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JP Morgan executes first DeFi trade on public blockchain

Multinational banking firm JP Morgan has successfully executed its first ever cross-border transaction using decentralized finance (DeFi) on a public blockchain.

The trade was facilitated by the Monetary Authority of Singapore’s (MAS) Project Guardian on Nov. 2 — which was established as part of a pilot program to “explore potential decentralized finance (DeFi) applications in wholesale funding markets.”

In other words, the pilot was another step into examining how traditional financial institutions can use tokenized assets and DeFi protocols to conduct financial transactions, among other use cases. 

Singapore’s largest bank — DBS Bank, Tokyo-based banking firm SBI Digital Asset Holdings and business leadership platform Oliver Wyman Forum also took part in the pilot program. 

The trade was executed on Ethereum layer-2 network Polygon, using a modified version of AAVE protocol’s smart contract code.

MAS said that a “live cross-currency transaction” was conducted, involving tokenized Singaporean Dollar and Japanese Yen deposits, along with a simulated exercise of buying and selling of tokenized government bonds.

Tyrone Lobban, Head of Blockchain Launch and Onyx Digital Assets at JP Morgan’s Onyx business unit shared the news on Twitter on Nov. 2, noting the tokenized SGD deposits were the first issuance of tokenized deposits by a bank. 

WORLD! J.P. Morgan has executed its 1st *LIVE* trade on public blockchain using DeFi, Tokenized Deposits & Verifiable Credentials, part of @MAS_sg Project Guardian https://t.co/XI212SG4zg Many world 1sts here, & since this is public ⛓ here’s a transparenton what we did:

— Ty Lobban (@TyLobban) November 2, 2022

MAS Chief FinTech Officer Sopnendu Mohanty said it was a “big step” towards more efficient financial networks, and the latest pilot has helped develop the country’s digital asset strategy, commenting: 

“The live pilots led by industry participants demonstrate that with the appropriate guardrails in place, digital assets and decentralized finance have the potential to transform capital…

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