Morningstar, the Chicago-based financial services firm behind one of the world’s most influential credit ratings agencies, is bringing its credit services to the Ethereum blockchain and beyond.
That’s per an October 1st report from Forbes correspondent Michael del Castillo that revealed the company has recently been ramping up an array of blockchain efforts, not least among them being credit giant’s plans to develop its own oracle technology — used to bring off-chain data on-chain — to package its ratings with securities through Ethereum smart contracts.
Notably, Morningstar’s blockchain embrace will begin with Ethereum but will reportedly expand to other cryptoverse projects later on.
“We’re looking to see how we can also provide credit opinions, whether it’s a credit rating or different types of credit data and credit analytics that accompany those debt instruments, and we’re also looking to provide our services on a blockchain,”
Said Michael Brawer, chief operating officer of the firm’s ratings division.
— Michael del Castillo (@DelRayMan) October 1, 2019
While the pivot represents the company’s strategic belief in the viability of blockchain tech in general, its initial work on Ethereum specifically is the latest indication that the smart contract platform remains considerably ahead of its direct competitors — e.g. EOS, Cardano, and Tezos — when it comes to mainstream traction.
Morningstar Oracles Are Coming
To bring its ratings services to Ethereum, Morningstar has deployed a small team of employees to build out its own oracles. Per del Castillo, the firm is eyeing two types. The first oracles will be used to tokenize business debt and package the security tokens with an associated, on-chain Morningstar credit rating, as mentioned before.
“We refer to it as an oracle of ratings that would be able to come directly from a third party, such as us, and tell interested parties our opinion of the creditworthiness of a particular debt issuance,” Brawer said.
The second type of oracle the company is developing will similarly be used for tokenizing business debt, but these ensuing tokens will be rated and further packed with Morningstar’s own in-house quantitative rating models.
“The objective would ultimately be to allow investors in a digital debt security to be able to run an independent, third-party model and see the results of that model on the blockchain,” the Morningstar Credit Ratings COO explained.
Big Names Make for a Big Year
As the top public blockchains, Bitcoin and Ethereum are currently in a league of their own within the wider cryptoeconomy, at least when it comes to their mainstream inroads. And 2019 has been a good year for Ethereum in particular regarding these inroads.
Looking at the year in review, banking giant JP Morgan kicked things off with a bang in February when it announced its own JPM Coin, which is being built on the bank’s permissioned form of Ethereum. A few weeks later, firm unveiled Anonymous Zether — a system for enterprises to anonymize ETH transactions.
In that same vein, “Big Four” accounting powerhouse EY published its own privacy tool for the smart contract platform in June. Dubbed Nightfall, the system also can anonymize ETH transactions.
Societe Generale and Banco Santander, two of the world’s largest banks, have issued bonds on Ethereum in the past six months as well. Germany’s top financial watchdog, BaFin, relatedly approved a €250 million euro offering of real estate bonds tokenized on the platform.
Tech giants Microsoft and Google have also made their own moves. The former recently released VeriSol, a verification tool for securing Ethereum smart contracts, while around the same time the latter outlined how hybrid blockchain-cloud apps could be powered by Ethereum, Google’s BigQuery, and Chainlink oracles.
Altogether, this year has seen larger enterprises increasingly devoting attention to the leading smart contracts platform.