Exploring the posibility of smart contracts linked to Exchange Traded Fund. Bringing Blockchain technology and conventional investment markets together


#1

Recently I read an article on derivatives and ETF’s and how, by investing in such, you can boost your returns.
Now, this is not my area of work but a friend of mine does deal with Exchange Traded Fund (ETF’s or Indextracker). According to him ETF’s provides a safer way of investing because your returns are not solely dependent on the performance of one asset or one company. An ETF can consist of multiple assets within the same sector.

So while reading this article I thought of the possibility that Blockchain can bring to the table by creating its own ETF like smart contract.
By having a innovative smart contract that is linked to multiple conventional exchanges, like; AEX, Dow Jones Index, Nasdaq of Nikke), we can move Cardano forward and actually help bring both worlds (Blockchain technology and conventional investment markets) together and create value for all investors. If this is possible I don’t know, but I would like to, at lease explore the possibility.

I would like to know if this is something that can be created /researcher by Cardano developers.
n/dennyb2010


#2

Hi, @dennyb2010! And very welcome to the awesome community!!

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( we got our own story :slight_smile: )

Theoretically, what you describe is technically possible to implement on a blockchain, and some companies are working on systems like that or systems that would allow things like that. Basically the main requirement for a blockchain to do stuff like this is called a “Smart Oracle”. It’s a something like a “verified source or facts”. Any facts. This article describes it very nucely:

So a blockchain platform should allow: 1) To build such oracles or to connect to existing ones; and 2) To allows smart-contracts to read data from them.

Once a blockchain can do this - that’s it. Then you got the whole world at your feet :slight_smile: And it really feels like it sounds. Because without it - your blockchain is like a closed system - someone can only call a contract with some parameters - but then you have to trust the person providing those parameters. With Oracles - blockchain becomes aware of the outside world.

Cardano aims to provide a great interoperability not only for Cardano itself with outside world, but for Cardano with the whole bunch of other systems and platforms and structures. The idea and intent are described here:

Cardano roadmap states: “We will then move from Byron to Shelley, where the network becomes decentralised. Over the next 18 months work will be done that contributes to stability, interoperability, and governance.” So we can safely assume that something like this should be implemented in “Basho” or more probably - in “Voltaire” stage.

So once a functionality like this is available - I think we not only could, but we very much will see a services like this happen :slight_smile: