In a Telegram conversation with CoinDesk, Matter Labs’ head of business development, Omar Azhar, described the chain as “a public and permissioned L2. Memento Blockchain for Compliance, another project participant, did not immediately reply to a request for comment when he referred a reporter to them for further details. In a typical public permissioned setup, everybody may view the network traffic, but only authorized users can make specific changes.
Bank’s Layer-2 Blockchain for Compliance
At a time when the value of many cryptocurrencies is at an all-time high, this project reflects the institutional community’s fresh enthusiasm for blockchain technology. This project bears echoes of the popular private enterprise blockchains from almost a decade ago. Even though they occasionally took codes from public networks like Ethereum and Bitcoin, such systems were separate.
Regulatory compliance concerns associated with public Blockchain for Compliance in the financial sector are reportedly motivating. The bank to establish the layer-2 network as reported by Bloomberg. The primary Ethereum chain is an example of an open network, making it difficult for regulated institutions to know their counterparties. The bank is of the opinion. That it can increase transaction speeds and meet those compliance requirements by building Layer 2 on top of Ethereum.
Deutsche Bank’s L2 Blockchain Testing
A ZKsync-based rollup could let banks test blockchains and choose validators. The head of industry applied innovation for Asia and the Pacific at Deutsche Bank, Boon-Hiang Chan, spoke with Bloomberg. Regulators may be granted “super admin rights” by the L2 blockchain. Which would enable them to investigate the flow of funds more thoroughly, according to Chan.
On November 6th, Memento Blockchain announced their L2 venture although nobody paid much attention to it. At the moment, the chain is undergoing testing on a test network. Developers can create their own blockchains using ZKsync’s technology with the help of ZK Stack, a flexible toolbox. The L2 is a component of Deutsche Bank’s multi-chain project known as Dama 2. The Singapore Monetary Authority is spearheading Project Guardian, which brings together twenty-four large financial institutions investigating blockchain technology as a means to tokenize their assets. Dama 2 is one of these organizations.
Final Thoughts
Financial institutions are now addressing blockchain technology. In a very different way, and this is evident in their construction of a public and permissioned Layer-2 (L2) blockchain. Blockchain technology is attracting increasing interest from institutions looking to enhance the speed, security, and regulatory compliance of cryptocurrency transactions as their prices skyrocket. Deutsche Bank intends to address the stringent compliance requirements of regulated financial companies by developing a safe and scalable platform that leverages Ethereum’s technology in conjunction with a Layer-2 solution.
A broader trend is emerging, and this endeavor is a part of it, toward combining the openness of public blockchains with the regulation and supervision required for financial sector compliance. Banks can now test and validate blockchains with greater oversight thanks to the ZKsync-based rollup. This demonstrates the industry’s need for control and flexibility in blockchain deployments. Given that regulators may soon have super admin rights it will be extremely important to strike a balance between decentralization and compliance to guarantee the efficacy and safety of these networks.
FAQs
Why is Deutsche Bank building a Layer-2 blockchain?
Deutsche Bank is creating a Layer-2 blockchain to address regulatory compliance concerns in the financial sector, offering improved transaction speeds and the ability to meet the strict regulatory requirements that public blockchains like Ethereum may not fulfill.
What are "super admin rights" in this context?
"Super admin rights" refer to enhanced regulatory access that allows regulators to oversee and investigate the flow of funds more thoroughly within the blockchain, ensuring compliance and transparency.
What role does ZKsync play in this project?
ZKsync is a Layer-2 scaling solution that Deutsche Bank is using to create its blockchain. It allows developers to build their own blockchains with ZKsync's flexible toolbox and is integral to testing and validating the blockchain.
How does this project relate to other blockchain initiatives?
This project is part of a broader movement, including initiatives like Project Guardian, which involves major financial institutions exploring blockchain for asset tokenization and improving financial transactions using secure and compliant blockchain solutions.
