Deutsche Bank, Germany’s largest bank, revealed its Ethereum layer 2, called Project Dama 2, which is currently in pilot phase.
This tool offers cheaper and more efficient transactions. This layer 2 was built using ZKsync technology, and its official launch is expected to occur in 2025.
ZKsync is a second-layer scalability technology for Ethereum that uses Zero-Knowledge Proofs (ZK) to enable fast and cheap transactions without compromising the security or decentralization of the Ethereum mainnet.
With ZKsync, transactions are processed off the mainnet and then consolidated into a single transaction on Ethereum, significantly reducing gas costs and increases processing speedwhile maintaining user privacy, as zero-knowledge proofs allow the validity of transactions to be verified without revealing the underlying details.
In general, this is one of the technologies that rollups use to lower costs and make more private transactions.
Boon-Hiong Chan, Asia-Pacific industry applied innovation leader at Deutsche Bank, explained that Layer 2 connects to Ethereum, which he called “the busiest commercial highway in cryptocurrencies,” Bloomberg reports.
This approach allows banks to avoid the risks associated with public networks, such as Bitcoin and Ethereum, which are free to use. “Using two chains, several regulatory concerns should be able to be satisfied,” Chan said.
Project Dama 2 is part of the Monetary Authority of Singapore’s Project Guardian, an initiative in which 24 major financial institutions are exploring ways to use the technology inherent in Bitcoin to tokenize assets.
As explained in the announcement, the second layer network was born after a collaboration with the cryptocurrency companies Memento Blockchain Pte. and Interop Labs.
According to Chan, layer 2 will allow create a “more personalized list of validators”, who process digital asset transactions in exchange for rewards. Another significant advantage is the possibility of granting regulators, and only them, “super administrator rights”, making it easier to supervise fund movements when necessary.
This is not Deutsche Bank’s first step into the cryptocurrency ecosystem and inherent technology. Last July, the bank announced its intention to enter the euro stablecoin race, planning to launch a new stablecoin in 2025, as NoticiasVE reported.