What Is the Exchange Protocol?
The Exchange Protocol is the proposed market-infrastructure component of Provenance-Backed Securities, addressing how resulting economic interests could be listed, priced, transferred, settled, reported, and audited within an applicable legal and regulatory framework.
What does the Exchange Protocol do?
The Exchange Protocol addresses the market side of the PBS framework.
It follows the analytical work performed by the broader PBS/MPS architecture rather than replacing it.
Provenance establishes the evidentiary history of an asset. Performance provides observable information about outcomes. Contribution Decomposition examines attributable contribution.
The Exchange Protocol addresses what happens when a resulting economic interest enters proposed market infrastructure.
What functions does the Exchange Protocol contemplate?
Listing & Pricing
The Technical Appendix describes the Exchange Protocol as supporting listing and pricing functions for PBS instruments.
Trading
The proposed protocol includes market mechanisms associated with trading and order matching.
Settlement & Liquidity
Settlement and liquidity mechanisms are included within the market-oriented Exchange Protocol architecture.
Reporting & Auditability
The Technical Appendix also describes trade reporting, audit trails, and regulatory oversight as Exchange Protocol functions.
Why isn't the Exchange Protocol the third analytical layer?
Earlier PBS materials described a three-layer market architecture consisting of the Provenance Ledger, Performance Oracle, and Exchange Protocol.
Subsequent PBS/MPS materials make a more precise functional distinction.
The core analytical architecture consists of the Provenance Ledger, Performance Oracle, and Contribution Decomposition & Royalty Flow. The Exchange Protocol is then treated separately as the proposed market infrastructure surrounding resulting economic interests.
This distinction separates the question of how contribution is analyzed from the question of how an economic interest could operate in a market.
From contribution to market infrastructure
Provenance
Establish an evidentiary record describing the asset, contributors, and contribution history.
Performance
Connect the documented asset with independently observable information about relevant outcomes.
Attribution
Examine how documented contributions relate to measurable outcomes and attributable contribution.
Exchange
Address compliant listing, pricing, transfer, settlement, reporting, and auditability of resulting economic interests.
Does the Exchange Protocol determine contribution?
No.
The Exchange Protocol should not be confused with Contribution Decomposition.
Contribution Decomposition concerns the analytical relationship between documented contributions and measurable outcomes. Exchange Protocol concerns proposed market infrastructure.
Keeping these functions separate makes it possible to distinguish attribution from subsequent market activity.
Does documenting an asset automatically make it tradable?
No.
A provenance record, performance record, or attribution result does not by itself establish that an economic interest may lawfully be offered, sold, listed, or traded.
Market activity involving PBS would remain subject to applicable legal and regulatory requirements.
The Exchange Protocol is therefore a proposed infrastructure concept, not authorization to conduct securities transactions.
Why is regulation especially important to the Exchange Protocol?
Exchange-related activity sits at the point where the technical PBS architecture meets securities-market regulation.
Washington DFI explained during ScarabCloud's regulatory engagement that, to the extent the architecture involves the offer or sale of securities, existing state and federal securities requirements would apply, including potential registration and licensing requirements.
DFI also stated that it could not direct ScarabCloud to an appropriate regulatory pathway for bringing PBS to market.
The Exchange Protocol should therefore be understood as proposed market infrastructure rather than an operating or regulator-approved securities exchange.
What role does compliance play in the proposed architecture?
The public Technical Appendix places identity, KYC, compliance, reporting, audit trails, and regulatory oversight within the broader PBS market architecture.
These concepts reflect the intended distinction between an auditable market framework and an unrestricted trading mechanism.
Specific legal obligations would depend on the instrument, transaction, participants, jurisdiction, and applicable law.
How does SeedBid™ relate to the Exchange Protocol?
SeedBid™ is presented in the PBS materials as the first domain-specific implementation of the architecture for agricultural genetic intellectual property.
The agricultural example connects provenance records with performance information and illustrates the larger objective of creating market infrastructure around documented intangible assets.
SeedBid™ remains subject to the same distinction as PBS generally: a proposed market architecture is not itself regulatory authorization to offer or trade securities.
What does this page disclose?
This page explains the functional role of Exchange Protocol within the public PBS/MPS architecture.
It is not an exchange operating manual, order-matching specification, settlement specification, compliance program, offering document, or implementation guide.
Its purpose is to make the architectural distinction clear: PBS/MPS analytical infrastructure establishes evidence