Block Array is a small blockchain startup based in Chattanooga, Tennessee, hoping to bring the power of the blockchain to supply chain management – and not just as a buzzword. While they aim to offer a wide range of services, from provenance tracking and anti-counterfeit measures, their primary initial focus lies within the US trucking industry, driven by a recent change in US federal law. However, the US trucking industry is one which is laden – pardon the pun – with problems, and Block Array’s intends to offer several solutions to ease the pain for companies and drivers alike.
The Electronic Logging Data Mandate
The implementation of the Electronic Logging Data Mandate – to be fully mandatory by December 2019 – means that every truck driver in the US needs an electronic logging device (ELD) to track their Record of Duty Status (RODS) which is what some drivers currently log in paper form to show their compliance with Hours of Service (HOS) regulations, and the metrics and details of their vehicle from its engine control unit (ECU), such as speed, fuel consumption, RPMs, and so on.
Initially, as a proof of concept, the ARY team developed a mobile application that truckers could download and interface with, to track and log their daily ELD metrics. However, the team’s focus recently has shifted in terms of how they want to get their ELD system to truckers. Instead of developing an app which requires upkeep and investment in terms of time and money, they instead are aiming to integrate with existing providers of ELD hardware, which will allow them to gain an immediately wider device footprint and not have to worry about the upkeep of an app which comes with its own complexities – unsupported or slow phones, updates to fix bugs, and driver’s mobile data usage potentially being impacted, leading to unwanted expenses for them, among other issues.
A rough timeline of the ELD Mandate implementation (Source).
Additionally, the ELD Integration can be used to create a complete maintenance history, via Driver Inspection Reports and the vehicle’s ECU.
Detention payouts occur when a driver appears at the designated pickup location, but the cargo they are there for is late due to the shipper not being on time. Traditionally, these situations can be hard to prove, but with the help of Block Array the driver can accurately log all events so their detention payouts cannot be disputed; the system essentially keeps all parties honest, or can at least prove when dishonesty is present on one side of the dispute.
You may not think that these payouts would pose a problem, but detention was actually ranked as one of the five most serious business problems by 84 percent of 257 carries surveyed by DAT Solutions, and “a very serious problem” by 20% of brokers. Truckers can be forced to drive a staggering amount of hours per week to make up for lost time and money, leading to good truck drivers leaving the industry altogether. A system such as Block Array with its trust-less, immutable record would hold shippers to account for late shipping, resolve disputes, and help retain drivers.
“Virtualised Grey Pool” – Cargo Brokerage Service
For truckers, not only is time money, but space in the back of their trucks also equates to cold, hard cash. If a trucker makes a trip and has only half of their capacity filled, they’re missing out on half of their potential paycheck. Via a web interface, app, or potentially integrated into the ELD devices themselves (which method will be used is yet to be confirmed), drivers will have access to a so-called “virtualised grey pool”; this allows them to see if anyone needs cargo moving to a destination they’re driving to in real-time, to avoid situations where they’re driving with unused shipping space. The system will assist with finding the best cargo in relation to the route the trucker wants to take, as well as to be compatible with his truck and the other cargo which will be onboard.
Existing traditional solutions in this space do already exist, such as DAT, but Block Array CEO Sam Bacha himself has described the situation as Block Array being a “complement” to these traditional services rather than attempting to go straight up against them directly. This is due to the ARY platform offering a somewhat different angle – that of an all-online solution which negates any need for interacting via telephone (as is the need with DAT, for example), the ability to chat online to solve issues, and generally a smoother, more modern experience, which the trucking industry is currently missing. However, this virtual cargo-matching market will nonetheless aim to be as competitive as possible to existing competition, and ultimately will be yet another way in which truck drivers can generate revenue.
Traditional brokers collectively do $150 billion in revenue per year and take 15-20% commission; with the systems here being outdated and mostly involving human-to-human interaction, there is plenty of space for improvement in terms of automation, not to mention the costs that can be cut when you remove the necessity for human brokers – costs which can be passed straight down to the drivers themselves.
Provenance, Product Info, and Anti-Counterfeit Goods
The Block Array chain of custody system will allow products to be traced back to their origin, solving similar problems to platforms such as VeChain (click here for our analysis) or Waltonchain – although using GS1 barcodes rather than RFID (Radio-frequency identification) tags. While barcodes traditionally do stand at a disadvantage to RFID tags within the context of logistics, due to having to be scanned, Block Array systems are intended to function via geofencing or any other event-based trigger.
Additionally, with the use of dual-layer QR codes, transactional information can be encoded to distinguish between legitimate or counterfeit goods – a problem the OECD estimates at costing the global economy an estimated half a trillion dollars per year.
Finally, the “XONS” protocol has a simple function – it allows barcodes to act as triggers or connections to smart contracts during their movement through the supply chain, as well as turning them into URIs, mainly in the form of web pages (URLs); which function they take will depend on whether it is an enterprise or consumer interaction. These logs would allow companies whose items the barcodes are connected to to keep the product info pages updated with various pieces of information – from the provenance information itself, to warranties, discounts, user manuals, and even product recalls, giving commercial buyers and consumers far greater oversight as to the history and current state of their purchases. Additionally the consumer application of the barcodes could extend the reach of businesses to consumers; for example if a customer has a TV which is a few years old and they need their warranty information, they could scan the barcode to be directed to the appropriate URL with it. At this point a chatbot could present the customer with a discount coupon for a new TV, based on the knowledge that the customer is looking for the warranty, the TV is old, and the customer already bought from this manufacturer in the past.
The consumer application intended for scanning barcodes to find out this backend information, codenamed “Badger”, has been delayed until 2019. The ARY team made this decision as they plan to focus solely on the B2B (business-to-business) logistics industry during this time. As they put it: “we feel we can make much greater strides and achieve our goals easier with a B2B approach rather than a B2C.” So while these features are still planned, the main development focus for now lies with the trucking systems – namely the ELD, detention payout, and virtualised grey pool services.
Block Array is at present an ERC-20 token, for use on the Ethereum blockchain, but the overlaying systems will also function on the Bitcoin network, Hyperledger Fabric platform, Oracles POA – and Cardano is targeted to be functional by Q3/Q4 of 2018. The team are also launching the testnet to their own blockchain by the end of March, but details on this are currently quite sparse.
Electronic Logging Device Data Storage
ELD devices can be connected to the ARY system via their Application programming interface (API). Data is then recorded based on whichever event triggers have been specified, and when the driver certifies their daily logs, a hash of those records is created and stored on the blockchain of choice (depending on the use case); this creates an immutable record which will be accurate and tamper-proof, and available for recall if the driver or company ever requires the data for legal evidence or dispute resolution.
eXtensible Object Name Service (XONS)
XONS essentially lets a normal barcode become a trigger, or allows it to connect to a smart contract. For example, imagine in a warehouse a package is moving down a conveyor belt, and then that package gets scanned; a recursive request is then sent to the domain name and authenticated, which then through the ARY backend connects to a smart contract on any blockchain. This system will be able to automatically notify suppliers or buyers once goods clear certain checkpoints, such as customs, or whenever they are sold, without the need for external data providers.
It will also make it possible for a barcode to double as a link to any URI, such as a website, for immediate recall of data which is continually kept updated, depending on the latest event triggers that are logged, or otherwise linked to it post-fact, until a terminal condition is met in response to the aforementioned recursive request. Dynamic Delegation Discovery is the name for this standard which turns any barcode with a standard format into a domain name. One avenue via which Block Array is aiming to monetise the system is by offering hosting of these URIs to companies – to avoid security issues such as domain hijacking, such as what happened with EtherDelta.
Blockchain data Interchange
BDI essentially translates “transactions” into contextualised events (based on the GS1 EPCIS standard, for those familiar with it), giving the “who, when, where, and what” of any trigger created via Visual SmartContracts (such as scanning a barcode), geofencing, or other event-based triggers. This means that the following will be logged: who is the user, when is the time, where is the GPS location, and what is the cargo itself. This is an important mechanism in keeping track of cargo and making sure it is in the right place and in the right hands.
GS1 Barcode Prefix Acquisition
GS1 barcodes are the standard data-tracking system for products handled by most major retailers, such as Amazon, Tesco, Walmart, and more, and also the standard upon which Block Array will operate. Block Array will acquire their own GS1 prefix which will allow them access to the general GS1 database. What the Block Array library will allow is to break down the barcode into its constituent parts (which you can see in the image below), then parse and compile the constituent element parts into a URL/URI/Mobile App. The result of this query will show the supply chain of the originating company, meaning the buyer can see if there is a chance that the product has been interfered with along its route.
An example of a GS1 barcode.
Team and Partnerships
Sam Bacha is co-founder and CEO of Block Array, and has a rather solid background in tech, having worked at Amazon as a Senior Financial analyst for several years – operating in big data – as well as running his own startup, Invert Game Studios, for 3 years, where he built an MVVM-Framework for Unity3D (a game engine). He was also joined in this venture by Micah Osborne, the second co-founder and CTO of Block Array, who himself has a solid resume of senior software development and engineering for over 15 years. Finally, Yuri Senyut, Block Array Systems Administrator/DevOps has worked on many closed-source distributed computing projects for large corporations for several years. Sam, Micah, and Yuri have also been friends for over 10 years, which is encouraging to see as they are likely a very close-knit team.
In terms of business development expertise, Will Jones is Block Array’s COO, who is additionally Vice President at Jones Management Services, a family-owned business involved in the consumer financial industry with holdings in various financial service companies like Check into Cash, a payday loan company, and First View Financial, a payment rails for debit cards, which is also a payment rails provider for BitPay.
New hires have taken place in the past couple of months, bumping the team up in terms of developers; the new hires include a new front end developer, a full stack software engineer (with experience working in a trucking company based in Chattanooga), a project manager/senior software developer, and a Rust/Golang developer. This means there are now 5 full-time developers at the ARY team, compared to the “3.5” who were previously split between developing as well as working on all other aspects of the business.
Currently, Block Array only has one advisor – Igor Barinov. He is the current tech lead at POA Network, an open, permissioned, and public blockchain network based on the Ethereum protocol – and also one of the platforms upon which ARY will be able to function, making his advisory capacity potentially quite important in the future. Barinov has plenty of blockchain experience and generally well over 10 years of high-level technical work experience, which should make him a great match for the team. Further advisors are currently “TBA” according to the website.
While the team may be small, they have made some key decisions which show foresight and confidence in their project.
Firstly, they are based in Chattanooga, Tennessee, which is also home to the Blockchain in Transportation Alliance (BiTA). BiTA has over 60 members, including UPS, FedEx, Uber Freight, and more. This demonstrates that they understand the importance of being close to the heart of their target industry, and this proximity will likely help them to stay in the loop with future developments with the networks they develop – they are already in frequent contact with BiTA as it is, and this kind of partnership from the very begin is a valuable on to foster. As of this month they are also members of the American Trucking Association, which gives them access to networking events, contacts, and a wider reach within the industry.
In January 2018, the Block Array team signed a Memorandum of Understanding (MoU) to work together with Qlink (QLC) – a blockchain-based decentralised mobile network. This is actually incredibly useful for Block Array, as the idea is for drivers be given access to the Qlink DApp functions and therefore Qlink’s mobile network – giving them constant access to information from their truck and other connected systems, as well as doubling as a tracking station which can sit in their trailer and double as a tracking device – with the cost of trailers and the cargo inside them this acts as a nice additional security mechanism.
A small pilot study with a US fleet of 15 trucks also finished at the end of February, although there currently isn’t much further information regarding this in the public domain as it is under NDA, to protect against competitors approaching the company to find out more details on what the ARY team is working on.
Additionally, an unannounced partnership with a trucking insurance company is said to be in the works – “to leverage the potential reduction in liability into lower premiums businesses will pay”. This insurance partnership is an as-yet unspoken of benefit to the overall Block Array model, cutting costs for drivers even further as a side effect of the streamlining and transparency that ARY would bring to them.
There is a total supply of 88,409,933 ARY tokens, with 68,430,738 in circulation at the time of writing. The token will be split ⅓ to independent validators, ⅓ to the ARY team, and ⅓ to businesses, to prevent collusion and network attacks.
ARY is a functional utility token; in order to store hashes or records to the blockchain, business will be required to stake a certain amount of ARY. Depending on which amount of shipping capacity the business is handling, they will need a differing amount of ARY.
The token metrics are currently in a “bootstrapping” phase until June, and subject to change, but so far the numbers are as follows:
100 ARY = 30 Hashes per day
100 ARY = 3 Records per day
10 ARY = 1 Product line for XONS
The number of ARY a company or driver will need will then scale accordingly, alongside the scale of the services required. Shippers will also need to stake ARY tokens to gain access to the virtualised grey pool.
However, the trucking industry in the US is one quite set in its ways. Faxes and computers with outdated OSes are still prevalent, so a “blockchain solution” may be a tough sell. According to even ARY CEO Sam Bacha, this can make business onboarding one of the company’s toughest challenges. However, they aim to simplify the process by essentially making the token equivalent to an old-fashioned CD Key or software license. To make it easier for businesses to gain access to ARY tokens without having an account on a crypto exchange, a non-crypto solution is also being worked up; this would likely involve a businesses buying (or “leasing”) the tokens from the Block Array team themselves, which would then be put in escrow and kept out of circulation just as if they were being staked in the regular fashion.
ARY masternodes are also planned, to assist in distributing the network to prevent against network attacks, as well as help with running it. The team are aiming to be fully IRS (Internal Revenue Service) and SEC (Securities and Exchange Commission) compliant with the masternode setup, which may make them the first team to quell any tax concerns that those running nodes in the US may have; this is an important step, as the IRS has the power to come down hard on non-compliant companies and those running nodes, and if the ARY team want a truly future-proof system, this is a small but important step to get right.
There will be Primary, Secondary, and Heartbeat nodes, requiring 40,000, 22,500, and 7,500 ARY tokens, respectively. They will pay out 250, 150, or 75 tokens every two weeks, as well as having to be hosted on a VPS service, with the ARY team reimbursing node holders for the hosting costs (as nodes must , plus an additional few percent to adjust for price volatility. The Primary and Secondary nodes will also have a “THAW” feature, which means that after 2 months of 100% uptime, a one-time bonus of 3500 for Priamary, and 1500 for Secondary, ARY tokens will be unlocked and sent back to the node owner. Masternodes alone will lock up roughly 2 million coins – with further node spots likely opening up in the future and leading to more coins being taken out of circulation. Full masternode details can be found here.
Masternodes and the staking system required by any business to operate on the ARY network creates an effect that can be highly beneficial to investors; as more and more tokens are locked up, those remaining in circulation should take on a higher value due to the available supply shrinking. Masternodes alone will lock up roughly 2 million coins – with further node spots likely opening up in the future and leading to more coins being taken out of circulation.
Roadmap and Advancement
The fact that the pilot with a small fleet of trucks was just completed shows that while the systems may be in alpha or beta, they are at least usable, and the ability for firms to ship freight using the ARY platform is targeted to be ready for testing by late April/early May. This will allow more truckers to get their hands on the system and will hopefully see more rapid advances in the ARY systems themselves, especially with the new, larger team.
Below is an overview of the current 3-month rolling roadmap for Block Array (click to enlarge):
Block Array 3-month roadmap.
Patent filings for an as-yet-undisclosed part of the overall Block Array system are underway, so we should hear more about this in the coming weeks and months.
Block Array will also be a platinum sponsor – alongside the FedEx Institute of Technology – for ETH Memphis, which is taking place in May and should help give ARY increased visibility. A generally bigger marketing push will also begin this year, which will hopefully make more people in the crypto-sphere aware of the project, as until now the marketing efforts have been close to non-existent. The team have also now hired a PR firm, so more updated content releases – such as a weekly dev update – are planned to keep the community in the loop and properly informed. One of the primary downsides of ARY until now, has lain in the difficulty of being able to accurately gauge what the main focus of the project is, exacerbated by the whitepaper being outdated for several months (though it is apparently currently being updated) – seeing the team be more on-the-ball in terms of community involvement and updates is encouraging.
According to the American Trucking Association, as of 2015 there were over 3.5 million truck drivers in the US alone, with a revenue of $676.2 billion in 2017, so the market for Block Array’s main focus – the ELD system and other trucking-related functions – is huge, and with the driver behind adoption being a law that is to come into full effect in under 2 years, there is a clear opportunity for Block Array.
With a current market cap of under $10 million, ARY is, in my opinion, a highly undervalued project. This is due to it solving several issues at once, as well as their closest competition in the blockchain space having substantially larger market caps. As mentioned before, the ELD system for truck drivers, as well as the ability to match unused cargo space to potential buyers, are already two exciting features, but when you combine them with the supply chain tracking and XONS barcode tech, Block Array comes across as a very potent competitor.
There are a few main issues I have seen discussed and that I personally have. The main one is that Block Array is in competition with long-running traditional ELD solutions and trucking services. While ARY offers a solid value proposition to truckers and supply chain management in general, and they have a valid use case for the blockchain in their services, they will have an uphill battle on their hands in terms of getting their product out to the many truckers in the US. The trucking brokerage sector alone has seen a 90% increase in venture capital funding since 2013, demonstrating that many others are also seeing a remarkable opportunity for tech advances in this space, and again demonstrating the stiff competition out there. However, with an increase in marketing and the valuable connections which the Block Array team are already fostering in the space (such as BiTA and the American Trucking Association), they already seem to be on the right path.
Major supply chain and delivery companies in the US, such as UPS or FedEx, may appear to pose strong competition to ARY, as they are bound to just roll out their own solutions; however, the US trucking market is highly fragmented, with 90% of companies having 6 trucks or less under their wing, and 50% being owner-operators. These companies and truckers are the perfect target audience for Block Array, who will be on the lookout for an ELD solution within the next couple of years, and with ARY integration into ELD hardware, may well end up using Block Array systems without even being aware of it.
A worry I had while researching and writing about ARY is that while the project is ambitious in scale, the team may be biting off more than they can chew for their size – but I’m not sure how valid this concern remains at this point. When you compare ARY to a project such as VeChain which is in a similar space in terms of supply chain management, anti-counterfeit goods, and provenance tracking, but with a team of more than 100, it puts the Block Array team which is under 15 in size into question. However, the fact that they want to focus heavily on the trucking issues to begin with is reassuring, as it will allow them to get a foothold in the supply chain industry and establish a working product with which they can potentially bankroll expansion and further development of the additional services. If they can manage to successfully scale the team with more talented developers as they push out their full feature set, and hold their own against the traditional, centralised alternatives in the trucking industry, as well as those with similar ambitions in supply chain management in the blockchain space, I see a bright future for Block Array.
A reason why I haven’t compared ARY much to blockchain projects which appear to be in the same space, such as VEN, Devery, or WTC, is because I don’t actually see them – at least initially – being in competition. With Block Array’s team being based in the US and being focused so strongly on the US trucking industry, and the other projects all being based either in Asia or Australia, and focusing entirely on supply chain management and counterfeit goods, the comparison seems a stretch to make. If ARY can do what it aims to do initially in the US trucking industry well, then they will have established a potentially huge customer base and made a name for themselves in an industry in which their other logistics solutions are highly applicable.
Additionally, while the ARY team are currently focused only on trucking, the systems they are building could also be adapted to be used in the rail, sea, and air freight industries. However, these implementations are a far off concern at this point.
Block Array may not be offering a revolutionary idea to the world, but they do offer an intriguing, and arguably much-needed combination of services to the supply chain industry in general, and an especially interesting number of services to truckers and over-land suppliers.
Counterfeit protection, provenance history, and document records, all placed on an immutable blockchain, are already potentially game-changing for the supply chain industry; coupled with an ELD backend solution driven by legal necessity, as well as other features which should make the life of truckers all across the US (and down the line, potentially globally) a whole lot easier, Block Array has a lot to offer to the world of logistics, and all at what currently looks to be a price that is a far cry from blockchain projects in connected areas, and seems absolutely undervalued when taken all on its own merits.
For more information on blockchain’s possible applications within the logistics sphere, please read the following article by us – Blockchain In: The Supply Chain Industry.
ARY is currently available on Kucoin and IDEX, with no details on future exchange listings being available at this point.
Disclaimer: We are long Block Array.
As always, this is not financial advice. This article is based on personal opinion, and we advise everyone to read Block Array’s white paper, and check through their official webpage, before investing. Do your own research, and consult a financial advisor if needed.