Banking giant Deutsche Bank is building a Layer 2 rollup network on Ethereum with ZKsync technology developed by Matter Labs.
Bloomberg reported on the project on Wednesday and a Matter Labs representative confirmed the story.
The chain will be “a public and permissioned L2,” Omar Azhar, head of business development at Matter Labs, told CoinDesk via Telegram. When asked to elaborate, he referred a reporter to another participant in the project, Memento Blockchain, which did not immediately respond to a request for comment. Generally, “publicly permitted” means that anyone can see what happens on the network, but only authorized participants can do certain things.
The project is a sign of renewed interest in blockchain technology among institutions, as prices of several cryptocurrencies reach all-time highs. It also echoes private company blockchains that were all the rage almost a decade ago. Those systems were disconnected from public chains like Ethereum and Bitcoin, although they sometimes borrowed code from them.
According to the Bloomberg report, the bank is creating the Layer 2 network to address regulatory compliance issues that arise with public blockchains in finance. (Regulated institutions have to know who they are dealing with, which is difficult on completely open networks like the Ethereum mainchain.) The bank believes that by creating a layer 2 on top of Ethereum, it will improve transaction speeds and address those compliance needs.
The ZKsync-based rollup could allow banks to experiment with blockchains and allow them to select which validators could run such a blockchain, Boon-Hiang Chan, Asia-Pacific industry applied innovation leader at Deutsche Bank, told Bloomberg. The L2 blockchain can also give regulators “super administrator rights,” allowing them to more deeply analyze the movement of funds, Chan said.
Memento Blockchain announced the L2 effort on November 6, but it received little attention at the time. The chain is currently in a testnet environment. It is built with the ZK Stack, a customizable toolset that allows developers to build their own blockchains based on ZKsync technology.
L2 is part of Dama 2, a multi-chain initiative led by Deutsche Bank. Lady 2, in turn, is part of the Monetary Authority of Singapore’s Guardian Project, which brings together 24 major financial institutions that are looking for ways to use blockchains to tokenize their assets.
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