Lite White Paper

September 2024
© by Kula Holdings Pty Ltd and Peter Tippett

The Future of Business Transformation

AI-Driven Customization Built on DLTs Using Programmable Transfer of Value

For the impatient, this is a 6 minute podcast created by Google NotebookLM that tells this as a story.

In the future, businesses will harness the power of AI to create platforms tailored to their unique needs, moving beyond conventional off-the-shelf products like Xero, payroll systems, CRMs, or booking platforms. These traditional tools have standardized business operations, but AI-driven systems will start from templates and evolve meet specific requirements—whether through prompts or continuous learning as the business operates. This adaptability will offer companies a competitive edge by designing solutions that directly address their unique needs.

This shift a move away from traditional software acquisition toward AI-generated platforms, where interfaces are automatically built and optimized based on business processes and user interactions. Beyond just creating platforms, these AI systems will also generate smart contracts or smart nodes using Distributed Ledger Technology (DLT), facilitating transparent value transfers. This will enable all parties, from customers to partners, to trust and verify every transaction within the value chain, with this movement fully automated.

The focus of this paper is on the Programmable Money functions and DLTs, while the AI functions will be covered in a separate paper in the future.

Core Innovation

Blockchain Technology

The key innovation lies in the integration of programmable money and blockchain technology, which will serve as the foundation for current b2b payments and in the future for AI-generated platforms. These technologies not only ensure security and efficiency in transactions but also automate compliance and build trust through transparent, smart actions.

Distributed Ledgers and programmable money will showcase their full potential, enabling businesses to integrate financial processes seamlessly into their systems. The result will be transparent, secure, and automated value transfers, whether in the form of payments, data exchanges, or services. This will allow businesses to scale quickly while maintaining flexibility in a dynamic marketplace, fostering stronger partnerships through the trust established by transparent data and expanding the jobs of different professions.

The Impact

Transparency and Real-Time Information Transfer

Some may view this as disruptive to many supporting industries, but we see it as another step in evolution—just as the personal computer and spreadsheets once revolutionized businesses, leading to today’s sophisticated data analysis tools that automate mundane tasks and created a whole new range of jobs and professional activities.

The true impact of this transformation will be in the management of fraud and deceptive activities. With all parties having access to the same real-time data, transparency will be the norm. This will not only improve trust but also help reallocate resources to where they are best utilized, reducing costs associated with fraud management boosting overall business efficiency and changing the regulation models to automatically managed.

Use Case Example

AI Built Example of what is possible

To illustrate how a business would implement this AI-driven customization built on DLTs, let's consider a hypothetical scenario.

Imagine a medium-sized logistics company, Global Express, deciding to revolutionize its operations. They begin by engaging with an AI platform that specializes in creating customized business solutions.

The AI system starts by analyzing Global Express's current processes, pain points, and future goals. It then generates a tailored platform that integrates their existing systems while introducing new functionalities. This platform includes a smart contract-based payment system for drivers, an AI-powered route optimization tool, and a blockchain-based tracking system for parcels.

As the company uses this new system, the AI continuously learns and adapts. It not only optimizes operations but also enhances security measures. For instance, it might notice inefficiencies in certain delivery routes and suggest improvements, while simultaneously detecting unusual patterns that could indicate fraudulent activities. The AI could identify suspicious behaviors in customer orders or driver activities, flagging them for further investigation.

Moreover, the system could analyze transaction patterns to detect potential money laundering attempts or other financial irregularities. The DLT aspect ensures that all transactions - from customer payments to driver compensation - are transparent, secure, and automated, making it extremely difficult for bad actors to manipulate the system. This transparency also allows for real-time auditing, further deterring deceptive practices.

By continuously learning from these patterns, the AI can propose new service offerings and security measures, staying one step ahead of potential threats while improving overall business efficiency.

Over time, this AI-driven system evolves into a comprehensive, customized solution that addresses Global Express's unique challenges, significantly improving their operational efficiency and competitive edge in the market. This transformation showcases how businesses can leverage AI and DLT to create bespoke solutions that go far beyond off-the-shelf products.

Delivery

A staged process starting with programmable money

The delivery of this innovation needs to follow a staged process, building on top of each core piece of technology.

Kula has currently focused on the initial stage of building the programmable value transfer functionality. This is based on the core principle: "You've completed the work, so you should be paid immediately—no delays, no excuses, no middlemen—and all others involved are also paid on the spot."

The initial work concentrates on ingesting information and converting data into an accepted format created via human-designed rules. This is then transformed into on-chain transactions that distribute incoming funds to designated wallets. These wallets are linked to recipients who have met the necessary Know Your Customer (KYC) requirements.

This is fundamentally the coding of the general ledger entries for creditors to create a self service model for creditors.

This then links to the Banking systems to allow on/off ramp functionally directly instead of a 3rd party provider which costs extra.

Stage One

Running at BodyMindLife now

To enable this initial stage of development, several critical core functions are essential for the system's functionality and effectiveness:

Permission-based tokens: These allow for controlled usage of the system, ensuring that only authorized parties can access and interact with specific features or data. This enhances security and privacy within the platform.
One-to-many atomic transactions: This capability enables the system to process multiple related operations as a single, indivisible unit. It ensures consistency and integrity in complex transactions involving multiple parties or steps.
Ultra-low-cost transactions: By keeping transaction costs below $0.01, the system remains economically viable for high-frequency, low-value transactions. This is crucial for widespread adoption and practical use in various business scenarios.
Rapid transaction finality: Achieving transaction finality in under 3 seconds significantly improves the user experience and enables near-real-time financial operations. This speed is essential for many business processes that require immediate confirmation.
Automated KYC/AML functionality: Integrating automatic Know Your Customer (KYC) and Anti-Money Laundering (AML) checks ensures compliance with regulatory requirements while streamlining the onboarding process for users.
Comprehensive wallet management: This feature provides users with secure and user-friendly tools to manage their digital assets, enhancing overall usability and security of the platform.
Off-chain data storage: Implementing off-chain storage for analysis and supporting documents (such as invoices, orders, and transaction activity) allows for efficient data management without bloating the blockchain.
Banking interface with real-time on/off-ramp: A cost-effective and real-time interface with traditional banking systems facilitates smooth transitions between fiat and digital currencies, crucial for widespread adoption and practical use.
Batch system integration: By integrating with batch-based systems through queue management models, the platform can efficiently handle large volumes of transactions and interact seamlessly with existing business infrastructure.
Standardized API interfaces: These provide a consistent and well-documented way for external systems and developers to interact with the platform, fostering ecosystem growth and integration possibilities.

This comprehensive system, incorporating all these essential functions, is currently operational as Kula Pay for the Yoga Industry on Wix Bookings. This real-world implementation serves as a proof of concept, demonstrating the practical applicability and effectiveness of the technology in a specific industry vertical.

This is running a mixture of Web2 and Web3 functions to allow full delivery which will change as Web3 matures.

Current Implementation Model

Running on Hedera and Wix

We have tokenized the financial operations of a business using a private stablecoin model on the Hedera Network that is only available to the members of the business. Each token is 100% backed by actual funds held in the company's bank account, similar to how public stablecoins work. This ensures that every token in circulation is fully supported by real-world assets, offering security and transparency in financial operations.

Each user is automatically assigned a digital wallet, linked directly to the business's stablecoin. One part of the platform manages the movement of funds between wallets based on specific rules set by the business as part of the transaction.

The wallet facilitates seamless deposits and withdrawals, enabling users to manage their funds effortlessly. The system is integrated with the company's bank account via a separate code base that has its own security rules to add another layer of protection. This allows the transfer of fiat currency into the wallet as tokens, or the conversion of tokens back into fiat when necessary.

Using a one-to-many atomic transfer model, the system can handle complex transactions such as splitting payments across multiple recipients, ensuring that all transfers are completed simultaneously and accurately. This atomic process guarantees that all transfers succeed, or none do, eliminating partial transactions and ensuring financial integrity.

The system is then supported by Kula Pay for Studios, which manages the rules, user details, KYC regulatory requirements, and ingests data from Wix Bookings. It then applies the defined rules before passing the transaction to be executed on the digital wallet management system.

Teachers have an App to manages their wallet and the withdrawal of their funds, which applies rules on what they can withdraw and verifies if they have completed all the required information.

In Summary of what is happening.

When a student checks in for class through Wix Bookings, funds are automatically transferred to the teacher account based on pre-set rules.

After the class, adjustments are made for retainers, bonuses or additional activities.

Teachers then use the Kula App to instantly transfer their earnings to their bank accounts while meeting regulatory requirements like superannuation.

Stage Two

Adding features to improve the Current implementation

This stage concentrates on expanding the system's capabilities by developing comprehensive interfaces and establishing foundational data structures that will serve as the backbone for future AI system implementations. The primary objectives of this phase are to broaden the system's reach, enhance its functionality, and lay the groundwork for advanced AI-driven features. This stage also involves expanding the core model beyond simple money transfers to encompass various types of value transfer and asset ownership. This expansion aligns with the original thesis of treating a community as a country.

Connect to stablecoin systems for unbanked and cross-border payments: This integration will enable seamless international transactions and provide a stable medium of exchange, reducing volatility risks associated with traditional cryptocurrencies. It will also facilitate faster and more cost-effective cross-border transfers, opening up new opportunities for global business operations.
Develop Smart Node models to shift processes away from Web2 services: By implementing Smart Node models to run the contraccts, we aim to decentralize key processes traditionally handled by the Web2 services. This transition will enhance security, reduce reliance on centralized systems, and improve overall system resilience. Smart Nodes will enable more efficient, trustless interactions between different components of the platform, paving the way for truly decentralized operations. This will have attached to the node code is a payment mode to pay the creator(s) of this contract as well.
Integrate additional data sources to broaden the marketplace: Expanding the range of data sources will enrich the platform's ecosystem, providing users with a more comprehensive and diverse marketplace. This integration will involve connecting to various external APIs, blockchain networks, and decentralized data storage solutions. By doing so, we'll create a more robust and versatile platform capable of serving a wider array of business needs and use cases.
Expand access to diverse value transfer models, enhancing the platform's versatility and user engagement:
- Implement robust voting systems to facilitate democratic decision-making processes within organizations and communities
- Develop comprehensive reward programs to incentivize user participation and loyalty across various business sectors
- Create dynamic status tier systems to recognize and reward user achievements and contributions
Enable the seamless movement of funds to Real World Asset (RWA) yield tokens:
- Integrate with established RWA platforms to provide users with access to tokenized real-world assets
- Implement smart contract functionality to automate the process of investing in and redeeming RWA yield tokens
- Develop risk assessment tools to help users make informed decisions when interacting with RWA yield tokens

The primary objective is to develop a programmable transfer product that operates predominantly on-chain, maximizing the utilization of blockchain technology for secure, transparent, and efficient transactions. This approach aims to leverage the full potential of distributed ledger systems, ensuring that the majority of financial operations, data processing, and smart contract executions occur within the blockchain environment. The only exception to this on-chain focus will be the on/off ramp functionality, which necessarily interfaces with traditional financial systems to facilitate the conversion between fiat currencies and digital assets. By structuring the product in this manner, we aim to harness the benefits of blockchain technology—such as immutability, transparency, and decentralization—while maintaining the flexibility required for real-world financial interactions.

Road Map

Build towards a full system that allow business to change

With the foundational functionality now in place, our focus has shifted towards setting up to work AI-building functions while simultaneously expanding the application of programmable money. As we advance our AI work, we'll continue to expand the use of SDKs, API interfaces, and create guides and templates to accelerate integration processes. This dual-pronged approach aims to create a synergistic effect, where advancements in AI technology complement and enhance the capabilities of our programmable financial systems.

We anticipate that AI will be divided into small, specialized models, each focusing on a specific set of activities. These models will work together to create a comprehensive product range. The smart contracts that are published will implement a "pay everyone at once" system, allowing AI creators and template builders to earn ongoing revenue. This revenue stream can potentially be converted into assets in the future, as the payment functionality builds trust and reliability. This approach aligns with the original idea behind NFTs but applies it to smart contract creation.

As we continue to expand and refine our AI functionality, we anticipate that the programmable model will gain significant traction across various market sectors. This evolution is expected to transform our platform from a specialized tool into a versatile, industry-agnostic solution capable of revolutionizing numerous sectors. The adaptability and intelligence of our AI-driven systems, combined with the flexibility of programmable money, will enable businesses to create highly customized, efficient, and responsive operational models.

To fully explore and document these advancements, we are in the process of preparing a comprehensive new white paper. This document will delve into the intricacies of our ongoing work, providing detailed insights into our methodologies, technological breakthroughs, and projected impacts across different industries. In the meantime, we're observing with great interest the rapid emergence of AI app-building capabilities in the broader tech ecosystem. Notable examples include platforms like Licode.ai and Project IDX, which are pushing the boundaries of what's possible in AI-assisted software development. Given the current pace of innovation, we confidently predict that the next 12 months will witness a surge of similar groundbreaking advancements in this field. These developments not only validate our strategic direction but also provide valuable insights and potential collaboration opportunities as we continue to refine and expand our own AI-driven solutions.

AI Podcast

Podcast created using Google NotebookLM using this White paper as it source.