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Understanding the Winter Protocol and its Impact on Supply Chain Traceability

Published 16.4.2024

The Winter Protocol is an open-source, ready-to-use solution for traceability and tokenization. It offers a range of APIs and toolsets, designed to tailor traceability and tokenization solutions to diverse applications. Initially conceived and launched on Ergo to serve the requirements of Palmyra Platform users, the Winter Protocol has broadened its horizons to become available in the Cardano ecosystem. This expansion is in response to the growing demand from the Cardano community for robust and reliable traceability tools and solutions. In the article, we will explain the basic principles of the Winter Protocol.

Traceability Requirements Are Becoming Stricter

There is a growing trend in major commodity import markets where governments are beginning to request businesses to comply with traceability rules. This is happening in both the USA and the EU.

In the USA, product traceability is often part of mandatory compliance requirements. For instance, the FDA has established the Food Traceability Rule which requires additional traceability records for certain foods. This rule is aimed at enabling faster identification and rapid removal of potentially contaminated food from the market, thereby reducing foodborne illnesses and/or deaths.

In the EU, product traceability requirements exist to ensure that products can be traced to a certain importer or manufacturer, production facility, and even production cycle. This is particularly important as it enables market surveillance authorities to identify and trace unsafe and non-compliant products. The General Food Law Regulation defines traceability as the ability to trace and follow food, feed, and ingredients through all stages of production, processing, and distribution.

For businesses, these traceability rules mean that they need to have systems in place to track their products throughout the supply chain. This includes not only tracking the origins of materials but also ensuring the integrity of all stakeholders involved, understanding the intricacies of manufacturing processes, and addressing the environmental footprint throughout the entire production cycle.

EPCIS Standard and GTIN identifiers

The team was faced with a decision: to create an entirely new system solely based on tokens, thereby bypassing the established EPCIS standard, or to design a system that adheres to the EPCIS standard. The latter option offered the benefit of utilizing the existing infrastructure of GTIN identifiers and other trade identification numbers. Moreover, EPCIS complies with regulations.

Upon deliberation, the team decided that adhering to the existing metadata standard was the most logical choice. This approach primarily involves manipulating JSON, generating metadata hashes, and minting unique tokens for each event (EPCIS event).

To fully comprehend the workings of the Winter Protocol, it’s essential to understand the purpose and application of the EPCIS standard and GTIN identifiers.

EPCIS (Electronic Product Code Information Services) is a GS1 standard that enables visibility within organizations as well as across an entire supply chain of trading partners and other stakeholders. It provides the ‘what, when, where, why, and how’ of products and other assets, enabling the capture and sharing of interoperable information about status, location, movement, and chain of custody.

EPCIS is used in electronic data interchange transactions, specifically related to tracking and tracing of products in supply chains.

The importance of EPCIS lies in its ability to provide real-time visibility and traceability of products and assets as they move through the supply chain. It streamlines supply chain operations by providing a standardized framework for capturing and sharing data.

The EPCIS standard defines several types of events. These events represent real-world actions involving products or assets in a supply chain:

  • Commission: This event signifies the creation of an object.
  • Aggregation: This event signifies the grouping of objects.
  • Disaggregation: This event signifies the ungrouping of objects into a smaller group or individual objects.
  • Observation: This event signifies an observation, such as quality testing of the items.
  • Transformation: This event signifies an irreversible transformation of an object.
  • Decommission: This event is used when an object is taken out of service.
  • This is what a diagram of a supply chain composed of an EPCIS event can look like.

    Initially, two sets of items are denoted by two commission events. These sets are then stored in a shipping container, signifying an aggregation event. The corresponding disaggregation event would involve the removal of these sets from the container. If two items are combined to form a new product, this process is represented by a transformation event. Lastly, the product is subjected to quality testing, which is depicted by an observation event.

    The Global Trade Item Number (GTIN) is an identifier for trade items, developed by the international organization GS1. GTINs can be used by a company to uniquely identify all of its trade items. GS1 defines trade items as products or services that are priced, ordered, or invoiced at any point in the supply chain.

    GTINs are often used to identify trade items in EPCIS events.

    The Winter Protocol was inspired and designed to accommodate the EPCIS standard. Metadata contains input and output objects with GTIN numbers. These objects represent trade items.

    Let's explain the difference between instance-level and class-level identification.

    Class-level identification refers to the identification of a group of items that are identical in every respect. This is typically what we think of when we consider a product identifier. For example, all 12-ounce cans of a specific brand of soda would share the same GTIN because they are the same product.

    On the other hand, instance-level identification, also known as fully serialized identification, goes a step further. It provides the ability to identify each product instance individually. This means that each individual 12-ounce can of the specific brand of soda would have a unique identifier, allowing each product instance to be tracked or traced individually.

    This is particularly useful in supply chain management, as it allows for precise correlation of observations at different times in the supply chain.

    The Winter Protocol

    The Winter Protocol mints Non-Fungible Tokens (NFTs) on the Ergo or Cardano blockchain, each representing an event as per the EPCIS standard. Each NFT serves as a unique identifier (ID) for its corresponding EPCIS event, creating an immutable record of events on the blockchain.

    When a user inputs new supply-chain management data, it's considered a specific EPCIS event. The Winter Protocol responds by minting a new NFT and storing the current metadata in IPFS. Minting an NFT involves creating and submitting a transaction. NFTs are minted according to users' inputs within the given supply chain. It is not necessary to have a pre-defined scenario, i.e. pre-minted NFTs. NFTs only serve as unique identifiers and a means of time stamping on the blockchain.

    The NFT includes an ID that is referenced by the metadata. A hash, generated from the metadata and associated with the NFT, ensures data integrity. Any attempt to alter the data stored in IPFS can be detected through hash validation.

    In the picture, Alice is inputting a new EPCIS event via the application. The application is responsible for minting a new NFT and recording JSON metadata in IPFS. The ID serves as a link between the NFT and the metadata. The hash included in the NFT guarantees the integrity of the data in IPFS.

    A supply chain can be visualized as a sequence of EPCIS events, represented by a linked chain or graph of NFTs. The Winter Protocol acts as a pointer to data stored in IPFS, safeguarded by timestamps in the blockchain.

    Each EPCIS event (or NFT) is associated with metadata. This metadata includes information about the input and output items. These items are represented by input and output objects (JSON data) including their GTIN numbers.

    The metadata also contains references to the NFT (ID) from which the input objects originate, ensuring the linkage of NFTs and thereby chaining the EPCIS events. Each new event points back to the previous one. This enables the tracing of all events from the beginning of the production cycle.

    The most important point that makes the protocol work is the eUTxO model. This makes it possible to think of the supply chain as a linked chain or graph of UTxOs (boxes in Ergo) in which each UTxO represents an EPCIS event.

    In the picture, there are two EPCIS events with IDs 1 and 2, both initiated by Alice, and one event with ID 3, initiated by Bob. The NFT event with ID 3 points to NFT event 2 via its metadata. Similarly, NFT event 2 points to NFT event 1, which doesn’t have a predecessor.

    Event 1 can be a commission, event 2 can be a transformation, and event 3 can be an observation.

    When a user inputs the event ID into the application, they will be able to view all the associated metadata stored in IPFS. This metadata includes information about the involved objects, the types of processing steps undertaken, and more. It also contains references to the event IDs from which the input objects originate. This allows for the construction of the entire linked chain or graph of the supply chain.

    The transfer of ownership of trade items from one entity to another is an EPCIS event. This event necessitates the minting of a new NFT and the storing of metadata in IPFS. The metadata encapsulates all the essential details about the new owner and the input items, inclusive of their GTIN numbers.

    The ownership of items is determined only by the records in the blockchain and IPFS. The ownership of items does not rely on the owner of the event NFT. A new owner can generate a new event and reference objects (including GTINs) from the metadata of the preceding event as inputs.

    On the Ergo platform, the ownership of UTxOs can be ensured by recording the user’s signature in the box register. This implies that any alterations or new activities involving this box can only be performed by the box’s owner. However, as most of the producers that the team currently collaborates with lack the technical expertise to handle cryptocurrencies and crypto wallets, the signatures belong to Palmyra.

    In case an error is identified in the recorded data, an error correction event must be initiated with the rectified information. This process involves minting new NFTs and storing new metadata. Consequently, when one reviews the traceability information history, both the error correction event and the original erroneous event would be visible.

    It’s important to note that it’s the events, not the items, that are tokenized. Tokenization of the final product is possible (but not necessary) once it exits the supply chain cycle.

    During the tokenization of items, it is possible to include information linking it to its GTIN number and NFT of the most recent EPCIS event it came from. A tokenized item can therefore refer to the entire production cycle (all EPCIS events).

    Observe the efficiency of the Winter Protocol. It can record virtually unlimited data, thanks to the IPFS storage. The integrity of the supply chain and data is safeguarded through the blockchain. Items are not represented by NFTs, as managing a large number of distinct tokens would place excessive demands on the blockchain resources.

    Take, for instance, a dairy farmer who milks a cow to produce standard milk cartons of a specific volume. The item being sold is a standard carton. It would have its own GTIN number and a corresponding commission EPCIS event with associated metadata. Similarly, a cheese producer goes through several steps in the cheese-making process, each of which has its traceability event. The final step in their chain would be the production of a standardized format of cheese for sale to retailers. Each of these cheese formats receives its identification number, following the GTIN standards.

    Conclusion

    In the future, the Winter Protocol could potentially evolve into a sidechain on Ergo or a partner chain on Cardano. The main blockchain would ensure security, while the dedicated networks would be more resource-efficient for the main blockchain.

    Legislation will mandate that small and medium-sized business owners establish traceability. The deployment of these systems can be intricate and might necessitate substantial investments in technology and modifications to processes. As a result, companies should thoughtfully assess their unique requirements and abilities when determining their approach to traceability. An economical solution that adheres to regulations, available on the Ergo and Cardano blockchains, could be an appropriate option for numerous entrepreneurs.

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