Yuval Rooz: Achieving on-chain capital markets requires solving privacy and settlement finality, misconceptions about Canton are unfounded, and super validators play a crucial role in transaction processing

Key takeaways

Achieving on-chain capital markets requires addressing settlement finality and privacy concerns.
Canton faces criticism due to its successful partnerships, not its operational model.
Misconceptions about Canton being a centralized database are unfounded.
Criticism of Canton’s execution and objectives often stems from misunderstandings.
Partnerships with traditional finance institutions highlight Canton’s integration efforts.
Canton lacks some foundational blockchain properties, raising questions about its classification.
Atomic composition of smart contracts with privacy is a unique feature of Canton.
Canton prevents double spending using a UTXO model similar to Bitcoin.
Super validators on Canton act as a decentralized ordering service.
Super validators coordinate and timestamp transactions without seeing them.
Understanding the role of super validators is crucial for grasping Canton’s transaction processing.
Canton offers unique capabilities not achievable on other blockchains.

Guest intro

Yuval Rooz is co-founder and CEO of Digital Asset, a New York-based enterprise blockchain company that provides infrastructure for institutional-grade financial systems. Before founding Digital Asset in 2014, he managed an algorithmic trading desk at DRW Trading and worked as a trader and developer at Citadel, where he built computer models during the financial crisis. Rooz played a pivotal role in developing the Canton Network, a privacy-preserving public blockchain now used by JPMorgan, the DTCC, HSBC, and other major financial institutions globally.

Overcoming challenges in on-chain capital markets

To achieve on-chain capital markets, it’s essential to address the challenges of settlement finality and privacy for issuers.

— Yuval Rooz
Convincing issuers to move their records on-chain requires solving settlement finality and privacy issues.
You need to be able to convince issuers to move their books and records to be natively on chain.

— Yuval Rooz
Privacy concerns are a significant barrier for issuers considering on-chain solutions.
How do you give settlement finality and get an issuer to be comfortable if they don’t want their books and records to be public?

— Yuval Rooz
Integrating traditional financial records with blockchain technology is complex.
Understanding the complexities of integrating traditional financial records with blockchain technology.

— Yuval Rooz
Addressing these challenges is critical for the adoption of on-chain capital markets.

Misconceptions and criticisms of Canton

The criticism against Canton is largely unfounded and stems from its successful partnerships.

— Yuval Rooz
Successful partnerships have led to criticism of Canton, not its operational model.
If people really had those topics deep in their heart and really said that this is not good for the industry, I would say that those topics would have come about.

— Yuval Rooz
Misconceptions about Canton being a centralized database are incorrect.
Some of the things that have been said, Canton is a centralized database with a coin on top of it, are all things that are not true.

— Yuval Rooz
Understanding what constitutes a centralized versus decentralized network is essential.
Criticism often stems from perceived biases against certain projects.
This insight provides a strong viewpoint on the nature of criticism in the crypto industry.

— Yuval Rooz

Execution and objectives of Canton’s project

The criticisms faced by our project stem from a misunderstanding of our execution and objectives.

— Yuval Rooz
Misunderstandings about Canton’s execution lead to criticism.
I would love to understand how what we’re doing is so existential for this industry and is so terrible compared to other things.

— Yuval Rooz
Partnerships demonstrate Canton’s commitment to integrating traditional finance with blockchain.
We just announced a partnership in Japan with Mizuho and Nomura and JPX around tokenized JGBs.

— Yuval Rooz
Execution of partnerships is a key aspect of Canton’s strategy.
Last week it was HSBC Payments, and we’re just executing on those things.

— Yuval Rooz
Bridging traditional finance and blockchain is central to Canton’s approach.

Canton and the definition of blockchain

Canton is not truly a blockchain despite its claims, as it lacks the foundational properties that define blockchain technology.

— Yuval Rooz
Questions arise about Canton’s classification as a blockchain.
It’s really about the properties when you say blockchain, you’re tapping into more than a decade of an industry with certain values.

— Yuval Rooz
Understanding fundamental blockchain characteristics is essential.
This insight challenges the definition of blockchain and critiques Canton’s claims.

— Yuval Rooz
The debate on Canton’s classification highlights differing views on blockchain technology.
I believe and like I would like to understand it better in this debate that Canton is not really a blockchain.

— Yuval Rooz

Unique features of Canton

Canton enables atomic composition of smart contracts with privacy, which is not achievable on other blockchains.

— Yuval Rooz
Atomic composition with privacy is a unique feature of Canton.
That’s what you can achieve on Canton that you cannot achieve on other blockchains.

— Yuval Rooz
Canton’s UTXO model prevents double spending, similar to Bitcoin.
The issuer of an asset can be a real-world issuer or a decentralized party like Bitcoin.

— Yuval Rooz
Understanding the UTXO model is crucial for grasping Canton’s mechanics.
This claim provides insight into the operational mechanics of Canton.

— Yuval Rooz

Role of super validators in Canton

Super validators on Canton act as a decentralized ordering service rather than validating the business logic of assets.

— Yuval Rooz
Super validators differ from traditional validators in their role.
They behave more like ISPs on the internet.

— Yuval Rooz
Understanding super validators is key to understanding Canton’s operations.
They act as an ordering, a decentralized ordering service, but they’re not validating the actual business logic of the asset.

— Yuval Rooz
Super validators coordinate and timestamp transactions without visibility.
The super validators purely act as a coordination layer and a timestamping layer.

— Yuval Rooz
Their role is crucial for transaction processing in Canton.