By George Ward
The Monetary Authority of Singapore (MAS) has announced its first wholesale market transaction using the Ethereum blockchain. The deal was conducted between Singapore-based cryptocurrency startup Polygon and US-based decentralized finance (DeFi) protocols Aave and Maker.
Hence, the two firms swapped Singapore dollars (SGD) for US dollars (USD) worth of Ethereum (ETH) tokens. The transaction is a significant development for the cryptocurrency and DeFi industries.
It is the first time a central bank has conducted a wholesale market transaction using blockchain technology. The deal also highlights the potential for blockchain-based financial infrastructure to facilitate cross-border payments and other financial transactions.
MAS managing director Ravi Menon said that the transaction was a “proof of concept” demonstrating blockchain technology’s potential to “improve the efficiency and resilience” of the financial system. He added that the Singaporean central bank would continue exploring blockchain for other types of transactions.
The deal between Polygon and Aave was conducted using the 0x protocol, an open-source protocol that enables the decentralized exchange of Ethereum-based tokens. In addition, the transaction was facilitated by the Maker Protocol, which is a decentralized lending platform built on the Ethereum blockchain.
Singapore Keeps Leveraging Blockchain Technology
This deal is a significant step forward for the cryptocurrency and DeFi industries. It demonstrates the potential for blockchain-based financial infrastructure to facilitate cross-border payments and other financial transactions.
It also highlights the potential for blockchain technology to improve the efficiency and resilience of the financial system. DBS Group is one of Asia’s largest financial services groups, with over 280,000 employees and operations in 18 countries.
The group has been exploring blockchain technology for many years. Also, it has been an active participant in the Enterprise Ethereum Alliance (EEA) development.
In 2018, DBS Group launched its digital transformation strategy to become a digital-first bank. The group is investing US$2 billion over the next five years to drive its digital transformation.
Completing this blockchain-based transaction is a significant step forward in the group’s digital transformation journey. It is also a strong validation of the potential of DeFi protocols to provide efficiencies and new opportunities in traditional finance.
The transaction was facilitated by DBS’ private blockchain platform and involved the transfer of $100 million worth of digital assets from one party to another.