt blockchain solutions without a steep learning curve.
Legal-Tech Synergy:
- Combining legal contract management with blockchain execution unlocks immense potential for financial markets.
Efficiency Through Automation:
- Automating workflows not only saves costs but also builds trust and transparency in traditionally opaque markets.
Adoption Barriers:
- Addressing cost and complexity is critical for increasing blockchain adoption in traditional industries.

What’s Next for ActaChain

Advanced Signature Verification:
- Enable buyers and sellers to sign contracts using their digital certificates, ensuring higher security and trust.
- Move signature verification on-chain to eliminate reliance on third-party platforms for validation.
- Use oracles only for extracting PDFs and metadata from DocuSign, while the blockchain handles the actual verification process.
DocuSign Template Library:
- Develop a library of pre-approved, customizable legal contract templates within DocuSign.
- Link each template to a corresponding smart contract, making it easier for issuers to select the correct contract and automate execution.
- Ensure that the selected DocuSign template triggers the associated smart contract seamlessly upon signature completion.
Multi-Chain Support:
- Expand ActaChain to support multiple blockchain networks, providing issuers and traders with greater flexibility and interoperability.
Advanced Analytics and Reporting:
- Provide issuers and traders with real-time insights on market trends, trade execution metrics, and compliance status.
- Enable audit trails for all transactions, ensuring transparency and regulatory compliance.
Partnerships and Real-World Deployment:
- Partner with banks, financial institutions, and bond issuers to implement ActaChain in live markets.
- Focus on user adoption by providing training and support for issuers and traders.
Scalability and Open Source Development:
- Optimize the system to handle larger volumes of trades and ensure high performance under heavy loads.
- Encourage open-source contributions to improve the platform and foster innovation in the bond trading ecosystem.

Key Focus Areas

Advanced Signatures: Shift to on-chain verification for signatures, reducing reliance on third-party platforms.
DocuSign Integration: Build a library of legal contract templates tied to smart contracts for seamless execution.
User Experience: Simplify the process for issuers by providing pre-approved templates and automated workflows.

ActaChain transforms bond trading by integrating trusted legal contract workflows with secure and transparent blockchain technology. By reducing costs, streamlining processes, and ensuring trust, it paves the way for a more accessible and efficient financial ecosystem.