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‘I don’t mention blockchain by design — it lets our customers think about the semantics of their business’: Shaul Kfir, Digital Asset

  • Digital Asset works with some of the largest FIs around the world, digitally connecting institutions and their partners.
  • As comfortable using blockchain as Oracle databases, co-founder Shaul Kfir joins us on the podcast to discuss the company's future prospects.

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‘I don’t mention blockchain by design — it lets our customers think about the semantics of their business’: Shaul Kfir, Digital Asset

We’ve got Digital Asset’s Shaul Kfir on the show today. Digital Asset helps power what it calls the Global Economic Network, an ecosystem of interconnected global networks across which information and value are transacted seamlessly. If the internet is the network of networks, that’s what Digital Asset is creating around financial services firms. Think of a global settlement network that includes multiple financial firms and can connect in blockchain just as well as it can an Oracle database.

Shaul talks about the firm’s new rollout of its software Daml 2.0 and how its evolved over time. We also discuss the partnership Digital Asset cut with SETL on the blockchain protocol which will underpin the Regulated Liability Network. If you’re looking for a view into where the world is headed with blockchain and the incumbent financial industry, you’re going to want to pay attention.

Shaul Kfir is my guest today on the Tearsheet Podcast.

If you’d like to access more of our coverage on blockchain, subscribe to our Bankchain Newsletter.

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The following excerpts were edited for clarity.

Digital Asset

Digital Asset is a software company. Our tools help financial institutions and other enterprises build networks and applications that span across organizations driving their economic value. So we have a core technology called Daml, which is an open source platform for building these multi party applications. But at its core, Daml contains a smart contract language and some powerful tooling that lets the customers define the data schemas, semantics, and execution of transactions between parties. So this can be across an industry, across multiple financial institutions like multiple banks, within an industry that wants to create some sort of new networks, new workflow, and new application across those companies.


We have a large base of customers within the financial space. So for example, we count five of the top 10 global exchanges as our customers and many other tier one financial firms. One example is the ASX, the Australian Securities Exchange. They're using Daml to completely replace their clearinghouse and electronic register system called Chess with a smart contract based solution. So when the new version of Chess goes live, any financial institution in Australia that’s connected to Chess can actually participate in a distributed network, where they themselves are a node in that network, in real time, seeing the changes of their positions and the transactional workflows in Chess.

New way vs. the old

There are multiple problems that our customers are trying to solve. But I think, first and foremost, it's very hard to develop and operate software that lets enterprises transact with each other. And when I say transact, I'm talking about the technical term ‘transact’ as in the transaction that happens across enterprises -- that each enterprise needs to run their own systems and serve their own data. But these silos make multi party workflows very, very slow and inconsistent and opaque. 

These disconnected systems across multiple companies require constant reconciliation and operational overhead. And they increase the risk to the enterprises because they don't necessarily have a real time intraday view of what their positions are. This lack of communication is a problem and also slows down the innovation in the space because now, every time we want to change, to roll out a new product to change a workflow, all of these enterprises need to agree on the change in the workflow. They need to each upgrade their own system at their own pace and coordinate all of this. And it makes upgrades that seem very trivial take years sometimes. That's a huge problem. 

Now it's much easier to go and together define these data schemas and semantics, and to upgrade in lockstep with everyone. We have real time reconciliation. So we always have a constant, honest and true view that's always synchronized with all of our counterparties, reducing a lot of this risk.


I don’t mention blockchain by design. It lets our customers really think about the semantics of their business. They don't need to care about how the runtime actually works. Then we provide drivers for multiple different technologies, and some of our customers choose to run on blockchains. For example, the Australian Securities Exchange that I mentioned decided to go with the VMware blockchain. But some other customers, for example, the Hong Kong Exchange, decided to go with their own technologies, like with the time tested Oracle databases that they're used to using. 

Our technology knows how to federate these different instances of Oracle databases or Postgres databases, to give the same experience that people expect from blockchains. So really, you can deploy Daml applications to blockchains or to traditional databases. 

Also, the word blockchain means different things to a lot of people. And I think there are two big buckets. There's the new asset class: the cryptocurrency side of things and stablecoins. That's one thing. That's not our focus. Our focus is on building technology, taking the same concepts of blockchain, taking the same vision, and sometimes some of the public blockchains, but applying that to build better enterprise software that reduces those silos across organizations.

Daml 2.0

Maybe it’s best to explain a little bit about Daml 1.0. Daml will solve that problem that I mentioned by building these multi party applications. Our company started in 2014, and the co founders came from the public blockchain space. We were very involved in the early days of cryptocurrencies and we wanted to apply those same learnings to enterprises. But there was this kind of chicken and egg problem where you have a lot of the machines saying, 'Here's the best network in the world. Just join our network.' But that's that's not how enterprises work and think, and we had to provide value from day one, and really prove that this new technology provides a lot of value straight off the bat for people to use. 

So at one point, we really focused on how we get all of the right tools and all the right structure to give the highest productivity to our customers, where they can really see the value from day one. The limitation there was that each of these applications has its own network. You can think of this as slightly larger data silos, and this is very similar to everything that happened in the private blockchain space which said, 'Now we have a multi party network across multiple organizations. They are using Daml, and they build these applications that really solve a lot of their problems. But they don't yet go fully towards that vision of a Global Economic Network based on the things we've been hearing a lot from the public blockchain advocates. 

This brings me to Daml 2.0. First of all, it brings interoperability across all of these networks. If you look at each and every Daml customer that is already in production, using them for their network -- Daml 2.0 allows all these networks to connect and behave as a single network. Conceptually, I think of it kind of like the internet -- it’s a network of networks, but we tend to think of the internet as just one thing. I don't really think about how the internet is deployedm I just connect to it through my browser. Daml 2.0 gives that same experience where if I'm a bank, and I'm connected to the Hong Kong Exchange, the Australian Securities Exchange, Deutsche Boerse, NASDAQ (all of these are Daml users), but I feel as if I'm just connected into one Daml network, not into multiple different Daml networks. So it really starts giving that feel of a much more global economic network. 

Each of these institutions can make their own technology choices. Some will be on Oracle Database, some like Postgres and some will be on the blockchain. These all connect and give one feeling of one experience.

Public blockchains

Public blockchains give you this ability to transact and to write workflows across multiple parties or multiple companies. But they don't give you that with the privacy and all the security tools that enterprises need. So that is a technology problem and giving that great developer experience and making the user very productive -- that's a user experience challenge as well as technology challenge.

FI readiness for blockchain

It's a great question. I think our tools really look like enterprise tools -- they don't look like Ethereum smart contracts or something like that. So from the perspective of developers, they're ready. They look at it, and it feels like the things they know -- maybe the language is a bit different, because it has slightly different constructs, but the integrations into their enterprise environment, into their security tools, into their identity management tools, all that looks and feels the same as anything they are used to seeing. 

It took some time from an educational perspective to get people comfortable with this idea of a network spanning organizations. But I think this is where we have come: blockchains are now 12 years old and enterprise blockchains are seven years old. We've gotten to the point where we're no longer educating and getting that pushback -- it's more around that concrete 'How do I integrate into this system or that system? And how do I report to the regulators?'

So we're now in the nitty gritty of enterprise use cases. And that's great. We have enough production use cases already, where it's already proven technology, although not with too many years of runway, but it is proven technology, and it's working I'd also say that once almost all of our customers start with one use case, they continue to do a second and a third use case and they go more and more towards their core business. So it's really proven -- we have those customer testimonials already.

Use cases

Another large company in the financial space is Deutsche Boerse. Deutsche Boerse is using us to build a digital post trade platform called D7 to support the digitization of German securities. There is a government mandate in Germany to digitize all of its issuances. This platform is going to provide a fully digital alternative to conventional physical issuance of securities. 

A key component of this platform, which went live in December 2021, is the digital central registry. They expect to have 80% of German securities digitized by mid year. So from our perspective, Digital Asset is a great match for D7 to connect into these different networks of the industry.

Partnership with SETL

This is a new partnership to create a new protocol, which can be used by regulated institutions to launch interoperable tokens. It's modeled on something called the Regulated Liability Network, or RLN, which is an initiative that was first proposed by Citibank's Tony McLaughlin. 

It will be developed and operated as part of a global RLN network. The idea is to enable banks, central banks, and other regulated institutions to create tokens for their customers, which represent liabilities. If we think of how the two tiered banking system already works, everything is liabilities on the balance sheet. The idea that Citi introduced was as a complementary aspect to a lot of discussion recently about central banks moving to a more digital currency-type technology. 

They suggested, 'Let's take the current way that banks work with these liabilities and move this on to a newer technology.' This goes into the transactional aspect of Daml: if we could actually have balance sheet changes, which represent the liabilities changes that have that transactional cross network of banks -- then you get a much more seamless and interconnected network that will allow a lot of use cases like international settlement.

We are working together with SETL to implement this. At the start, this network is going to provide all the scalability and the privacy that come with both our technology and SETL’s technology.

Recent fundraising

We're continuing to build out -- there is a lot more to be built as we continue working on the vision and to scale the company. We've done this pretty much without a marketing and sales function in the company. We've been heads down for years working on the product itself. We're really looking to use these funds to achieve the scale that our customers expect of a technology company that powers their very core infrastructure. So we will be investing more in our partnerships, in our growth, sales, support, and continued hiring of developers and product people. 

There's so much more we want to build. We are getting more requests, more customers, and want to continue giving a great developer experience.

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