Banking giant Deutsche Bank is building a cumulative Layer 2 network on Ethereum with ZKsync technology developed by Matter Labs.
Bloomberg reported on the project on Wednesday and a representative for Matter Labs confirmed the story.
The channel will be “a public, permissioned L2,” Omar Azhar, head of business development at Matter Labs, told CoinDesk on Telegram. When asked to elaborate, he referred a reporter to another project participant, Memento Blockchain, which did not immediately respond to a request for comment. Generally, “public permission” means that anyone can see what’s happening on the network, but only authorized participants can do certain things.
The project is a sign of renewed interest in blockchain technology among institutions, as prices of various cryptocurrencies reach unprecedented heights. This also echoes the private enterprise blockchains that were popular almost a decade ago. These systems were disconnected from public chains like Ethereum and Bitcoin, although they sometimes borrowed code from them.
According to the Bloomberg report, the bank is building a layer 2 network to address regulatory compliance issues related to public blockchains in the financial sector. (Regulated institutions need to know who they are dealing with, which is difficult in completely open networks like the Ethereum main chain). The bank believes that by creating Layer 2 on top of Ethereum, it will improve transaction speeds and address these compliance needs.
The ZKsync-based rollup could allow banks to experiment with blockchains and select validators that could run said blockchain, Boon-Hiang Chan, head of applied innovation at Deutsche’s Asia-Pacific industry, told Bloomberg Bank. The L2 blockchain can also give regulators “super administrator rights,” allowing them to look deeper into fund movements, Chan said.
Memento Blockchain announced the L2 project on November 6, but it received little attention at the time. The channel is currently in a test network environment. It is built with ZK Stack, a customizable toolkit that allows developers to create their own blockchains based on ZKsync technology.
L2 is part of Dama 2, a multi-chain initiative led by Deutsche Bank. Dama 2, meanwhile, is part of the Monetary Authority of Singapore’s Project Guardian, which brings together 24 major financial institutions exploring ways to use blockchains to tokenize their assets.
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