Small and medium-sized enterprises (SMEs) are often looking for ways to raise capital beyond traditional bank loans. One option is issuing bonds; however, issuing and managing them can be administratively, financially, and organisationally demanding for smaller companies. A company needs to find investors, build trust, handle the necessary administration, and manage the entire lifecycle of a bond. Large companies can afford extensive campaigns and therefore have easier access to investors. For SMEs, however, a similar process is often prohibitively expensive.
The current situation is also challenging for investors themselves. Today, they have to search for smaller bond issues individually, assess them separately, and often spread their investments across many different issuers. A unified digital environment could give them a clearer overview of available opportunities and make it easier to purchase bonds on a larger scale, similar to the way stocks are traded today.
The DEUSS project was created in response to the need to simplify the entire process. Its goal is to create a digital environment where companies can issue digitalised bonds and investors can more easily search for, assess, and purchase them. The platform is intended to cover the entire European Union market and offer a more unified approach to bonds regardless of the country in which they are issued. Thanks to the use of blockchain, the entire lifecycle of bonds will also be auditable.
Blockchain as a Tool of Trust
One of the key components of the project is the use of the existing European Blockchain Services Infrastructure (EBSI). Within the platform, blockchain will provide the technical foundation for bond tokenisation and the traceability and auditability of the entire process.
Blockchain is most commonly associated with cryptocurrencies, but it can also be used for other purposes. In the DEUSS project, it is intended primarily as a tool for establishing trust. It makes it possible to record that a specific digitalised bond actually exists, who owns it, and what its transfer history is. Thanks to blockchain technology, this information can subsequently be traced and verified.
All bond movements on the blockchain are handled by so-called smart contracts, which are programmes running on the blockchain. “In the DEUSS system, they serve as a kind of bond marketplace: they record individual bonds and their quantities in the respective blockchain accounts, manage the lifecycle of issues, and enforce the rules governing authorised transfers, custody, and settlement of trades,” explains Ing. Jan Trávníček from the Centre for Knowledge Management at FEE CTU, who works on the project as Lead Frontend Developer and UX Designer.
Another advantage of blockchain is that all records are stored on multiple devices simultaneously, in so-called nodes, which maintain a complete database of all transactions. If someone attempted to alter records on the blockchain retroactively, the altered data would no longer correspond to the databases stored on the individual nodes, making an attempted fraud evident. The EBSI infrastructure operates across 20 nodes in different EU member states, reducing dependence on a single technical point or country. This increases resilience against threats and improves the traceability of records.
The DEUSS Project as a Technical Challenge
In the context of financial markets, trustworthiness is absolutely crucial. From this perspective, the use of blockchain is a natural choice. On the other hand, blockchain is publicly readable, meaning that every member of the network can potentially see the entire history of transactions. In finance, however, such data is sensitive and needs to be protected. “The biggest development challenge was integrating blockchain into the highly regulated financial market of the EU. To protect data and comply with legislative requirements, we had to build a very robust web-based infrastructure around the blockchain to ensure that everything was both legally compliant and usable,” explains Ing. Albert Švehla from the Centre for Knowledge Management at FEE CTU, the project’s Technical Director.
While the financial sector is highly conservative and strictly regulated, blockchain technologies operate according to different principles and introduce a new level of complexity into the system. Developers therefore had to address not only the programming itself, but also legal and regulatory constraints, data security, identity management, process traceability, and reliable communication between the individual components of the platform.
In reality, the DEUSS project is not a single application, but a complex ecosystem consisting of five separate applications. These applications manage different parts of the overall process, from the registration and verification of individual entities through financial scoring and payment management to supervision of the platform. The developers therefore had to take into account high requirements for security, inter-application communication, and the user experience.
The applications will be used by a variety of groups, ranging from SMEs seeking financing and professional and retail investors to administrators responsible for overseeing the entire ecosystem. Each group has different needs, while the applications must remain understandable and accessible to all of them. “That is why we placed a strong emphasis not only on the technical aspects of the solution, but also on user-friendliness and user interface design, ensuring that it meets the standards of modern financial applications,” says Ing. Jan Trávníček, who was directly responsible for designing the user interfaces.
From Development to Live Operation
In addition to the development itself, the FEE CTU team gained valuable experience coordinating an international team consisting of academic institutions and industry partners. This required aligning technical, business, and legal requirements into a single functional solution. On the technical side, FEE CTU cooperated with Brno University of Technology and Slovak University of Technology in Bratislava, whose teams focused primarily on the development of smart contracts. The team from the Centre for Knowledge Management at FEE CTU was responsible for the technical analysis, development of the components outside the blockchain, and subsequently the integration of the blockchain into the system, enabling further interaction with it.
“Integrating the blockchain itself and working with this sometimes very low-level system was a particularly valuable experience for us. In addition to developing smart contracts, we learned how to work with the system’s asynchronous nature and how to move an entity from a conventional database onto the blockchain, which also involves changes to the underlying data sources,” explains Ing. Luboš Harašta from the Centre for Knowledge Management at FEE CTU, who worked on the project as Lead Blockchain Developer.
The DEUSS project was launched in 2024 and is now in the final stage of development. The smart contracts that will form the future backbone of the platform recently successfully passed a security audit, and the project as a whole has been presented at the INATBA conference in Brussels and at the 30th Annual Government Roundtable in Greece. More than 200 SMEs are already planning to join the project and seek financing through the platform.
Although the project is nearing completion and the platform is approaching live operation, the team from the Centre for Knowledge Management at FEE CTU will continue working with it for another two years. During this period, it will provide the necessary support to future operators and institutions that will connect to the platform. The entire team is highly motivated to successfully finalise the project after two years of development and launch the platform in live operation.
The DEUSS project is funded by the Czech Ministry of Industry and Trade under the National Recovery Plan and builds on a European DLT financing project aimed at helping small and medium-sized enterprises overcome a crisis.
Photo credit: Knowledge Management Center
