Source: AiYing Compliance
BIS Report: https://www.bis.org/publ/othp_mariana.pdf
We collected data on 63 blockchain-related trials conducted by central banks in G20 countries. We found that a large number of projects (47% of the sample) involved multiple uses (such as central bank digital currency CBDC, tokenization, decentralized finance DeFi, etc.) and were compatible with the Ethereum Virtual Machine (EVM), a technical architecture based on Ethereum. In addition, an increasing number of projects are being launched on public blockchains, proving that public, permissionless infrastructure can meet the needs of regulated institutions.
Our findings highlight several important points:
Innovation often occurs at the margins and is eventually adopted by mainstream institutions. If innovation is suppressed, the technology that eventually matures will be limited. Despite their reservations about cryptocurrencies, central banks are applying battle-tested technologies from the permissionless world to their own unique contexts. If the U.S. government had stifled innovation in the information and communications technology (ICT) sector, the transmission of information on Fedwire might still be in the teletype and Morse code stages. As a result, central banks are not only exploring CBDCs and payment systems, but also more complex projects such as tokenization and decentralized finance, which are increasingly deployed on public, permissionless blockchains.
Two very interesting projects include:
Project Mariana: A cross-border FX project using tokenized central bank money and automated market makers (AMMs) on the Ethereum Sepolia testnet.
Project Guardian: A trio of sub-projects that build liquidity pools, structured notes, and asset-backed securities for trade finance on Ethereum’s second layer network.
Project Guardian: A trio of sub-projects that build liquidity pools, structured notes, and asset-backed securities for trade finance on Ethereum’s second layer network.
Project Guardian: A trio of sub-projects that build liquidity pools, structured notes, and asset-backed securities for trade finance on Ethereum’s second layer network.
Project Guardian: A trio of sub-projects that build liquidity pools, structured notes, and asset-backed securities on Ethereum’s second layer network for trade finance ...
Take Project Mariana as an example:
From the Project Mariana Interim Report released by the Innovation Center of the Bank for International Settlements, it can be seen that the specific way in which Project Mariana realizes the exchange of cross-border wholesale central bank digital currency (wCBDC) involves several key technical components, including the design of wholesale CBDC, bridging technology, and automated market makers (AMM). Together, these components form a system architecture that can operate safely and efficiently on an international network. The following are the specific implementation details of these technical components:
1. wCBDC design
Wholesale CBDC adopts a unified technical standard based on the Ethereum standard (ERC-20) to achieve interoperability between different CBDCs. This standard allows:
Central bank governance features: Central banks can manage their wCBDCs on-chain, such as issuing and redeeming (minting and destroying), controlling access rights to wCBDCs, and recovering wCBDCs in emergencies.
Upgradeability: The smart contract of wCBDC can be upgraded to fix potential problems or adjust functions without stopping operations or replacing existing CBDC.
2. Bridging technology
Bridging technology allows wCBDC to be securely transferred between different blockchain networks. Each bridge consists of two smart contracts:
a domestic bridge account and an international bridge account, which communicate with each other through a relayer to transfer wCBDC between networks.
The central bank manages these bridges, ensuring that only authorized commercial banks can use the bridge to transfer wCBDC, and ensuring the consistency and security of wCBDC during the transfer process.
3. Automated Market Maker (AMM) Design
The AMM used by Project Mariana is based on the Constant Function Market Maker (CFMM) model, a common model in decentralized finance (DeFi) that determines the transaction price through a fixed pricing function. The specific implementation of AMM includes:
Liquidity Pools of Three Currencies: The liquidity pool of AMM contains wCBDCs in Euro (EUR), Swiss Franc (CHF) and Singapore Dollar (SGD), supporting cross-currency transactions.
Liquidity Providers and Traders: Commercial banks can become liquidity providers and deposit one or more wCBDCs into AMM. Traders can trade with the pool, and transaction fees and slippage are determined by the transaction size and the state of the liquidity pool.
We believe that Ethereum has the strongest developer ecosystem among the major first-level blockchains. We have heard from some traditional financial institutions that they are also currently abandoning proprietary enterprise blockchains and turning to EVM-based blockchains because of the support of their strong developer communities (such as development tools, human capital, etc.).
In addition, the report pointed out that the final report of this experimental project will be released before the end of the year, when more research findings and possible considerations for central banks will be provided.
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