In collaboration with the central bank of Singapore, JPMorgan participated in its first-ever decentralised finance (DeFi) transaction. According to the Monetary Authority of Singapore (MAS), the transaction was one of many to announce the commencement of Project Guardian.
According to MAS, the pilot program’s goal is to identify the potential use cases of DeFi applications in the financial markets. Additionally, it was an asset tokenization and international transfer experiment.
As reported by Todayq, the pilot also included DBS and SBI Digital Asset Holdings. The parties, according to MAS, made it easier for tokenized assets to be traded, notably Singaporean and Japanese government bonds and currencies.
These transactions made use of the decentralised exchange Uniswap and a modified version of the DeFi protocol called Aave on the Polygon blockchain.
JPMorgan has made significant investments in the foundational blockchain technology even if its chief executive continues to be hesitant about crypto. Onyx, the division of JP Morgan devoted to blockchain technology, took part in the test and most recently worked with Visa to create Confirm. Confirm is a tool that verifies account information and ensures that sides in the transactions provide real names and accurate information.
According to Onyx, Confirm can verify more than 2 billion bank accounts from 3,500 banking institutions. It appears that Deutsche Bank has also decided to become a founding member of Confirm.
Since announcing Project Guardian in May 2022, Singapore’s central bank has long recognised DeFi’s enormous potential. MAS said in its recent statement that DeFi enables direct financial transactions between companies without the use of middlemen.
These initial live Project Guardian transactions, according to MAS, show how tokenized assets “can be traded, cleared and settled instantaneously.” The central bank claims that while streamlining the procedure, “management of bilateral counterparty trading relationships” is still necessary.
To achieve this, MAS says a reliable standard must be created. It refers to these mechanisms as “trust anchors.” In essence, financial institutions would issue trading counterparties with these verifiable credentials.