One of the biggest players in the German financial market—Deutsche Bank—has decided to enter the blockchain industry. According to Bloomberg , the bank is building its layer-2 (L2) blockchain on Ethereum, which uses ZKsync technology.
It aims to solve compliance problems, which are critical for regulated finance. It also reveals the possibility of using blockchain effectively and openly. Deutsche Bank is currently head of this development, which means blockchain’s future in finance is bright.
What’s the Deutsche Bank Building?
The primary purpose of Project Dama 2 is to improve overall blockchain implementation in financial institutions that the L2 solution can solve. As a decentralized application constructed on the Ethereum blockchain, this platform seeks to enhance transaction throughput and decrease expenses. It also responds to the compliance needs of regulated industries.
Deutsche Bank, one of the worlds largest banks is building their own Layer 2 on top of Ethereum powered by @zksync and built by @Memento_Bc
Why build your own L2? Institutions clearly see the benefits of tokenization and moving onto blockchain rails:
✅Reduced costs
✅Increased… https://t.co/GnCKj3a0Og— Omar (@Ozhar) December 18, 2024
One aspect of the development of this aspect is the integration of ZKsync technology . Using ZKsync , transactions are transparent, but at the same time, privacy is maintained without necessarily considering security. It will also include an effective verifier and other compliance assets tailored for authorities. All these features make it a blockchain for the financial industry.
Why Does This Matter for Finance?
It is part of the Monetary Authority of Singapore’s Project Guardian. Deutsche Bank involves 24 institutions exploring the concept of tokenization.
Deutsche Bank might serve as a reference point for financial institutions. It offers insights on overcoming regulatory challenges to implement blockchain solutions. These solutions relate to asset servicing, trading, and monitoring compliances. The platform, therefore, seeks to plan an initial deployment as an MVP in 2025. The procurement of a license shall be the following major development.
Today in @business : ZKsync is powering @DeutscheBank moves’ in blockchain, enabling secure and compliant solutions for tokenized and hybrid funds. The future of onchain finance is happening on @zksync .. pic.twitter.com/XIt0O4d1BJ
— Xoch 🧪 (@xo_poseidon) December 18, 2024
Why Layer 2?
Blockchains in layer 2 have better throughput in processing transactions. They do so at the same or a lower cost than traditional methods. Additionally, they remain secure and transparent.
For Deutsche Bank, an L2 solution offers an added advantage: regulatory tools. These tools include ‘super admin rights.’ These rights enable financial regulators to audit transactions and their characteristics. This approach makes blockchain more transparent while at the same time meeting compliance laws and regulations.
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