The Rise and Fall of Blockchain Consortia
In today's interconnected business world, multi-party processes have become a Gordian knot of complexity, as we explored in our Data Sharing Evolution Series. Many-to-many digitized collaboration and integration with external systems and stakeholders have become essential.
This is particularly acute in industries like telecommunications, where a single international roaming transaction can involve dozens of parties, each with its own systems and data formats.
In the mid-2010s, blockchain technology emerged as a transformative solution for automating complex, multi-party processes, leading to the formation of blockchain consortia—alliances of companies building shared networks to create a single source of truth and reduce inefficiencies.
In this blog series, 'From Consortia to Cooperatives: The Evolution of Multi-Party Business Automation,' we’ll trace the journey from the ambitious beginnings of blockchain consortia to their eventual demise and the emergence of digital cooperatives.
TradeLens: Digitizing the Global Supply Chain
In 2018, Maersk and IBM launched TradeLens, a blockchain platform aimed at digitizing the global supply chain. The platform sought to reduce shipping times, minimize paperwork, and improve visibility across the logistics networks. TradeLens initially showed promise, processing over 2 billion shipping events and 30 million containers by 2020.
However, the platform faced significant challenges. Competing shipping lines, such as CMA, CGM, and Mediterranean Shipping Company, were hesitant to join a Maersk-controlled platform, creating adoption barriers. As participants increased, varying data formats hindered interoperability. These issues compounded, undermining TradeLens' ability to deliver on its promise. Despite substantial investment, Maersk discontinued TradeLens in late 2022, highlighting the difficulties of achieving widespread adoption.
Marco Polo: Collaboration in Trade Finance
Launched in 2017, Marco Polo was a consortium of banks and technology providers aiming to streamline trade finance operations and reduce the reliance on paper-based processes and manual checks. Marco Polo demonstrated early success with pilot transactions, including a 2019 trade between Germany and China that significantly reduced processing time.
However, as Marco Polo scaled, banks struggled to agree on data-sharing protocols and corporate clients were reluctant to adopt a new platform. The complexity of integrating with diverse banking infrastructures and navigating varying regulations added further challenges. By 2021, Marco Polo had completed only a limited number of live transactions, falling short of its objectives for industry-wide transformation.
B3i: Coordination in the Insurance Industry
Formed in 2016, B3i brought together 15 major insurers and reinsurers to explore blockchain applications in insurance. The consortium aimed to improve claims processing, automate contracts, and reduce frauds. B3i's early developments included securing $20 million in funding and launching a catastrophe excess of loss product.
However, as B3i expanded, it encountered significant technological and operational challenges. The platform struggled with performance issues and high transaction costs, compounded by the difficulty of translating complex insurance contracts into standardized smart contract terms. As efforts to standardize stalled, enthusiasm for the project faded. In July 2022, B3i filed for insolvency, illustrating the complexities of implementing blockchain solutions in the insurance sector.
The Legacy of Blockchain Consortia
Despite the strong demand for digital transformation, these consortia exposed that organizational and governance challenges were just as significant as technical ones. Their struggles underscored key areas that future multi-party coordination solutions must tackle:
Neutral Ownership: TradeLens' adoption struggles underscore the need for platforms to be seen as impartial to gain industry-wide acceptance.
Interoperability: Marco Polo's data-sharing protocol issues emphasize that seamless integration with existing systems is essential for widespread adoption.
Agile Governance: B3i's failure to achieve consensus on standardized smart contract terms highlights the need for efficient and adaptable decision-making structures.
Privacy and Control: Corporate hesitation to join Marco Polo shows that businesses require strong guarantees of data privacy and control.
Scalability: The performance issues faced by TradeLens and B3i illustrate that solutions must handle real-world transaction volumes without compromising performance.
Interweave's Vision: The Next Step in Multi-Party Collaboration
Drawing from years of research and lessons from early blockchain innovation, Interweave has developed a vision for digital cooperatives that addresses the challenges faced by previous consortia. Our approach combines advanced cryptography, flexible governance, API-based integration, and privacy-preserving cryptographic techniques to create a new paradigm for multi-party business automation. Interweave's platform represents a leap forward in secure, efficient collaboration across organizational boundaries.
In our next blog, we'll explore how these lessons have shaped the emergence of Decentralized Autonomous Organizations (DAOs) in the enterprise space. We'll examine how DAOs can build upon the well-known and legally established Cooperative model while introducing new mechanisms for governance, collaboration, and decision-making. Join us as we uncover the potential of enterprise DAOs to revolutionize multi-party business processes to reduce costs, create new revenue streams, and pave the way for truly decentralized cooperation.
Learn more or reach out at interweavetech.io.
