This document discusses using Corda and blockchain technology to support trade finance through letters of credit. It provides an overview of Corda and its goals in trade finance, including payments, KYC/KYS, and negotiable title documents. The document outlines R3's focus on trade business networks, invoice management solutions, and core banking providers. It then demonstrates a scenario of using Corda for electronic bills of lading and describes the components of a Corda application, including states, contracts, and flows.

1. 1
1
Supporting Trade Finance with
Letters of Credit and Corda

2. Youtube
youtube.com/cordablockchain
Free Training
training.corda.net
Public Slack
slack.corda.net
Documentation
docs.corda.net
Github Repository
github.com/corda
Email
r3devrelations@r3.com
@Cordablockchain, @inside_r3
Hashtags: #Corda, #r3
Our Goals for Today

3. • Brief overview of Corda and Blockchain in Trade Finance
• Brief Introduction to Corda
• Introduction to Bills of Lading in Trade Finance
• Demo of our revamped Letter of Credit CorDapp
Our Goals for Today

4. • Payments and Settlement on Ledger
• KYC and KYS
• Negotiable Title Documents
Examples:
• Running experiments with TradeShift, GTNexus, BankTrade, and Temenos
• Finastra, Intellect, and Infosys are planning to build new products with Corda
Themes R3 is focusing on for Trade Finance

5. • Trade Business Networks like Tradeshift, PrimeRevenue, Aronova
• Invoice Management Solutions like Taulia, Basware, and Esker
• Core Banking Providers like Temenos, Infosys, Oracle, and SilverLake
• Other Uses like custody transfer, contract management, and commodities
management
Themes R3 is focusing on for Trade Finance

6. Trade Finance is somewhat well understood. So let’s
define some intuitive requirements:
• The ability to monitor digital assets
• The ability to accept and manage derivative assets like
debt instruments
• The ability for sellers to communicate with banks to
receive letters of credit
• Rock-solid infrastructure and 24/7 availability.
Our Scenario: Electronic Bill of Lading

7. • Corda nodes for notary, central
banks, product exporters, and
importers
• webserver and website for
customers and bank employees to
access
• Fun fact: Bolero provides a
product for electronic bill of lading
as a service with Corda!
Software Stack for our Letter of Credit Cordapp
* Source: BOLERO

8. Quick Recap of the Components of a CorDapp
(Smart Contracts on a Corda network)
2. Contract:
Verify the transactions
3. Flow:
Execute the business logic
1. State:
The object in Corda State
1. Get consumed
2. Get updated
3. Get stored

9. Corda States in a Cordapp
• States are the objects we want to represent digitally.
• They only exist in the participating nodes of the specific transactions.
• For Example: TokenState
TokenState
implements ContractState
PROPERTIES
Party issuer
Party owner
int amount

10. Corda States in a Cordapp
• States are the objects we want to represent digitally.
• They only exist in the participating nodes of the specific
transactions.
TokenState
implements ContractState
PROPERTIES
Party issuer
Party owner
int amount
ALICE
BOB
ED
CARL
DEMI
1
7
5
9
4 3
2
6
8

11. Existing State
Input
Desired
Output State
Output
Calculation
Encapsulate into
Transaction
Desired
Output State
Output
Existing State
Input
Transaction
Corda Contracts in a CorDapp
✅
✅
✅
Contract Rules：
Rule #1
Rule #2
Rule #3
Rules need to be
followed during a
transaction
Ledger update
Recording
• Ledger update is done through transactions in the flows
• Contracts verify the validity of a transaction: SUCCESS ✅

12. Existing State
Input
Desired
Output State
Output
Encapsulate into
Transaction
Desired
Output State
Output
Existing State
Input
Transaction
✅
✅
❌
Contract Rules：
Rule #1
Rule #2
Rule #3
Rules need to be
followed during a
transaction
！REJECT！
Ledger update
Recording
Calculation
Corda Contracts in a CorDapp
• Ledger update is done through transactions in the flows
• Contracts verify the validity of a transaction: FAILURE ❌

13. Issuance Transaction
No inputs
One output,
amount is positive
One issue command,
issuer is required signer
TokenState
issuer
owner
amount > 0
participants = issuer, owner
Issue
(issuer)
Inputs Outputs
Corda Contracts in a CorDapp

14. Corda Contracts in a CorDapp
sss
1. No inputs
2. One output
3. Output is TokenState
4. Issuer is required signer
5. Owner must be required signer
6. Owner's Amount field is positive
TokenContract.java
implements Contract
public void verify(LedgerTransaction tx) {
}
• Our contract code in TokenContract.java

15. SIGN
UPDATE
PROPOSE
UPDATE
SEND
(UPDATE + 2 SIGS)
CHECK
UPDATE
NOTARY
POOL
SIGN
UPDATE
SEND
(UPDATE + 3 SIGS)
END
SEND
(UPDATE + 3 SIGS)
RECORD
UPDATE
RECORD
UPDATE
END
END
NODE A
NODE B
SIGN
UPDATE
SEND
(UPDATE + 1 SIG)
SEND
(UPDATE + 2 SIGS)
CHECK
UPDATE
Corda Flows in a CorDapp
• Flows execute the business logic
• Flows consist of two classes (Initiator & Responder)

16. • Buyer creates purchase order
• Buyer applies for letter of credit
• Buyer's bank accepts application
• Seller adds bill of lading and ships
• Seller's bank pays seller
• Buyer's bank pays seller's bank
• Buyer's bank loans cash to buyer
• Buyer pays their bank
Implementing Our Bill of Lading
B.
Bank
Buyer
Applies for letter of credit
Buyer’s Bank
Pays Seller’s Bank
On Credit for Buyer
S.
Bank
Seller
Buyer creates purchase order
Bank Approves L. O. C.
Seller Creates Bill of Lading
Seller’s Bank
Pays Seller

17. Let's do a demo !

18. Let's look at the code . . .

19. Additional Resources
• Source code of the Original Letter of Credit CorDapp :
https://github.com/davidawad/LetterOfCreditBackup
• Source code of the Original Letter of Credit App Frontend:
https://github.com/davidawad/LetterOfCreditWebBackup
• Source code of the Revamped Letter of Credit CorDapp:
https://github.com/davidawad/letter-of-credit-revamp

20. Any Questions?

21. r3.com | corda.net
Thank you for watching!
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