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Privacy-preserving analytics for the securitization market: a zero-knowledge distributed ledger technology application

Author(s)
Meralli, Sophie
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Creative Commons Attribution https://creativecommons.org/licenses/by/4.0/
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Abstract
Abstract A zero-knowledge proof or protocol is a cryptographic technique for verifying private data without revealing it in its clear form. In this paper, we evaluate the potential for zero-knowledge distributed ledger technology to alleviate asymmetry of information in the asset-backed securitization market. To frame this inquiry, we conducted market data analyses, a review of prior literature, stakeholder interviews with investors, originators and security issuers and collaboration with blockchain engineers and researchers. We introduce a new system which could enable all market participants in the securitization lifecycle (e.g. investors, rating agencies, regulators and security issuers) to interact on a unique decentralized platform while maintaining the privacy of loan-level data, therefore providing the industry with timely analytics and performance data. Our platform is powered by zkLedger (Narula et al. 2018), a zero-knowledge protocol developed by the MIT Media Lab and the first system that enables participants of a distributed ledger to run publicly verifiable analytics on masked data.
Date issued
2020-01-25
URI
https://hdl.handle.net/1721.1/131728
Department
Massachusetts Institute of Technology. Media Laboratory
Publisher
Springer Berlin Heidelberg
Citation
Financial Innovation. 2020 Jan 25;6(1):7
Version: Final published version

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