UBS (NYSE:UBS) completed a Proof-of-Concept (PoC) that simulated the UBS Key4 Gold offering on a ZKsync Validium in a test environment.
The test was designed to provide solutions regarding scalability, cost, privacy, interoperability with Ethereum, and “ease of access for transacting assets.”
ZKsync Validium, an L2 blockchain solution designed to scale Ethereum while maintaining data privacy, was selected for the “deployment of the PoC with the goal of effectively growing the network while also enhancing its interoperability capabilities in a test environment.”
UBS Key4 Gold offers retail and wealth clients in Switzerland “access to purchase a direct claim to physical gold.”
It allows for fractional gold investments with “real-time pricing, deep liquidity, secure physical storage, and optional physical delivery.”
UBS Key4 Gold is powered by the UBS Gold Network, a “permissioned blockchain connecting vault operators, liquidity providers, and distributors.”
The UBS team conducted a PoC to evaluate the “technical feasibility and cost implications of moving the infrastructure onto a zero-knowledge proof-based DLT network.”
This PoC was the latest initiative from UBS in utilizing Ethereum technology and follows the recent “launch of UBS’ first tokenized money market investment fund, uMINT, which was built on the Ethereum blockchain.”
The PoC simulated a UBS Gold Network built on ZKsync Validium, which is “a ZK rollup that stores data off-chain.”
This mechanism reportedly provides an avenue for financial products that are interoperable with Ethereum while ensuring regulatory compliance, privacy, and security.
In the PoC, smart contracts were deployed on a testnet to “simulate the UBS Gold Network activity.”
These contracts replicated KYC processes and the whitelisting of accounts on the UBS Gold Network, including “gold token issuance, transaction processing, and reconciliation.”
The Validium model allowed UBS to operate the network while “maintaining ownership of the data storage, ensuring privacy and control while inheriting the security of the established Ethereum network.”
Furthermore, the ZKsync infrastructure addressed critical points the PoC set out to accomplish:
- Scalability: High transaction throughput at lower costs by bundling transactions and storing data off-chain
- Privacy: Transaction data can be stored on any type of private server controlled by the organization, ensuring confidentiality of user data
- Interoperability: Seamlessly connects to Ethereum and also inherits Ethereum’s security properties, enabling cross-network asset transfers
Alex Gluchowski, Co-Inventor of ZKsync, commented:
“This PoC reflects UBS’ continued efforts to explore how blockchain can enhance its financial offerings and support its broader digital asset strategy. I firmly believe that the future of finance will take place onchain and ZK technology will be the catalyst for growth. By leveraging ZKsync, institutions can natively and trustlessly interoperate with Ethereum and other ZK Chains without the need for third-party bridges or consortia. UBS exploring solutions on ZK technology is a reflection of its innovative vision for its digital asset strategy. Furthermore, this PoC is a testament to the fact that ZKsync is the ideal home for tokenized assets, building Web3 without compromise. We’re excited to play an integral role in the continued evolution of the space. ”
The PoC was deemed promising in “demonstrating ZKsync’s ability to meet UBS’s privacy and interoperability objectives while simultaneously addressing scalability requirements.”
It highlighted how ZKsync provides the “capability for financial institutions to develop tailored solutions that meet specific needs.”
Through this PoC, ZKsync’s tech reportedly maintained “institutional-grade levels of security, interoperability, and privacy without needing to store specific transaction data, while also providing native and trustless interoperability.”
Christoph Puhr, Digital Assets Lead for UBS Group, commented:
“This is another great example of how UBS collaborates with technology providers to stay at the forefront of innovation. Whilst tokenized securities hold a lot of potential to bring new solutions to our clients, scalability, privacy, and interoperability remain key challenges to overcome. Our PoC with ZKsync demonstrated that Layer 2 networks and ZK technology hold the potential to resolve these.”
As noted in the update, ZKsync is the ZK tech powering the next generation of builders with scale.
Secured by math and designed for native interoperability, ZKsync “enables an elastic network, an expanding ecosystem of customizable chains.”
Rooted in its mission to advance personal freedom for all, the ZKsync technology makes “digital self-ownership universally available.”
