On October 19, the Monetary Authority of Singapore (MAS) announced the launch of Project Guardian, a partnership with the financial industry to test the viability of tokenization and DeFi applications, while also managing risks to financial stability and integrity.
On November 2, MAS announced that its Project Guardian’s first industry pilot project exploring potential DeFi applications in the wholesale financing market (First Industry Pilot) has completed its first live transaction. Among them, DBS Bank, JP Morgan and SBI Digital Asset Holdings trade foreign exchange and government bonds against liquidity pools consisting of tokenized Singapore government bonds, Japanese government bonds, Japanese yen (JPY) and Singapore dollar (SGD). The pilot successfully conducted a real-time cross-currency transaction involving tokenized JPY and SGD deposits.
Ty Lobban, head of JPMorgan’s Blockchain Launch and Onyx digital assets divisions and a board member of the Enterprise Ethereum Alliance, published an article detailing JPMorgan’s role in Project Guardian, which BlockBeats translated as follows:
JPMorgan Chase has used DeFi, tokenized deposits and Verifiable Credentials (VC) to execute the first real-time transactions on public blockchains as part of the MAS-led Project Guardian.
We have set a lot of world precedents, and since the transaction takes place on the public blockchain, this article will openly and transparently explain what we have done.
As a first step, we use the Polygon network for trading.
We initially wanted to execute this transaction on Ethereum, but because we wanted to perform a series of authentication-related expensive operations with relatively low gas fees, (we chose Polygon). Of course, given that MAS aims to be an open, interoperable network, Guardian will also explore the possibilities of other blockchains in the future.
In the second step, we use Aave to adopt its “permission pool concept”.
We deployed a revision of Aave Arc to set certain parameters, such as interest rates and foreign exchange rates. Please click on the link to view our deployed lending pools.
BlockBeats Note: Aave Arc is a permission-required liquidity pool specifically designed for institutions to maintain regulatory compliance in the DeFi space. These liquidity pools will be separate from existing pools on Aave and require extensive KYC.
In the third step, we issued a tokenized Singapore dollar deposit.
This deposit token will be incorporated into JPMorgan’s consolidated debt. This is a native token that provides stable on-chain value without the scalability issues that Stablecoin faces. This is the first tokenized deposit issued by a bank. Please click on the link to view the SGD tokenized deposit contract issued by J.P. Morgan.
As a fourth step, we use the World Wide Web Alliance W3C Verifiable Certificate VC to provide compliant access to Aave (or any other DeFi protocol).
Compared with whitelisted addresses, VCs can provide more granular control, including risk restrictions, asset restrictions, etc. And, we implemented on-chain VC authentication.
On-chain VC verification is complex and brings composability to identity. We want to take a few, professional verifiers and use them in dApps to bring further standardization and portability to identity, just like “identity LEGO bricks”!
We are designed to ensure that VC compliance checks can be used with any DeFi protocol that does not require any knowledge of the VC, thus eliminating the need for KYC on the DeFi frontend. Compliance is pushed to the edge, not dApps.
Please click on the link to view the validator. We’ve created a validator for each company in Project Guardian. So each company has its own rules, but anyone can consult and verify these rules. On-chain VC verification wasn’t strictly pioneered by us, my build isn’t perfect, and I’m still exploring ZKP technology.
Additional note: As a heavily regulated bank, JPMorgan Chase prohibits money laundering, so KYC is necessary. With the above in mind, we hope to improve the security of our use of DeFi pools by using VCs and whitelists. Institutional DeFi is something to look forward to.
In the fifth step, we built an institutional wallet.
1. The trader will never have access to the company’s funds;
2. Only approved DeFi protocols can be accessed by institutions;
3. VC is bundled with trading instructions, that is, VC can be traded on the chain, otherwise the transaction fails;
Click on the link to view real-time SGD and JPY transactions.
In short, this is the first real-time transaction of tokenized deposits by a large regulated financial institution through VC-based DeFi on the public chain. For more information on how institutional DeFi is supporting the next generation of finance, and for more information about Project Guardian, click on the link.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/jpmorgan-do-for-the-first-defi-transaction/
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