New bridge from Deutsche Bank to connect crypto and TradFi

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Deutsche Bank is stepping into the future with a new layer-2 blockchain solution designed to tackle the compliance hurdles that come with using public blockchains in traditional finance.

Say hello to Project Dama 2, a game-changer that’s part of Singapore’s Monetary Authority’s Project Guardian.

Everyone get a layer-2

The bank’s new protocol supports existing public blockchains like Ethereum by focusing on cost efficiency, security, and regulatory compliance.

By using specially selected validators that meet strict compliance standards, Deutsche Bank wants to create safer interactions, minimizing risks like accidentally dealing with sanctioned entities or unverified validators.

Plus, it incorporates features like ZKsync technology, which ramps up transaction speed and security.

One of the coolest aspects of this project is the introduction of super admin rights for regulators, or as many call it, censorship, so this means oversight authorities can keep an eye on transactions transparently whenever needed.

It’s a common way to balance the perks of blockchain, like scalability and interoperability, with the necessary regulatory requirements, making it a safer and more efficient framework for financial institutions.

Traditional institutions are hesitant

Public blockchains like Ethereum have the potential to revolutionize finance, especially through asset tokenization, but traditional banks have been cautious about jumping in due to compliance worries.

Risks include unexpected events like hard forks that can throw digital ledgers into chaos.

Project Dama 2 addresses these issues while keeping a detailed transaction record separate from the underlying Layer-1 blockchain.

Developed in collaboration with crypto firms Memento Blockchain and Interop Labs, Project Dama 2 offers a tailored compliance approach while leveraging blockchain’s scalability and cost-saving benefits.

Adoption

This development highlights how important collaboration is for advancing blockchain innovation, and the project represents a strategic move toward combining TradFi’s regulatory rigor with the efficiency of decentralized systems.

If regulators give it the green light, Deutsche Bank plans to roll out a minimum viable product for Dama 2 next year.

Have you read it yet? Worldcoin have to erase user data

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