Deutsche Bank dares a Layer 2 on Ethereum

Although Ethereum is regularly challenged by rival blockchains, it maintains its place of choice among major financial institutions. In fact, many have already adopted it as an alternative solution for their transactions. Now it is Deutsche Bank's turn to take the plunge. The German bank is working on an ambitious project, aimed at integrating a second layer blockchain on Ethereum, as part of its regulatory compliance initiative.

Ethereum, at the heart of banking innovation

Deutsche Bank is not the type to be impressed by the new blockchains that are popping up on the market. His project, called Dama 2use the ZKsync technologya protocol that allowsoptimize transactions on Ethereum while reducing their cost and slowness.

The objective is simple: meet compliance requirements while continuing to exploit the benefits of public blockchain.

Through this Layer 2 (L2), the bank intends to offer a secure framework for financial institutions wishing to move closer to decentralization without taking risks.

This initiative falls within the framework of Project Guardianan initiative of the Monetary Authority of Singapore, aimed at explore the possibilities of asset tokenization via blockchain. This partnership brings together 24 financial institutions to test and integrate innovative solutions.

If Deutsche Bank succeeds in its bet, it could well become a model to follow for other financial giants, by showing that it is possible to combine decentralization and strict regulation.

Crypto: Deutsche Bank paves the way for new possibilities

The advantages of a Layer 2 on Ethereum are multiple: faster transactionsless costly and better compliance with financial rules. The Dama 2 project makes it possible to add advanced regulatory tools, such as “super” administrator rights for regulatorsin order to monitor and audit transactions with complete transparency.

This platform could well be the key to large financial institutions further adopting blockchain while protecting themselves from associated risks, such as transactions with sanctioned entities.

The stakes are high, as public blockchains are often seen as too vulnerable to abuse. By partnering with ZKsync, Deutsche Bank hopes to offer a secure environment where institutions can trade cryptoassets without fear of violating regulations in place.

But as a bank official points out, “ the balance between innovation and compliance is delicate, but that’s what we’re banking on “.

• Layer 2 for more efficient transactions;
• ZKsync for security and compliance;
• Platform testing under Project Guardian;
• Objective: a functional version in 2025.

Deutsche Bank's project is not a first in the sector. The bank has already launched in June 2023 with a crypto plan including digital asset custody services, shaking up the German financial landscape. A bold bet that could change the situation.