Parfin Ethereum Layer-2’s Rayls Network was recently featured on J.P. Morgan’s blockchain-focused business unit EPIC project, highlighting secure and compliant network identity solutions to address privacy needs in regulated financial markets.
Parfin Privacy Solutions on the Ethereum L2 Blockchain
Kinexys Digital Assets (KDA) owned by JP Morgan, a business unit of the company based on blockchain technology, presented United Finance (UniFi) Rayls blockchain ecosystem in its Project EPIC report. The report examines privacy and identity solutions in the institutional landscape, with the goal of “expressing the challenges and opportunities in this space and catalyzing dialogue and action across the industry.”
To achieve this, the KDA team conducted a Proof of Concept (POC) initiative focusing on four goals: confirming institutional needs for privacy and identity, identifying criteria required for a scalable identity solution, exploring the feasibility of emerging privacy solutions currently available in the market, and connect the institutional world with the native web3 world to find a viable development path.
The report notes that this is a result of this POC Parfin Ethereum L2 privacy solution. Rayls aims to provide an end-to-end system that “enables banks to transact privately and confidently” by integrating privacy, security and governance.
KDA highlighted Rayla’s privacy ledgers, which protect “sensitive data locally with end-to-end encryption and Merkle root certificates enabling confidential interactions.” The report details that privacy ledgers are connected through a decentralized blockchain called the “commit chain,” a shared blockchain that allows privacy ledgers to transmit encrypted messages.
This enabled each entity to maintain its own privacy ledger locally and interact with others via an atomic transport protocol that reportedly ensured the correct transfer of resources between chains, “while privacy ledgers maintained independent, confidential records across the network.”
Rayl’s regulatory compliance was also highlighted as it is integrated with anti-money laundering (AML), know-your-customer (KYC) and suitability frameworks through assurance services, “ensuring trust and meeting institutional requirements.”
The need for identity and privacy solutions
According to the report, the billionaire asset tokenization market is poised for exponential growth and is expected to reach multi-million dollar valuations in the future. However, it highlights the need to address privacy at an institutional level and develop composable privacy representative identity solutions to further the industry’s development.
KDA argues that the lack of standardized approaches and infrastructure among market intermediaries for identity verification and compliance creates “significant inefficiencies in asset interactions.”
Moreover, a lack of standardization often leads to redundant processes that do not deliver the operational benefits that tokenization promises:
Without these core elements, the industry’s growth will remain confined, particularly in terms of attracting conventional investors who expect stalwart data protection comparable to conventional markets.
The report raised some issues regarding the scalability of the Ethereum L2 project, noting that a privacy pool approach using ZKPs instead of Merkle root attestations would provide greater flexibility to Rayl’s privacy solution. The underlying throughput of the approval chain was also highlighted as “a key factor in scaling our system.”
Rayls seeks to “bridge the gap between decentralized finance (DeFi) and traditional finance (TradFi)” by supporting banks and other financial entities around the world in dealing with the complexities of digital asset management.
Ultimately, Marcos Viriato, co-founder and CEO of Parfin, believes that “Rayls represents a paradigm shift in the way banks can conduct transactions safely and efficiently,” adding that the financial technology company “looks forward to continuing to develop solutions, that will contribute to the future of banking.”
Ethereum (ETH) is trading at $2,920 in the weekly chart. Source: ETHUSDT on TradingView
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