JPMorgan conducts first DeFi trade on Polygon for MAS project Guadian

As part of the Monetary Authority of Singapore (MAS) Project Guardian pilot, JPMorgan closed the first live cross-border transaction on November 2nd polygon away.

MAS’ Project Guardian initiative aims to explore ways in which traditional financial institutions use tokenized assets and decentralized financial protocols (DeFi) to perform, among other things, financial transactions.

Milestone for JPMorgan

MAS Chief Fintech Officer Sopnendu Mohanty said the live pilots led by industry participants show that digital assets and DeFi have the potential to transform capital markets with the appropriate guard rails.

Mohanty called this a major step towards facilitating “more efficient and integrated global financial networks,” adding that the Project Guardian “deepened” the regulator’s understanding of the digital asset ecosystem and helped develop Singapore’s digital asset strategy.

Going forward, MAS plans to work with more institutions to facilitate global learning about industry regulation and “responsible innovation” policies, standards and best practices.

For the first test phase, the Blockchainwholesale payments division of JPM – Onyx – with Singapore’s DBS Bank, Japan’s SBI Digital, Singapore Exchange’s digital asset platform Marketnode and Temasek. Participants performed a cross-border transaction in tokenized Japanese yen and Singapore dollar deposits, as well as simulated trading in tokenized government bonds.

Trade Polygon, Aave and more

Tyrone Lobban, Head of Onyx Digital Assets, confirms the development tweeted,

“WORLD! JP Morgan has its first LIVE-Trades executed on the public blockchain using DeFi, Tokenized Deposits & Verifiable Credentials, part of MAS’ Project Guardian.

Lobban revealed that the banking giant wants to continue trading Ethereum ane chose Polygon because of the low gas rates. However, future phases of Project Guardian will explore other blockchains as well, the manager said, while citing MAS’ goal for open/interoperable networks.

JPMorgan used Aave to leverage its Permissions Pools concept and deployed a modified version of Aave Arc to set certain parameters such as interest rates and exchange rates. In addition, the bank has issued a tokenized deposit in Singapore dollars (TSD) for the Japanese yen. TSD is a “native deposit token with stable on-chain value without the scalability issues that plague stablecoins.”

To enable compliant access to Aave, JPMorgan used W3C Verifiable Credentials (VC). According to Lobban, VCs offer much “finer-grained” control, including risk limits, asset limits, etc., rather than just having allow-listed addresses.

The bank has also developed an institutional wallet to ensure traders do not have access to corporate funds. Trades, on the other hand, can only be conducted using approved DeFi protocols, and all trading institutions have VCs.

The news comes just weeks after JPMorgan CEO Jamie Dimon reiterated his negative stance on the asset class Bitcoin referred to as a “decentralized Ponzi scheme”.

                                    <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>