Key Takeaways
- Deutsche Bank is developing a layer 2 blockchain solution on Ethereum powered by ZKsync technology.
- The project’s aim is to address regulatory challenges for financial institutions using public blockchains and provide more efficient transactions.
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Germany’s largest bank Deutsche Bank is developing an Ethereum layer 2 network using ZKsync technology to enhance transaction efficiency and meet regulatory standards in finance, according to a new report from Bloomberg.
The initiative, part of Project Dama 2 and linked to Singapore’s Project Guardian, is aimed at resolving key issues for regulated lenders operating on public blockchains, such as unknown transaction validators, risks of payments to sanctioned entities, and unexpected hard forks.
The goal is to enable banks to safely and securely utilize public blockchains for various financial services while addressing regulatory concerns, said Boon-Hiong Chan, Head of APAC Securities Market and Technology Advocacy at Deutsche Bank.
The L2 solution will enable banks to create a “more bespoke list of validators” and provide regulators with “super admin rights” to monitor fund movements, he noted.
The bank unveiled a test version of Project Dama 2, an asset-servicing pilot, in November. Incorporating a L2 solution into Project Dama 2 is also expected to offer cost-effectiveness benefits.
“Using two chains, a number of these regulatory concerns should be able to be satisfied,” said Chan.
“You are not dependent on the Layer 1 for detailed transaction records anymore,” he added.
Project Dama 2, developed in collaboration with Memento Blockchain and Interop Labs using ZKsync technology, is part of the Monetary Authority of Singapore’s Project Guardian. This broader initiative involves 24 major financial institutions testing blockchain technology for asset tokenization.
The bank plans to launch a minimum viable product next year, provided regulatory approval is received.
Deutsche Bank has recently partnered with the crypto exchange Crypto.com to enhance corporate banking services in the Asia-Pacific region. The collaboration, announced on December 10, will initially focus on providing banking capabilities in Singapore, Australia, and Hong Kong, with plans for future expansion into Europe and the UK.
The collaboration is part of Crypto.com’s broader global expansion strategy, which includes launching new products such as a stablecoin and an ETF by 2025.
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https://cryptobriefing.com/ethereum-l2-banking-solution/
