December 18, 2024
Deutsche Bank has reportedly launched an ambitious pilot project called “Dama 2,” which aims to create a layer 2 built on the Ethereum network, in a strategic move to facilitate the integration of financial institutions into public blockchains.
According to a Bloomberg report on December 18, the project seeks to overcome the regulatory challenges faced by banks and financial institutions when using public blockchains, while ensuring adherence to strict regulatory standards.
In turn, Bun Heung Chan, Head of Applied Innovation, Asia Pacific, Deutsche Bank, stated that blockchains like Ethereum pose significant risks, especially when it comes to interacting with illegal or sanctioned entities. These include concerns about the lack of clarity about who is responsible for verifying transactions, and the potential for transaction fees to flow to prohibited parties.
According to Chan, Layer 2 could help solve these concerns, as it allows the bank to create a dedicated list of auditors who process transactions, enhancing security and transparency. It could also give regulators strong administrative powers to monitor financial flows within the blockchain, making it easier to identify suspicious or illegal activities.
Dama 2 was developed in collaboration with Memento Blockchain and Interop Labs using ZKsync technology. The project is part of a broader initiative known as “Project Guardian,” led by the Monetary Authority of Singapore, which aims to explore the potential of asset tokenization in collaboration with major financial firms such as JPMorgan and DBS Group.
