Open Transaction Network: What is it and what does it mean for the incoming era?

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Alejo Czerwonko. Chief Investment Officer, Emerging Markets, Americas, UBS AG

• An Open Transaction Network (OTN) is the new foundational infrastructure for the Regenerative Era, supporting the restoration, renewal and revitalization of natural resources, and fostering economic well-being.
• OTNs promise to increase transparency and enhance interactions within complex ecosystems that could help tackle climate change and supply chain vulnerabilities.
• OTNs are participatory, relying on decentralization and robust governance mechanisms; interoperability is key to their role and goals, while simultaneous technological headwinds such as artificial intelligence will boost their efficacy.

“Throughout history – from the agricultural to the digital age – infrastructures have shaped society’s defining activities, impacting social, economic and environmental conditions of the times,” says Herman Gyr, founding partner of Enterprise Development Group.

“As we transition into the Regenerative Era – a period that seeks to restore, renew and revitalize our natural resources while fostering economic well-being – the need for a new type of infrastructure is evident. An Open Transaction Network (OTN) represent a kind of “digital mycelium” for the Regenerative Era, steering the developments and practices of this new period in human history.”

OTNs epitomize a network architecture powered by open-source source software, enabling individuals and organizations to connect beyond the confines of platform controls through interoperability. These networks are rooted in the core values of decentralization, transparency, empowerment and above all, agency, drawing inspiration from the fundamental principles that brought about the World Wide Web.

Gyr continues, “OTNs promise to enhance transparency and interactions within complex ecosystems, supporting transactions that align with the Regenerative Era’s goals, e.g. promoting soil health, biodiversity and carbon stewardship in agriculture, or adapting transactions in urban environments to meet the challenges of climate change and supply chain vulnerabilities.”

Demonstrating their importance, Gyr emphasizes that “OTNs will enable practices that ensure the resilience of our communities while fostering balance between humanity’s interests and those of the natural world.

Multi-layered benefits

The innovative approach of OTNs in creating an equitable, fair and trustworthy marketplace thus brings numerous benefits to multiple stakeholders in the regions where they are being piloted.

For instance, markets gain from enhanced efficiency, competition and innovation due to open transaction interoperability and accessibility. Market efficiency allows businesses to access broader markets, fueling cross-border competition and streamlined operations. Consumers benefit from greater product diversity, improved transparency and efficient market interactions, driving a dynamic, equitable and sustainable market ecosystem.

OTNs also empower communities, allowing them to gain agency and tailored engagement in the economic network. They promote equitable economic opportunities and foster civic engagement through transparency. OTNs’ adaptability enhances access to education, entrepreneurship and financial inclusion, enriching community life.

Governments can leverage OTNs to increase transparency, improve service delivery, facilitate better policymaking, reduce corruption and support data-driven governance. OTNs boost economic development by encouraging innovation, entrepreneurship and investment while ensuring inclusive participation in economic and decision-making processes.

Academia will enjoy an open data environment to enable diverse research and the development of innovative models, strengthening academia’s advisory role to government and industry through data-driven insights. This collaboration enhances OTN operations and builds trust among stakeholders.

Sustaining the OTN model

Network members and the existence of robust and transparent governance measures will fundamentally determine the efficacy of an OTN. Central to this endeavour is cultivating trust among participants in transactions involving multiple stakeholders.

Established and emerging OTNs designed with these critical considerations provide a snapshot of insights on the sustenance of OTNs.

• Community contribution: Decentralization and the maximization of benefits for all stakeholders are critical to the success of an OTN. Therefore, OTNs must foster a vibrant and engaged community, ensuring the network’s operations and expansion are held accountable.
• Technology: OTNs are built upon the principles of inclusivity, innovation, security and transparency. They are designed to ensure broad adoption and seamless interoperability, provide a cooperative platform, facilitate collective formation of protocols, adopt minimal and privacy-conscious data collection, continuously assess technological efficacy, and promote open dialogue for trust-enhanced collaboration.
• Governance: OTNs should embrace a participatory approach, promoting substantial stakeholder interaction through various feedback channels, advisory boards, user groups and transparent onboarding processes. The open dissemination of network policies and the establishment of straightforward, accessible grievance mechanisms maintain transparency across all network activities for informed and engaged members.

“The key to network thinking is fostering “trust” in the multi-party interactions between the various network participants, facilitated by the symbiosis of technology and clear governance for seamless transaction interoperability,” says Dr Pramod Varma, co-founder of Foundation for Interoperability in Digital Economy (FIDE) and co-author of the Beckn protocol.

“While technical interoperability can be readily attainable through unified protocols, addressing the legal, contractual and process-level interoperability needs in a network can be complex,” he continues, “Thus, this critical aspect needs to be carefully designed, coupled with broader consensus amongst the network participants. With trust being established, OTNs, similar to the internet and powered by various protocols and standards, will trigger unprecedented exponential innovation cycles.”

“

This isn’t just technology; it’s a gateway to equitable services in commerce, health, agriculture and education, where your voice alone opens up a universe of multimodal possibilities – this is what I would call a solution the world really needs.””— Jan Kuenne, Vice President, EU and India Pacific, Enterprise Development Group

Boosting OTNs with artificial intelligence

As OTNs evolve and practitioners around the world learn and adapt from multiple OTN proof points, policymakers and industry leaders must also stay cognizant of other emergent technological headwinds, such as the fast-changing artificial intelligence (AI) landscape and the geo-economic policy opportunities that OTNs could unleash.

The rapid evolution of AI technologies could significantly boost the efficacy of OTNs. By incorporating multilingual, conversational AI tools and models, OTNs can attract and engage various internet users across generations.

Strategic investments in AI – particularly in developing intelligent voice-based interfaces and advanced cataloguing methods with context-aware, language-native large language models – are key to making digital experiences more inclusive for OTN users. These integrations promise to broaden the accessibility and appeal of OTNs, ensuring they meet their users’ diverse needs and preferences.

Jan Kuenne, vice president, EU and India Pacific, of Enterprise Development Group, says that “Amidst the drive to embed generative AI into every aspect of our lives, needed or not, in combination with the power of OTN, is a bridge for an inclusive and open world for everybody.

“Imagine a world where language barriers vanish, where AI listens and translates, enabling immediate digital access for the illiterate and speakers of non-mainstream languages alike. This isn’t just technology; it’s a gateway to equitable services in commerce, health, agriculture and education, where your voice alone opens up a universe of multimodal possibilities – this is what I would call a solution the world really needs.”

The global potential of OTN

OTN frameworks can evolve into “digital trade corridors,” facilitating the uninterrupted exchange of goods, services and human capital, thus bolstering bilateral or regional trade opportunities. The interoperable network will allow service providers to gain access to diverse markets, fostering healthy competition and offering consumers a broader selection of goods and services at more competitive prices.

The path towards establishing these digital trade corridors, underpinned by OTNs, involves taking strategic, incremental steps that serve as foundations for broader expansion. Realizing this vision necessitates the collective efforts and contributions of the entire market ecosystem, including policy advocates and the funding landscape, marking a critical phase in the evolution of global trade dynamics.

As OTNs continue to develop, their journey – encompassing adaptations, achievements and challenges – will pivot around the fundamental principle of interoperability. The true potential of OTNs stretches into the infinite possibilities of human creativity and need.

Through pilot projects unfolding globally, the emergence of customized utility and sustainability frameworks suited to distinct contexts is imminent. Although the practical applications and deployment strategies may vary from one country to another, the underlying principles shaping their objectives will remain steadfast, promising a unified vision for a more interconnected and innovative future.

Views expressed in this blog and the primer are those of the authors and do not necessarily represent the views of the funding agencies, companies or institutions mentioned.