A new blockchain-based language for financial contracts could be used to manage peer-to-peer loans and risk profiles, its founders have claimed.
The domain-specific language, titled Marlowe, has been developed by cryptography firm IOHK, as an “industry-scale” tool for decentralised financial services, including P2P lending platforms.
Lending platforms can use Marlowe to develop and deploy custom instruments for their customers and clients. This includes contract analysis, which can allow lenders to predict how a particular contract might respond in different economic simulations.
Read more: Is cryptocurrency gaining momentum in the P2P space?
“Contracts are written in the language of finance, rather than the language of the blockchain,” an IOKH spokesperson said, in a company blog post.
“This means that some sorts of errors are impossible to write: so certain kinds of incorrect contracts are ruled out completely. For example, every Marlowe contract will have a finite lifetime after which it will perform no further actions, and at that point any funds tied up in the contract will be returned to the participants, meaning that funds in a contract can never be locked up indefinitely.
Read more: FCA bans retail sales of crypto-derivatives
“It is possible to analyse, completely automatically, how a contract will behave in all circumstances, without having to run it. For example, it is possible to determine whether a particular contract can fail to make a payment in some cases, or whether it is guaranteed to make full payments in every eventuality.
“Contract behaviour can be simulated in a browser, so that users can try out the different ways that a contract might behave, before committing funds and running it for real.”
Read more: Bank of England governor snubs Bitcoin but suggests stablecoins have benefits