github.com/true-sqn/fabric@v2.1.1+incompatible/docs/source/developapps/scenario.md (about)

     1  # The scenario
     2  
     3  **Audience**: Architects, Application and smart contract developers, Business
     4  professionals
     5  
     6  In this topic, we're going to describe a business scenario involving six
     7  organizations who use PaperNet, a commercial paper network built on Hyperledger
     8  Fabric, to issue, buy and redeem commercial paper. We're going to use the
     9  scenario to outline requirements for the development of commercial paper
    10  applications and smart contracts used by the participant organizations.
    11  
    12  ## PaperNet network
    13  
    14  PaperNet is a commercial paper network that allows suitably authorized
    15  participants to issue, trade, redeem and rate commercial paper.
    16  
    17  ![develop.systemscontext](./develop.diagram.1.png)
    18  
    19  *The PaperNet commercial paper network. Six organizations currently use PaperNet
    20  network to issue, buy, sell, redeem and rate commercial paper. MagentoCorp
    21  issues and redeems commercial paper.  DigiBank, BigFund, BrokerHouse and
    22  HedgeMatic all trade commercial paper with each other. RateM provides various
    23  measures of risk for commercial paper.*
    24  
    25  Let's see how MagnetoCorp uses PaperNet and commercial paper to help its
    26  business.
    27  
    28  ## Introducing the actors
    29  
    30  MagnetoCorp is a well-respected company that makes self-driving electric
    31  vehicles. In early April 2020, MagnetoCorp won a large order to manufacture
    32  10,000 Model D cars for Daintree, a new entrant in the personal transport
    33  market. Although the order represents a significant win for MagnetoCorp,
    34  Daintree will not have to pay for the vehicles until they start to be delivered
    35  on November 1, six months after the deal was formally agreed between MagnetoCorp
    36  and Daintree.
    37  
    38  To manufacture the vehicles, MagnetoCorp will need to hire 1000 workers for at
    39  least 6 months. This puts a short term strain on its finances -- it will require
    40  an extra 5M USD each month to pay these new employees. **Commercial paper** is
    41  designed to help MagnetoCorp overcome its short term financing needs -- to meet
    42  payroll every month based on the expectation that it will be cash rich when
    43  Daintree starts to pay for its new Model D cars.
    44  
    45  At the end of May, MagnetoCorp needs 5M USD to meet payroll for the extra
    46  workers it hired on May 1. To do this, it issues a commercial paper with a face
    47  value of 5M USD with a maturity date 6 months in the future -- when it expects
    48  to see cash flow from Daintree. DigiBank thinks that MagnetoCorp is
    49  creditworthy, and therefore doesn't require much of a premium above the central
    50  bank base rate of 2%, which would value 4.95M USD today at 5M USD in 6 months
    51  time. It therefore purchases the MagnetoCorp 6 month commercial paper for 4.94M
    52  USD -- a slight discount compared to the 4.95M USD it is worth. DigiBank fully
    53  expects that it will be able to redeem 5M USD from MagnetoCorp in 6 months time,
    54  making it a profit of 10K USD for bearing the increased risk associated with
    55  this commercial paper. This extra 10K means it receives a 2.4% return on
    56  investment -- significantly better than the risk free return of 2%.
    57  
    58  At the end of June, when MagnetoCorp issues a new commercial paper for 5M USD to
    59  meet June's payroll, it is purchased by BigFund for 4.94M USD.  That's because
    60  the commercial conditions are roughly the same in June as they are in May,
    61  resulting in BigFund valuing MagnetoCorp commercial paper at the same price that
    62  DigiBank did in May.
    63  
    64  Each subsequent month, MagnetoCorp can issue new commercial paper to meet its
    65  payroll obligations, and these may be purchased by DigiBank, or any other
    66  participant in the PaperNet commercial paper network -- BigFund, HedgeMatic or
    67  BrokerHouse. These organizations may pay more or less for the commercial paper
    68  depending on two factors -- the central bank base rate, and the risk associated
    69  with MagnetoCorp. This latter figure depends on a variety of factors such as the
    70  production of Model D cars, and the creditworthiness of MagnetoCorp as assessed
    71  by RateM, a ratings agency.
    72  
    73  The organizations in PaperNet have different roles, MagnetoCorp issues paper,
    74  DigiBank, BigFund, HedgeMatic and BrokerHouse trade paper and RateM rates paper.
    75  Organizations of the same role, such as DigiBank, Bigfund, HedgeMatic and
    76  BrokerHouse are competitors. Organizations of different roles are not
    77  necessarily competitors, yet might still have opposing business interest, for
    78  example MagentoCorp will desire a high rating for its papers to sell them at
    79  a high price, while DigiBank would benefit from a low rating, such that it can
    80  buy them at a low price. As can be seen, even a seemingly simple network such
    81  as PaperNet can have complex trust relationships. A blockchain can help
    82  establish trust among organizations that are competitors or have opposing
    83  business interests that might lead to disputes. Fabric in particular has the
    84  means to capture even fine-grained trust relationships.
    85  
    86  Let's pause the MagnetoCorp story for a moment, and develop the client
    87  applications and smart contracts that PaperNet uses to issue, buy, sell and
    88  redeem commercial paper as well as capture the trust relationships between
    89  the organizations.  We'll come back to the role of the rating agency,
    90  RateM, a little later.
    91  
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