Over the last few weeks, we have covered the topic of interoperability, and the different approaches projects have taken to solve the problem. The first approach was on-chain with Polkadot and Cosmos, and last week, we covered how open-source projects like Chainlink are doing it without a blockchain.
This week we will cover the Quant Network, a closed-source project that focuses on creating interoperability between enterprise chains, governments, regulatory bodies and specific open blockchains.
They have gained traction due to this proactive regulatory approach and have positioned themselves well to capture a portion of the centralised blockchain industry.
What Is Quant Network?
The Quant Network was founded by Gilbert Verdian, an early blockchain enthusiast with a lengthy background in banking and other industries. These include companies such as Ernst & Young, HSBC, and BP Oil; he also held roles at government agencies such as Her Majesty’s Treasury, the UK Ministry of Justice, the Bank of England, and the Federal Reserve.
Before founding Quant, Verdian was part of the team that in 2015 proposed the Blockchain ISO Standard TC307. This proposal is responsible for creating a common standard across the globe, detailing how governments and organisations should build blockchains and other distributed ledger technologies (DLTs) to be interoperable, as well as several other considerations. It has found significant traction globally, with 63 countries signing up.
Source: International Organization for Standardisation
It was only in 2017 that Verdian officially announced the Quant Network, a solution to the limited interoperability between blockchains and distributed ledger technology.
In 2018, they released their Overledger OS whitepaper and conducted an Initial Coin Offering (ICO) where they intended to raise $36.9m; unfortunately, due to market conditions at the time, they only managed to raise a total of $11m. Due to the unsuccessful ICO, they raised additional money in private funding rounds, which Tech Nation led in 2019 and Sigma Capital in 2022. They have also received funding from companies such as Oracle and Lorca in the past.
In 2020 Quant officially launched their Overledger Network, the backbone of its interoperability.
Since then, they have released version 1.5 of their mainnet and Overledger 2.0. Along the way, they have also formed partnerships with several leading software brands, including Oracle, Nexi Group, LACChain and Volo.
How Does The Quant Network Work?
Quant is a platform designed to connect various blockchains and other DLTs. They have chosen to focus specifically on helping enterprises, government and regulatory bodies to be interoperable with one another. One of the first things to recognise is that Quant is a closed-source project; therefore, its code isn’t published publically, and it doesn’t share the details of how its core functionality works. Even though they have a token (QNT), they have concentrated on this centralised approach to solving the issue, something very different from many other projects with tokens in the space. This strategy is likely due to Verdian’s background working in centralised systems and seeing how blockchain could help make them more robust and efficient. Nevertheless, Verdian also realised the benefits of being connected to decentralised blockchains and integrated the ability to be interoperable with them into the network.
To achieve interoperability, Quant has four core layers: the Transaction Layer, Messaging Layer, Filtering and Ordering Layer and the Application Layer.
Source: Overledger Whitepaper
This layer is responsible for storing the transactions of the various blockchains. This is the layer that is in charge of reaching a consensus between the connected blockchains. Once a transaction has been accepted and validated, it cannot be changed.
This is the layer primarily responsible for information and data transfer. This is data that has been created by the connected blockchains. Three types of data will be processed and transferred across this layer: transaction data, smart contract data and metadata. This layer is also responsible for storing all transaction information and messages from various connected applications and translating the metadata into something understandable by all blockchains.
Filtering and Ordering Layer
This layer is also responsible for handling messages; however, it is more specific and involves sorting the data according to particular searches. This layer will provide services such as validating off-chain messages, as it will hold a complete history of messages transferred through the protocol. This layer will enable developers to create applications that trigger specific actions, such as depositing tokens to a certain network or interacting with smart contracts across different chains.
This is the layer the day-to-day user will interact with. It is the user interface and will allow individuals and enterprises to interact with all the various blockchains connected through the Quant Network. These will be highly customisable and have a high degree of flexibility in what they can do as long as they adhere to the design rules of the below layers.
All these layers create an interoperable solution and the Quant Network’s key features.
Quant Network Key Features
The Quant Network has several key features that allow it to operate and provide the service it does. It starts with the Overledger Operating System (OS).
Overledger Operating System
Overledger officially went live in June 2020. Its primary responsibility is securing the transfer of information and data on Quant. When it launched, it had the capability to connect to several public permissionless blockchains, including Bitcoin and Ethereum; it also could connect to several enterprise blockchain solutions, including Hyperledger Fabric, Corda, XRP Ledger (Ripple) and JP Morgan’s Quorum.
It isn’t known precisely how the Overledger Operating System works; however, apparently, it is similar to Google’s Kubernetes technology. In theory, it allows an unlimited number of participants to use an application without crashing. Overledger fulfils a similar role and automatically fixes any errors as soon as they appear by relying on a distributed network of nodes.
Access to the Overledger OS is permissioned; this means that not anyone can join. To connect to it, you are required to pay a variable annual licensing fee (payable in QNT tokens) that is determined by certain metrics such as company size, performance and active use of the system.
One of the core features of the Overledger OS is the Overledger DLT Gateway, which allows the OS to function and provide interoperability between chains.
The DLT Gateway is a communications protocol that sits on top of the various blockchains and DLTs that Overledger connects to. Through the REST API, users can connect to the Overledger DLT Gateway. An added benefit of this approach is that this protocol can be used without the need to interact with the various connected ledgers and chains at an application level, negating the need for consensus or forks.
This network transfers data, non-fungible tokens, fungible tokens and smart contracts from one chain to another and allows the creation of what has been dubbed mDApps.
Multi-DLT Applications (mDApps)
Within blockchain, we have traditionally dealt with decentralised applications or dApps. These are applications that exist on only one blockchain at a time.
Quant is attempting to build the ability to leverage not only one chain but multiple at the same time. Instead of being reliant on only one chain, developers will have the ability to use several at once for their unique benefits. This can be achieved with a combination of blockchain technology and other various DLTs.
While this will offer several advantages, the most significant drawback will be that the user is limited to the speed of the blockchains they interact with, which may cause issues. Nevertheless, it will allow users to pick what is most essential for them, such as the speed of Solana or the security of Bitcoin.
The Overledger DLT Gateway will also allow developers to write smart contracts in any programming language they want, even if the blockchain doesn’t natively support them. This will allow for the creation of Multi-DLT Smart Contracts.
Multi-DLT Smart Contracts
Multi-DLT Smart Contracts are very similar to the concept above; however, instead of supporting just transactions, the Overledger network can also support smart contracts on several chains simultaneously. These can unlock new use cases and applications never envisioned before. They can potentially assist enterprises and government leverage blockchain to its full capacity.
All of the services above are brought together by the native token QNT.
The QNT Token
QNT is a utility token that has been designed to be integral to the Quant Network. The developers have ensured that it is required to both access and perform functions on the network.
The QNT token is required by enterprises, developers, gateway operators and anyone who wants to use the network to pay their annual licenses. These can be paid in fiat; however, the Quant Treasury converts the fiat to an equivalent amount of QNT token by purchasing it on the open market. It is then held in a layer 2 payment channel for 12 months, where it is then moved to the Quant Treasury, where it can be used for purposes such as further network development. If users intend to renew their licenses, they must go through the same process the following year. These fees will depend on several factors, such as:
- number of users
- number of employees
- types and number of applications
- number of Overledger transactions
Users will be required to hold QNT to run mDApps and gain access to the Overledger system. As a user, your license will expire annually, and you will be required to purchase another one for continued access.
Called consumption fees in the Overledger system, you are required to lock up and pay a certain amount of QNT to perform different functions on the network. One interesting thing to note is that the more QNT you lock up and the longer you do, the cheaper your consumption fees are.
Read and Writes
Developers and enterprises are required to pay for read and writes to the Overledger system. Developers can make these payments in QNT based on a fiat amount, and enterprises can pay a fiat amount converted to QNT.
Similar to the AppStore. Quant will have a place where enterprises and individuals can go to purchase mDApps. These can be sold through various different models, including freemium (pay for in-app features), paid, subscription and in-app.
Overledger will have oracle services that can be paid in QNT tokens.
Gateway Operators (those looking after each connection) will be required to stake a specific amount of tokens in order to participate. This is very similar to how Ethereum uses Proof of Stake to secure its network.
These are a few of the primary uses of the QNT token; for a complete list and explanation, you can read the following article.
The Future of the Quant Network
Quant has taken the approach of collaboration. It has positioned itself to sit between traditional organisations/enterprises, governments and regulatory bodies and public permissionless networks.
As Central Bank Digital Currencies continue to be explored around the world, they will also require a trusted party to rely on while leveraging some of the benefits of open systems.
Quant can make these traditional parties feel comfortable and in control, which is something that will most likely be required for them to embrace the benefits blockchain can provide.
Quant is an interesting project that diverges from the traditional crypto industry approach. Only time will tell whether open or closed systems win. It may be a combination of both.
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This is not financial advice. All opinions expressed here are our own. We encourage investors to do their own research before making any investments.