Build on Canton Network: Business Benefits, and Development Costs

What makes Canton Network different from other enterprise blockchains

The network was not built on top of an existing public blockchain and was engineered from the ground up for regulated TradFi finance.

• Canton’s origin: built by Digital Asset for institutional finance. The Canton blockchain for finance was built on top of Digital Asset’s blockchain infrastructure, with a primary focus on compliance, privacy, and fast settlement for banks.
• How Canton differs from Ethereum: Canton offers Selective Privacy, unlike Ethereum’s fully transparent public ledger, and Cross-Chain composability.
• The TradFi-DeFi bridge Canton is designed to close: The TradFi DeFi bridge of Canton has already processed over over $1.5 trillion in transaction volume in the ecosystem of Canton.

Core technical features of the Canton Network

Canton is designed to tackle the limitations of the regulated financial system by building on four major architectural components: privacy, consensus, contract language, and cross-ledger interoperability.

1. Selective disclosure and sub-transaction privacy

The architecture behind Canton Network’s privacy is sub-transaction privacy on the network as required by institutional compliance in a regulated finance environment. Only the parties to a contract can see its details in a given transaction.

2. Canton’s synchronization protocol and consensus model

Canton’s innovative consensus model is revolutionary because it is the first time that a distributed ledger does not require a global state consensus. Instead, Canton authorizes each node in the network on a one-by-one basis by checking the data the node is allowed to see.

3. Smart contract Layer

Foods1, hereafter referred to as Daml smart contracts, encode workflow logic. LK1 was specifically “shrink-wrapped” for this particular audit by the compliance teams at financial firms. The Digital Asset Modeling Language, or Daml for short, is the native contract language of Canton. Daml has been specifically designed for the modeling of the various types of financial contracts that typically form trees or graphs.

4. Interoperability

Canton enables interoperability between ledgers, such as a repo ledger and a collateral ledger, that are separately governed and support atomic settlement between them, without the need for a central clearing entity, thereby greatly reducing the reconciliation costs of siloed TradFi systems.

Business benefits of building on the Canton Network

A platform-based approach to traditional enterprise chains provides considerable benefits in terms of compliance, settlement, monetization, and development velocity. The network business benefits across these areas are concrete enough to inform serious platform evaluation.

Canton Network raised $355 million in a funding round backed by major institutions, including HSBC, BNP Paribas, and Citadel Securities — signaling serious traditional finance appetite for regulated blockchain infrastructure.

Regulatory compliance is built into the protocol layer

For this to work, permissioned access, identity verification hooks, and audit trails have to be embedded into the protocol. Regulatory compliance in blockchain, therefore, is ‘built in’ rather than ‘added on top’ as separate middleware, which has to be subject to legal engineering to make it work for institutions.

Atomic settlement and elimination of counterparty risk

Technologies such as Atomic settlement blockchain mechanics can enable a single transaction to confirm a transfer, bringing to an end the settlement lag that is currently costing institutions billions of dollars in collateral each year.

Built-in monetization: transaction-based revenue for app builders

Cantonomics structured revenue model applies to all on-chain transactions for application developers and digital asset issuers on the platform. This function is not available on most other enterprise blockchain platforms.

Faster time-to-market compared to custom blockchain builds

Daml removes the need for teams to worry about low-level infrastructure details, letting them focus on the application’s business logic. With institutions such as Goldman Sachs already running on top of the network, less work is required to bring other institutions online. As a result, the time taken to deliver new applications to market is significantly reduced.

Who should build on Canton Network: Ideal use cases

All of the listed use cases address problems in regulated financial workflows (privacy, atomicity, compliance).

• Tokenized asset issuance: securities, bonds, and real-world assets

The range of tokenized real-world asset networks supported is especially well-suited for equities, bonds, and other types of fund units, typical securities that require per-transaction confidentiality that public blockchains cannot provide.

• Repo, collateral management, and intraday liquidity

Atomic swaps on Canton enable collateral management on the blockchain, eliminating settlement risk for intraday repo agreements.

• Digital fund administration and NAV settlement

You can automate NAV calculations and investor redemptions using Daml contracts for considerable efficiency gains.

• Cross-border payments and FX settlement

Canton allows interoperability between different ledgers used by correspondent banks, so, for example, FX can be settled on a separate ledger from other transactions between the counterparties without them having a Global State.

Canton Network development costs: What to budget for

Canton Network development costs are high due to the specialized nature of the Canton Stack, particularly the high Daml and enterprise integration complexity compared to other blockchain projects.

Key cost drivers

The blockchain development cost is based on a Minimum Viable Application comprising one workflow and one integration point. It would likely take 3-6 months to build such an application with 3-5 engineers.

Daml developer rates and availability in the market

Daml developer cost is typically 20–40% above the cost of hiring a Solidity developer. This is because there are not as many Daml developers in the market, so you can engage the right sourcing specialist for this role as early as possible in your hiring process.

Infrastructure and node operation costs

Canton node operation costs vary greatly between joining as a participant node and operating your own sovereign domain. The costs of additional hardware, enhanced networking, and complex DevOps management for a sovereign domain must be factored in.

Ongoing maintenance

Daml smart contract audit costs in the order of 4–8 weeks for a contract of medium complexity. Ongoing costs to update the contract via the protocol releases, as well as the evolution of Cantonomics and its associated fee structures.

Building on Canton Network vs. competing enterprise blockchains

When it comes to selecting an enterprise blockchain for the institutional fintech scene, there are numerous platforms in the pipeline. This enterprise blockchain comparison will focus on three leading platforms: Hyperledger Fabric, R3 Corda, and various permissioned Ethereum variants. Architectural differences are the primary aspect under review to gauge compliance, the potential size of an ecosystem, and long-term costs in more detail.

How to structure a Canton Network development team

Making good staffing decisions will have the same impact on your delivery dates and your budget as any of the technical decisions you make.

Core roles: Daml engineers, domain architects, and integration specialists

This graphic illustrates a full production-ready blockchain team for a fintech project. The Daml engineer writes the contract logic for the blockchain contracts. The Canton domain architect builds out the necessary nodes for the Canton user in the Canton Network.

In-house build vs. outsourcing to a specialist blockchain partner

Outsourcing the blockchain enables the client to achieve a much faster time-to-market than if they were to build a full Daml production environment themselves. Typically, a company new to Daml takes 6-12 months to reach production, but a Canton development specialist with experience building financial use cases for the network can get a client up and running in 4-8 weeks.

Evaluating a development partner’s Canton and Daml track record

When choosing a provider to outsource to, look for a development partner with Daml certification, Canton Network deployments, and financial-grade security experience. A hybrid model, in which the partner builds the customer’s Canton infrastructure and the customer’s internal Canton development team builds the business logic, is becoming cost-effective for many customers.

Risks and limitations to evaluate before you build on the Canton Network

Each enterprise blockchain platform has its strengths and weaknesses, and we detail the main points to consider when evaluating whether the Canton Network is the right choice for you to spend your hard-earned cash.

• Ecosystem maturity: where Canton still has gaps

To further explain the limitations for us of the Canton Network, there is currently a much smaller tooling eco-system to draw from compared to, for example, the Ethereum eco-system, which means there are less third party libraries, fewer resources in general for developers to lean on when building out solutions on the Canton Network.

• Daml talent scarcity and its impact on delivery risk

The talent pool for Daml in the market is woefully inadequate: currently, there are only hundreds of Daml-certified developers worldwide, and even for typical blockchain roles, it can take 2-4 months to find the required talent.

• Regulatory uncertainty around tokenized assets in key jurisdictions

Rules for tokenized assets are currently fragmented, largely untested, and differ across the EU (MiCA), the US (SEC), and APAC – creating uncertainty about how they will be interpreted in practice and how an enterprise can manage them within its compliance layer.

Getting started: Your first steps to build on the Canton Network

We have created a structured getting started for Canton Network so you can hit the ground running and avoid rework.

Proof-of-concept scope

The focus of a Canton proof of concept should be to validate one end-to-end workflow for one asset class, for example, issue a token and then do the atomic settlement for that single one.

Accessing Canton Network: Participant Onboarding and Node Setup

To onboard a participant to run on the Canton Network, one would typically need to

• Verify the identity of the participant;
• Provision them with a Canton node;
• Have them sign off on a governance agreement;

Allowing 4-8 weeks for this process to complete before writing production code for your feature is key to having a sound Canton development roadmap.

Choosing the Right Development Partner for Your Canton Project

By making sure that a development roadmap for Canton is delivered by a development partner with experience in Daml and the financial domain, the new project must implement an effective roadmap. Early engagement with a lawyer experienced in Daml-compliant design will also save a lot of money compared to waiting until later in the build process and trying to retrofit.

Conclusion

First, Canton Network is unique from the many other enterprise blockchain platforms under development in that it is designed from the ground up as a privacy-first architecture. Second, applications will be built on top of the network using Daml for smart contracts. Also, the synchronizers between nodes enable interoperability among network applications. So, it is especially well-suited to financial workflows subject to very heavy regulatory requirements. The cost to develop applications on top of the Canton Network will vary widely based on factors such as the level of Daml expertise on the development team, the complexity of integrating with the back-end of existing systems, and the specific requirements of applicable laws and regulations. We recommend developing a very explicit, scope-limited proof of concept before making any estimates for a full production deployment.