JPMorgan conducted the transaction on the Ethereum layer2 network Polygon due to its low transaction fees, and it used the permissioned pool concept of the Aave Protocol.
As part of the Monetary Authority of Singapore (MAS) Project Guardian, JPMorgan executed the first live trade on public blockchain.
DeFi, Tokenized Deposits, and Verifiable Credentials were used by the banking giant to complete the transaction.
Project Guardian is a joint venture between MAS and financial institutions including JP Morgan, Marketnode, and DBS Bank Ltd. Its emphasis is on asset tokenization and DeFi use cases.
DBS Bank, JPMorgan, and SBI Digital Asset Holdings participated in the pilot program by trading foreign exchange and government bonds against liquidity pools containing tokenized Singapore, Japanese government bonds, Japanese Yen, and Singapore dollars.
A cross-currency transaction involving tokenized Japanese Yen and Singapore Dollar deposits was completed. They also simulated the trading of tokenized government bonds.
JPMorgan executes its first DeFi transaction :
Ty Lobban, JPMorgan’s Head of Blockchain Launch & Onyx Digital Assets, explained how the bank completed the transaction on Twitter on November 2.
According to Lobban, the bank conducted the transaction on the Ethereum (ETH) layer2 network Polygon (MATIC) due to its low transaction fees and leveraged the permission pool concept of the Aave (AAVE) Protocol.
JPMorgan issued a tokenized Singapore Dollar (TSD) deposit for the Japanese Yen, he continued. TSD is a native deposit token with a stable on-chain value that does not suffer from the scalability problems that plague stablecoin.
The bank built on-chain verification of VCs using W3C Verifiable Credentials (VC).
According to Loban, on-chain verification “brings composability to identity,” which could be used across multiple DeFi protocols. He added:
“(JPMorgan) cannot facilitate money laundering and must implement KYC.” Using VCs and allowlists enabled us to use DeFi pools with confidence on these points.”
Finally, the bank established an institutional wallet to prevent traders from accessing company funds. At the same time, only approved DeFi protocols can be used for trades, and all trade institutions have VCs.