Built by Ernst & Young (EY) and ConsenSys, Baseline Protocol is an enterprise solution built on the public Ethereum network.
The Baseline Protocol is an open-source initiative, built on the public Ethereum blockchain, that attempts “to deliver secure and private business processes at low cost”.
Built by Ernst & Young (EY) and ConsenSys, it was launched in March 2020 as part of the Ethereum OASIS project and supported by an initial pool of 14 companies, including Microsoft and other participants of the Ethereum Enterprise Alliance.
The Baseline Protocol finds its foundation on Ethereum: its mission is to become “the common frame of reference between systems” by leveraging the Ethereum public blockchain as a settlement layer. This protocol wishes to include normal corporate systems of record, any kind of database, state machine, and potentially include other blockchains (or distributed ledgers).
Despite its nascency, Baseline Protocol has already featured an initial proof of concept for supply chain applications, allowing participants to participate in a transparent product procurement process. Its demo protocol, named Radish34, attempts to solve the issue of knowledge privacy in public blockchains through the use of atomic compartmentalization.
EY and ConsenSys concluded that proprietary systems for businesses often lead to severe issues in how data is shared from one system to the other. Consequently, hundreds of millions of dollars are reportedly being spent on ERPs, CRMs, and other internal systems that are designed to record proprietary information of all kinds.
Furthermore, this “lack of synchronization” between systems is estimated to cause a lot of disruptions in how businesses operate. This leads to clear consequences ranging from direct costs to regulatory actions, and data information leakage.
As a consequence, the teams behind the Baseline Protocol believe in establishing a “common frame of reference” (i.e., the Baseline Protocol), with Ethereum serving as its foundation layer.
The Baseline Protocol acts as the standardized library of components allowing multiple Middleware to build their proprietary applications, yet making them fully interoperable. The protocol leverages the use of Ethereum (referred to as “Mainnet”) without the need to reveal sensitive data to a public network.
Ethereum (“Mainnet”) acts as the foundation layer of the Baseline Protocol. According to its documentation, it serves as the “public good” for enterprises to build data management solutions thanks to Ethereum’s perceived properties of decentralization and censorship-resistance.
In short, Mainnet is considered as the state machine equivalent of the Internet. Within the Baseline protocol, Ethereum serves the purpose of being the Mainnet candidate of choice.
In the Baseline Protocol, Middleware are interpreted as systems of record that are maintained by legal entities that wish to establish a common frame of reference to run business process integration across them.
For instance, let’s assume two suppliers need to work together on sharing their inventories: Alice is an Apple Retailer and is the sole supplier of Apple products for Bob, an electronic retailer. Bob wants to notify in real-time that its supply of MacBook Pro runs low, and need to order new computers. However, he does not wish to share information about his entire inventory. Typically, Alice and Bob would run different systems together with alternative proprietary software solutions. A protocol like Baseline would contribute to connecting both Middleware, fostering the use of Ethereum, owing to the baselining of their respective ERPs.
The Baseline Protocol consists of a library of components and procedures that aim to become the standard in multiple industries by maintaining both record consistency and workflow integrity through the use of a permissionless blockchain (i.e., Ethereum, also referred to as “Mainnet”).
By doing so, the Baseline Protocol still allows the separation of multiple systems of records between parties, yet, leveraging the decentralization and distributed properties of Ethereum.
In general, two transacting parties (in this case, businesses) need not have access to all information from other parties. Precisely, one party does not need to know any information or process it has no stake in.
Conversely, the use of public permissionless networks like Ethereum is typically seen as fully transparent to third parties. Anyone can analyze the blockchain and obtain valuable information about a single account pattern, as best illustrated by the growth of various on-chain analytics companies. In short, no business would be keen to share information about its internal processes to the public. For instance, employees' payrolls would typically not be data that are desirable to be shared where anyone can freely consult the figures.
Yet, the use of a single frame of reference is required for two parties to maintain consistency and continuity with other state machines.
Atomic compartmentalization refers to a proposed property that must be achieved by the Baseline Protocol to make it viable for businesses to implement solutions on it.
Atomic compartmentalization is defined as:
a Workflow that can restrict access and awareness to a specific set of parties down to a single step or record.
Meanwhile, a Workflow relates to:
a series of steps that constitute a coherent business process between a set of counter-parties.
To achieve atomic compartmentalization, the Baseline Protocol relies on a set of steps, including the breaking of tasks in a workflow in discrete events.
Baseline Protocol relies on the idea that through the establishment of a “common frame of reference”, enterprises could save hundreds of $ millions of unnecessary costs thanks to synergies through the use of a unique standard for recording and sharing data.
Worth noting, this solution differs from the usual dichotomy between permissioned and permissionless networks, and the rigid concept of private vs. public networks. Instead, it directly targets enterprise systems vendors, and other cloud providers by emphasizing the nature of Ethereum as the state machine equivalent of the Internet.
Currently, Baseline's development approach finds its roots in its supply chain example that is being generalized into a set of libraries, forming the core Baseline Protocol, which would apply to a wider range of industries.
However, it remains to be seen whether the protocol would find its niche owing to its nascency, being still in development while the documentation is being written as of now.
With the support of Microsoft, it is very likely that popular solutions like Microsoft Azure, its cloud computing service, may experiment with the use of Baseline Protocol, leading to sustained interest in the protocol from other parties.
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