JP Morgan executes its first DeFi transaction on the public blockchain
Banking multinational JP Morgan successfully executed its first cross-border transaction using decentralized finance (DeFi) on a public blockchain.
MAS’s director of financial technology said the success test was “a big step towards building more efficient and integrated global financial networks.”
The exchange was facilitated on November 2 by the Guardian Project of the Monetary Authority of Singapore (MAS), which was established as part of a pilot program to “explore the potential applications of decentralized finance (DeFi) in wholesale finance markets. “.
In other words, the pilot was another step in examining how traditional financial institutions can use tokenized assets and DeFi protocols to conduct financial transactions, among other use cases.
The pilot program was also attended by Singapore’s largest bank – DBS Bank, Tokyo-based banking firm SBI Digital Asset Holdings and corporate leadership platform Oliver Wyman Forum.
The transaction was performed on the Ethereum Layer-2 Polygon network, using a modified version of the smart contract code of the AAVE protocol.
MAS claimed that a “real-time cross-currency transaction” was conducted, involving deposits of Singapore dollars and Japanese yen, as well as a simulated exercise of buying and selling token government bonds.
Tyrone Lobban, Head of Onyx Blockchain and Digital Asset Launch at JP Morgan’s Onyx Business Unit, shared the news on Twitter on November 2, noting that tokenized SGD deposits were the first issue of tokenized deposits by a bank.
Sopnendu Mohanty, MAS Chief FinTech Officer, said it was a “big step” towards more efficient financial networks and the latest pilot helped develop the country’s digital asset strategy, commenting:
“Live pilot projects led by industry participants demonstrate that, with the proper safeguards in place, digital assets and decentralized finance have the potential to transform capital markets.”
Umar Farooq, CEO of “Onyx by JP Morgan” – a business unit within the wealth management firm that focuses on blockchain technology – told Bloomberg on November 2 that JP Morgan’s on-chain transaction “was the first time a large bank, possibly any bank, had tokenized deposits on a public blockchain.
DeFi Lending Protocol AAVE also commented on the new pilot, adding that DeFi trading is a “significant step” for the industry as it “represents a huge step towards bringing traditional financial assets closer to DeFi.”
Project Guardian was officially launched for the first time in May. 2022, which came about a month after JP Morgan and DBS partnered to build a new blockchain interbank platform to complement the work of central bank digital currencies (MNBC). This step comes as many of the biggest financial players have predicted big things for blockchain-based tokenization of real-world assets.
The Boston Consulting Group has estimated that the total size of illiquid tokenized assets will reach $ 16.1 trillion by 2030 in a September 2022 report.
While Cynthia Wu, COO of digital asset services platform Matrixport, recently told Cointelegraph that “almost anything could be tokenized in 5-10 years” and non-fungible tokens (NFTs) could be the tool used to represent off-chain assets such as real estate deeds, stocks and bonds.
By Brayden Lindrea, Cointelegraph
Brayden Lindrea is an Australian-based freelance technical writer and journalist. He is primarily interested in how blockchain technology and cryptocurrencies will disrupt the traditional financial system.
The views expressed herein are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move carries risk, you should do your research when making a decision.
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