A network built for trade has to be fast, verifiable and easy to run. Our Q3 progress update covers the work on all three this quarter. 🧵

In 1969, DHL started by flying shipping documents from San Francisco to Honolulu, so they would arrive before the ships. More than 50 years later, the papers that say who owns cargo still mostly travel the same way. We think proof of ownership belongs on a ledger anyone can check.

A buyer usually pays only once the goods have arrived as agreed. Before it does, it checks that what arrived matches the order, in the quantity and condition the contract set. If the shipping records disagree, payment waits while both sides work out whose version is right. The exporter's cash is tied up in that argument until they do.

A promise to pay can be sold. A bill of exchange orders the buyer to pay a set amount on a set date. Once the buyer accepts it, the exporter can sell it to a bank for cash today, at a discount. The bank is buying the buyer's promise, so it needs to know whether the promise is genuine and who made it. The less of that it can check, the deeper the discount.

Security remains a key priority for IOTA. Our bug bounty program is now live on @sherlockdefi, inviting everyone to help identify vulnerabilities and strengthen the network. Check out the details below.

When a buyer pays 90 days after delivery, the supplier is lending to the buyer for three months. Payment terms of 30, 60 or 90 days are standard in open account trade, according to the US International Trade Administration. Large buyers tend to ask for the longest terms, and small suppliers are rarely in a position to refuse. That wait is a large part of why exporters need trade finance at all.

Trade finance rates are quoted per year, but most advances only run for weeks. At a 12% annual rate, an advance repaid after 60 days costs about 2% of the amount borrowed. On a thin export margin, that 2% can decide whether an order makes money at all.

An importer commits funds before the goods arrive, and often before it has anywhere to sell them. The exporter has already paid for production and is waiting to be paid. The same documents decide when either of them sees that money again.

A shipment is routinely insured against being lost, damaged or stolen. Insuring against the buyer not paying is a separate market with different rules. Physical risk can be surveyed. Commercial risk has to be inferred from records held by the people whose risk it is.

How can a funder back an exporter they would never lend to for five years? The funding covers one shipment. When the buyer pays for that shipment, the funding is repaid. How long that takes is set by the payment terms: thirty days, ninety, sometimes six months. The funder never has to guess where the exporter will be in 2031. They only have to be right about one trade.

A cargo changes hands several times between leaving the exporter and reaching the buyer. Each handover is recorded by whoever is holding the goods at the time, in their own system, in their own format. Nobody is lying. There is simply no single version of the journey, and the party financing it is reading the one they were sent.

When the UK tested whether ordinary commercial shipping data could stand in for customs paperwork, it covered 80% of the minimum data customs risk checks require. The information was already being produced by the supply chain. It was not reaching the people making the decision.

When a trade document turns out to be false, the loss rarely lands on whoever wrote it. It lands on the party that accepted it, often months later, in a different country, with no way to go back. Which is why the document is worth less than the question of who stood behind it.