Today the Monetary Authority of Singapore (MAS) announced the successful first pilot of Project Guardian, which explores the potential of DeFi for financial institutions. JP Morgan Onyx, DBS and SBI Digital Asset executed trials for foreign exchange transactions and government bond trades using modified public lending protocol Aave and the decentralized exchange (DEX) Uniswap on the Polygon blockchain.
One test was for foreign exchange, and the other was for trading government bonds. Aave launched support for permissioned DeFi lending pools, Aave Arc, earlier this year.
The challenge for institutional DeFi usage is how to avoid creating walled gardens and yet add a layer of safeguards for compliance. One solution is the introduction of trust anchors, with certain financial institutions issuing verifiable credentials to traders so that the counterparties are known.
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