UBS Explores Blockchain for Digital Gold with ZKsync Validium PoC – BitRss

UBS has taken a strategic step towards modernizing digital gold investments by conducting a proof-of-concept (PoC) for UBS Gold using ZKsync Validium. This Layer 2 (L2) blockchain solution is designed to scale Ethereum while maintaining privacy. The PoC aims to address challenges in scalability, privacy, and interoperability as UBS seeks to expand UBS Gold into global markets.

UBS Gold is an investment product offered to retail and wealth clients in Switzerland, allowing fractional gold investments with real-time pricing and secure physical storage. The UBS Gold Network, a permissioned blockchain, connects vault operators, liquidity providers, and distributors. However, the network’s limitations in scalability, privacy, and interoperability need addressing for potential global expansion.

Why ZKsync Validium?

After evaluating multiple blockchain technologies, UBS selected ZKsync Validium for its ability to meet the specific requirements of the UBS Gold Network. ZKsync Validium addresses three critical needs: enhanced scalability, privacy, and interoperability. It offers high transaction throughput at lower costs by storing data off-chain, ensuring confidentiality for users, and seamlessly connecting to Ethereum, the foundational layer for Decentralized Finance (DeFi).

The PoC simulated a UBS Gold Network on ZKsync Validium, testing the feasibility of meeting these requirements while assessing cost implications. Smart contracts were deployed on a testnet to simulate the Gold Network, replicating key functionalities such as gold token issuance and transaction processing. The Validium model allowed UBS to operate the network with off-chain storage, ensuring privacy and control.

Key Objectives and Outcomes

The PoC aimed to evaluate technical feasibility and business viability. It successfully demonstrated UBS’s ability to meet privacy and interoperability objectives while addressing scalability requirements. By leveraging Validium mode, UBS ensured user privacy and validated interoperability as stablecoins bridged from Ethereum were used to purchase gold tokens.

While ZKsync’s Validium supported high throughput, achieving optimal cost efficiency would require thousands of transactions per hour, highlighting opportunities for further scalability optimization. The results underscored the broader potential for integrating L2 solutions into UBS’s operations, including future-proofing for increased transaction volumes and creating tailored solutions to address specific financial needs.

This PoC highlighted ZKsync Validium’s capability to support UBS Gold’s privacy and interoperability requirements. By leveraging blockchain technology, UBS continues to explore innovative ways to enhance its financial offerings while adapting to the growing demand for digital assets. More details on ZKsync can be found here.

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