Major financial services group DBS Bank, is applying decentralized finance for a project backed by Singapore’s central bank.
DBS has started a trading test of foreign exchange and government securities using permissioned, or private, DeFi liquidity pools, the firm announced on Nov. 2.
The development is part of Project Guardian, a collaborative cross-industry effort pioneered by the Monetary Authority of Singapore. Conducted on a public blockchain, the trade included the purchase and sale of tokenized Singapore government securities, the Singapore dollar, Japanese government bonds and the Japanese yen.
A spokesperson for DBS stated that Project Guardian was performed on the Polygon mainnet using a fork of Uniswap v2 protocol. The representative also pointed the two key implementations that need to occur to move a step closer to an institutional-grade DeFi protocol, including verifiable credentials and price oracles.
The project has shown that trading on a private DeFi protocol enables simultaneous operations of instant trading, settlement, clearing and custody. The initiative could potentially transform the existing trading processes by providing better liquidity across multiple financial assets and markets.
According to DBS’ head of strategy Han Kwee Juan, the latest Project Guardian developments lay the foundations for building global institutional liquidity pools enabling faster trading, greater transparency, lower settlement risks and other benefits. Han also pointed out that a highly liquid market attracts more investors and adds efficiency by bypassing intermediaries.
