Decentralized Consensus Data Calculation via Outlier Exclusion
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Solution Overview
Problem
Current systems for calculating consensus data in capital markets rely on third-party vendors, making them vulnerable to manipulation and costly, while lacking anonymity and security for participant firms.
Innovation Solution
A decentralized peer-to-peer network using a distributed ledger technology that enables anonymous sharing and validation of market data, identifying and excluding outlier participants through smart contracts to prevent manipulation, and calculating consensus values without central control.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If third-party vendors are used to collect and aggregate individual market data, then consensus market data can be generated, but the system becomes vulnerable to manipulation and incurs significant costs
Solution Approach 1:
The patent extracts the third-party vendor from the system entirely, replacing it with a decentralized peer-to-peer network where participant firms directly share and validate each other's market data through smart contracts, eliminating the intermediary that causes manipulation vulnerabilities and high costs
Solution Approach 2:
Participant firms in the decentralized network perform their own data validation and consensus calculation through automated smart contracts, eliminating the need for external third-party vendors to aggregate and verify data, thereby reducing costs and improving reliability
2Loss of information
If third-party vendors aggregate individual market data, then consensus data is generated, but participant firm data confidentiality and anonymity are compromised
Solution Approach 1:
The patent introduces smart contracts as intermediaries that enable automated data sharing and validation while preserving confidentiality through cryptographic techniques, allowing firms to share necessary market data without exposing proprietary information or identity
Solution Approach 2:
The system creates cryptographic copies and hashes of market data that can be shared and validated across the network without revealing the original confidential information, enabling verification while maintaining data privacy
3Reliability
If statistical threshold methods are used to identify outlier participant firms, then manipulation can be detected, but participant firms are excluded or charged premium fees
Solution Approach 1:
The decentralized network enables participant firms to autonomously validate each other's data submissions through smart contracts, eliminating the need for external exclusion decisions and premium fee structures while maintaining reliable outlier detection through cryptographic verification
Data Source
AI summary
The present disclosure relates to methods and systems for calculating consensus data on a decentralized P2P network using a distributed ledger. Embodiments of the present disclosure provide for calculating, by a network node, data values corresponding to market rates associated with the network node, and sharing the data values with other network nodes. The data values from all network nodes are aggregated and a rule set applied to the aggregated data to determine and outlying values. Any network node that submitted an outlying value is designated as an outlier node. Consensus data is calculated based on data values that exclude data values from the outlier network nodes.