Contingent Asset Representation with Risk-Aware Smart Contracts
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Solution Overview
Problem
Existing computer systems lack efficient methods for managing and facilitating transactions involving contingent assets, which are liabilities contingent on future events, leading to uncertainties in valuation and transaction processes.
Innovation Solution
A computing system that utilizes risk analysis and blockchain technology to authenticate, evaluate, and manage contingent assets, enabling secure and transparent transactions by determining risk levels, negotiating listings, and facilitating payments through smart contracts and distributed ledgers.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If traditional asset transaction methods are used for contingent assets, then existing computer systems can process simple assets, but they cannot efficiently manage and facilitate transactions involving contingent assets due to valuation uncertainties
Solution Approach 1:
The patent introduces a computing system as an intermediary that mediates between buyers and sellers of contingent assets. This intermediary performs risk assessments, determines risk levels, and facilitates transactions through smart contracts, thereby enabling the system to handle contingent assets while maintaining transaction reliability through automated verification and risk management protocols
Solution Approach 2:
The patent changes the parameter of asset representation by encoding contingent assets with risk level parameters and contingency conditions. By representing assets as data structures with specific parameters (risk level, contingency events, payout conditions), the system can process contingent assets systematically while maintaining reliability through parameter-based validation and comparison
2Reliability
If risk analysis and blockchain technology are implemented to manage contingent assets, then transaction security and transparency are improved, but system complexity increases
Solution Approach 1:
The patent segments the complex task of contingent asset management into distinct functional modules: risk assessment module, blockchain ledger module, smart contract execution module, and contingency event monitoring module. Each module handles a specific aspect of the process, reducing overall system complexity by creating independent, manageable components that can be developed and maintained separately
Solution Approach 2:
The system implements self-service through automated risk assessments, smart contract execution, and contingency event detection. The computing system automatically evaluates risk levels without manual intervention, executes transactions when conditions are met, and monitors for triggering events, thereby reducing operational complexity while maintaining high security standards through algorithmic processes
3Measurement precision
If contingent assets are represented with risk levels and contingency information, then valuation accuracy is improved, but data processing requirements increase
Solution Approach 1:
The patent extracts and separates critical valuation information (risk level, contingency conditions, payout terms) from the overall asset data structure. By extracting only the essential parameters needed for valuation and transaction processing, the system achieves accurate pricing while minimizing the volume of data that needs to be processed and stored, focusing computational resources on the most relevant asset attributes
Data Source
AI summary
A method includes an object owner computing entity issuing a digital record representing a contingent asset to a marketplace computing entity that identifies an asset authenticity computing entity. The method further includes the asset authenticity computing entity generating authenticity information associated with the contingent asset and the marketplace computing entity determining that an authenticity indicator is the same as a lifecycle status indictor of the digital record. The method further includes the marketplace computing entity generating a smart contract to indicate availability of the contingent asset to include available terms and the authenticity indicator and obtaining a portion of a copy of an object distributed ledger. The method further includes the marketplace computing entity causing inclusion of a next block on the object distributed ledger that includes the smart contract to represent the contingent asset.