German banking giant develops Ethereum L2 using ZKsync

Key Takeaways

Deutsche Bank is developing a level 2 blockchain solution on Ethereum powered by ZKsync technology.
The aim of the project is to address regulatory challenges for financial institutions using public blockchains and provide more efficient transactions.

Germany's largest bank, Deutsche Bank, is developing a layer 2 Ethereum network using ZKsync technology to increase transaction efficiency and meet regulatory standards in finance, according to a new report. report from Bloomberg.

The initiative, as part of Project Dama 2 and linked to Project Guardian Singapore, aims to solve key issues for regulated lenders operating on public blockchains, such as anonymous transaction verifiers, risks of payments to allowed groups, and unexpected hard forks.

The aim is to enable banks to use public blockchains safely and securely 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 allow banks to create a “list of more specific verifiers” and give regulators “super administrative rights” to track asset movements, he noted.

The bank unveiled a trial version of Project Dama 2, an asset service pilot, in November. The inclusion of the L2 solution in the Dam 2 Project is also expected to bring cost-effectiveness benefits.

“By using two chains, several of these regulatory concerns should be satisfied,” Chan said.

“You no longer rely on Tier 1 for detailed transaction records,” he said.

Project Dama 2, developed in collaboration with Memento Blockchain and Interop Labs using ZKsync technology, is part of the Singapore Project Custodian Monetary Authority. This broad initiative involves 24 major financial institutions testing blockchain technology for asset tokenization.

The bank plans to launch a minimum viable product next year, subject to regulatory approval.

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 to expand in Europe and the UK in the future.

The collaboration is part of Crypto.com's broader global expansion strategy, which includes launching new products such as a stable and ETF by 2025.