Page 22 - PROJECT KHOKHA 2

THE PROOF-OF-CONCEPT
Proof-of-concept technical objectives
While several potential benefits were considered during the design process, the following stood out as the primary opportunities to explore during the PoC:
• Lowering the barrier to entry for new market entrants by using DLT to reduce the minimum infrastructure requirements, systems costs and operational requirements for participation.
• Simplifying the reconciliation requirements in the settlement processes of all parties, including new capacity such as transparent visibility of market liabilities against a trading member or specific security held by a trading member, by consolidating several current market infrastructure components onto a single shared ledger.
• Enabling innovation opportunities through DLT-based securities trading and helping
to prepare local markets for growing global adoption of wCBDC and other tokenised securities. This would lay the foundation for interoperability between DLT networks (private, permissioned and even public) and their applications – especially in expanding the utility of wCBDC on multiple networks.
The debenture token market proof-of-concept
The co-design process resulted in the PK2 PoC multi-DLT debenture token market consisting of two core DLT networks – the wCBDC Zone, housing the wCBDC prototype; and the Khokha Hub, housing the debenture token and wToken prototypes. Debentures are bought in the primary market with wCBDC, while they are bought in the secondary market with the wToken (called Khokha Tokens
4
in the PoC). In addition, FDM Tokens were also
created to facilitate secondary market trade of the debenture tokens using a fractionalised order book.
4 The FDM Tokens were created as a synthetic instrument to combine the principal value (debenture tokens locked in custodial wallets in the Khokha Hub) as well as the interest value of a debenture before maturity in order enable its trade in the secondary market. Interest for a particular debenture non- fungible token (NFT) is paid in wCBDC via the FDM contract, which executes maturity obligations similar to a MaFISI in the current market.
22 PROJECT KHOKHA 2