Business & Information Systems Engineering

, Volume 59, Issue 6, pp 457–467 | Cite as

Automated Execution of Financial Contracts on Blockchains

  • Benjamin Egelund-Müller
  • Martin Elsman
  • Fritz Henglein
  • Omri Ross
Research Paper
  • 42 Downloads

Abstract

The paper investigates financial contract management on distributed ledgers and provides a working solution implemented on the Ethereum blockchain. The system is based on a domain-specific language for financial contracts that is capable of expressing complex multi-party derivatives and is conducive to automated execution. The authors propose an architecture for separating contractual terms from contract execution: a contract evaluator encapsulates the syntax and semantics of financial contracts without actively performing contractual actions; such actions are handled by user-definable contract managers that administer strategies for the execution of contracts. Hosting contracts and contract managers on a distributed ledger, side-by-side with digital assets, facilitates automated settlement of commitments without the need for an intermediary. The paper discusses how the proposed technology may change the way financial institutions, regulators, and individuals interact in a financial system based on distributed ledgers.

Keywords

Blockchain Domain specific language Financial services Distributed ledger 

Notes

Acknowledgements

We thank Sofus Mortensen for suggesting the topic of financial contracts on distributed ledgers.

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Copyright information

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2017

Authors and Affiliations

  • Benjamin Egelund-Müller
    • 1
  • Martin Elsman
    • 1
  • Fritz Henglein
    • 1
  • Omri Ross
    • 1
  1. 1.Department of Computer ScienceUniversity of CopenhagenCopenhagenDenmark

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