The Baseline Protocol has given rise to a new era of enterprise blockchain, one that isn’t strictly based on private (permissioned) or public (permissionless) networks. Rather, the Baseline Protocol has created an opportunity for enterprises to leverage both public and private blockchains to achieve privacy, permission and performance of complex and confidential workflows. The Baseline Protocol does this by using a public blockchain to establish trust, while keeping private business data on off-chain systems.
For instance, Unibright and Provide are currently working on baselining the supply chain for CONA Services (Coke One North America). By utilizing the Baseline Protocol, CONA plans to establish a “Coca Cola Bottling Harbor'' to provide a low barrier of entry for additional Coca-Cola bottlers. This project is intended to benefit both internal bottlers and external suppliers (i.e. raw materials vendors supplying cans and bottles) by giving all parties access to a private, distributed integration network.
The Mainnet Dilemma
Yet while a number of benefits can be achieved from this implementation, questions remain in regards to using Ethereum as the public ledger, or mainnet, needed to serve as a common frame of reference for these complex workflows.
As of December 2020, the Ethereum public network has been chosen as the lowest-level common frame of reference for distributed systems in baseline protocol demos and proof-of-concepts. A mainnet in the context of the Baseline Protocol is an always-on public utility, or a state machine, that sacrifices speed, scalability and fast finality to prevent tampering and censorship.
A mainnet is what ultimately allows companies to share data with other parties, without ever revealing sensitive information. This is important, as a key approach to Baselining is that everything is performed on a public blockchain under a high privacy model.
Unfortunately, performance issues, data finality problems and high costs associated with Ethereum remain a concern for many companies considering the Baseline Protocol. In addition, concerns around data privacy and government regulations are yet to be resolved when leveraging the Ethereum network for business use cases.
Baseledger: A New Mainnet for The Baseline Protocol
In order to address these issues, Provide and Unibright have authored a whitepaper detailing a new mainnet of choice for the Baseline Protocol. Known as “Baseledger,” this is a public-permissioned, council-governed network that caters to the primary requirements enterprises need to leverage the Baseline Protocol.
As described in the whitepaper, Baseledger is an “Architecture of Architectures.” This means the Baseledger network will serve as the underlying ledger for coordinating leaf node consensus; state synchronisation and configurations; and plugging in other protocols for exiting and tokenization (Layer 1), along with workflows and zero-knowledge proofs (Layer 2).
Prior to Baseledger, no other projects have aimed to coordinate Layer 1 and Layer 2 within a single, open architecture. Baseledger, however, can serve as the minimum viable protocol to serve Layer 2 functionalities and exit them into Layer 1 by storing baselined proofs in the network. Moreover, Baseledger can work as the underlying ledger for coordinating multi-chain setups, like combining Baseledger with Ethereum for enterprise DeFi (decentralized finance) purposes.
How Does Baseledger Work?
While impressive, there are some important details to note about Baseledger in regards to its consensus mechanism, token model and governance.
First off, the Baseledger network consensus mechanism that underlies any protocol pair is “Tendermint” consensus. Tendermint is discussed in detail in the whitepaper, but overall this consensus ensures that each operator running a Baseledger full or leaf node remains synchronized. As such, Baseledger can run autonomously and/or coordinate other multi-chain setups with protocol pairs.
Secondly, Baseledger will leverage Unibright’s existing UBT token to serve as its hybrid working and payment utility token. While there are tokens that serve as stores of value, or as securities, Baseledger focuses on utility tokens used for payments and work.
For example, as noted in the whitepaper, a Baseledger payment utility token model may take the same approach as the Unibright UBT token. The UBT token is a payment token that acts as a voucher or license to access certain products and services. This is done by holding UBT and locking it within Provide Payments, for example, or putting it into custody. Moreover, while many enterprises remain wary of token models for business use cases, UBT is understood as an “initial access token,” meaning UBT token balances can be refilled monthly by fiat payments, like USD. This is also done by way of Provide Payments, so enterprise procurement just works the way it does with other enterprise software.
In regards to a work token, Baseledger takes the approach that as demand for the service grows, more revenue will flow to service providers. Given a fixed supply of tokens, service providers will rationally pay more per token for the right to earn part of a growing cash flow stream. While payment tokens function as electronic money that is used to buy a resource, work tokens provide the right (via staking) to perform work in the network.
It’s also important to point out that the core feature of a tokenized ecosystem, or a public blockchain, is that it encourages participants to do work. This in mind, the planned token model for Baseledger has the potential to support both enterprise (those interested in software-as-a-service) and cryptocurrency (those interested in staking UBT and earning rewards) use cases. Ultimately, the complete vision is a token model that helps grow the Baseledge network.
Finally, Baseledger will be governed by a council consisting of recognized companies and leaders from the enterprise blockchain space and other sectors. To begin, the council is expected to have five to nine members, including founding companies. The council is set to grow consistently over time, and a written contract signed by all council members will guarantee their consent for the rules and conditions.
Baseledger in Action
While Baseledger is a new proposal, there are various ways that the network can be implemented today.
For example, consider a procurement process use case, with the potential for a tokenized invoice. There are three phases required here – an initialization phase, a phase of repeated worksteps and an exit phase.
During the initialization phase different participants will set up organization registries, workgroup shields and workflow veritiers, all according to the Baseline Protocol. A phase of repeated worksteps is then initiated, where participants baseline their business process. For instance, the document flow could start with purchase orders, and then continue with order confirmations, shipping notifications, goods receipts and subsequently invoices.
Acting as the mainnet, proofs of state synchronization are then notarized on Baseledger, without revealing the sensitive content of the business data to third parties. Finally, proof of the final state is notarized during the exit phase. This can be used as a trigger for tokenization to enable automated payment or DeFi applications.
You can view detailed example setups in the whitepaper here.