German lending behemoth, Deutsche Bank AG Inc. (NYSE:DB), was developing an Ethereum (CRYPTO: ETH) Layer-2 blockchain, according to a Wednesday report, the latest in a wave of growing interest in Web3 by traditional financial giants.
What Happened: The solution was developed using ZKsync technology and was part of the Project Dama 2 experiment, which was unveiled in November, Bloomberg reported.
The Layer-2 concept was an attempt to avoid the issues that regulated banks may have when working with public blockchains, such as transacting with criminals and sanctioned entities, according to bank executives quoted by Bloomberg.
A rollup, or a Layer-2 scaling solution, offers the security of the Layer-1 chain and infrastructure while catering to enterprise needs for security and compliance. They allow for full customization, with only permissioned entities allowed to be as validators—participants that verify transactions.
Deutsche Bank didn't immediately respond to Benzinga's request to confirm this development.
Why It Matters: Project Dama 2 was part of the broader "Project Guardian" initiative, launched by Singapore's central bank, the Monetary Authority of Singapore, to test the application of asset tokenization and decentralized finance across a broader range of use cases in the financial sector.
Participating financial institutions include names like JPMorgan, which previously conducted a cross-border transaction on a public chain.
The move comes in the wake of similar initiatives by other major corporations. Earlier in August, multinational conglomerate Sony Group unveiled its Ethereum Layer-2 blockchain, Soneium. The public blockchain, developed in collaboration with Web3 infrastructure, Startale Labs, hosts a range of Web3 games, NFT marketplaces, and entertainment-related services.
Deutsche Bank is the largest lender in Germany, with assets worth €1.31 trillion ($1.36 billion) as of Mar. 31, according to S&P Global.
Price Action: Shares of Deutsche Bank closed 2.44% lower at $17.18 during Wednesday's regular session and were down 1.05% in after-market trading, according to data from Benzinga Pro.
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