Deutsche Bank Develops Ethereum Layer-2 Blockchain Using ZKsync

Deutsche Bank, the biggest bank in Germany, is starting a new blockchain project to help financial institutions use Ethereum better. The bank is developing an L2 solution using ZKsync technology.

In the process, this will fix some of the problems financial institutions face in using public blockchains, like issues with rule-following and security. The new system is part of Project Dama 2, which is connected with Singapore’s Project Guardian.

According to Bloomberg, the project houses 24 financial institutions that aim at exploring the use of blockchain in asset tokenization. Deutsche Bank aims to release the first version of the platform by 2025, pending approval from regulators.

L2 Solution aims to make the transactions faster, yet cheaper, while ensuring all steps strictly adhere to financial norms.

It will utilize Ethereum’s blockchain but with added features to make it work better. Another big plus is that it will allow the bank to select trusted validators, which lessens risks like working with banned groups.

“You are not dependent on Layer 1 for detailed transaction records anymore,” said Boon-Hiong Chan, the head of APAC Securities Market and Technology Advocacy at Deutsche Bank.

Project Dama 2 comes under Singapore’s Project Guardian. It aims at testing blockchain technology for tokenizing assets. This is meant to ensure that banks can use blockchain in a safe and effective manner without creating compliance issues. Deutsche Bank’s L2 blockchain solution also provides regulators with special “super admin rights” to supervise transactions. This helps in making things clearer and controlled.

Moreover, this is part of Deutsche Bank’s bigger plan for the use of blockchain in traditional finance. The use of ZKsync will enable the bank to solve some of the biggest issues pertaining to transaction security and risks associated with handling crypto assets.

If it works, it could also be a model for other banks looking to implement blockchain in a secure way.

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