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UBS Explores ZKSync’s Layer-2 Technology in Blockchain Expansion

Swiss banking giant UBS has successfully completed a proof-of-concept for its UBS Key4 Gold offering using the Ethereum layer-2 network ZKsync. This experiment signals a growing interest among traditional financial institutions in blockchain technology.

The simulation was conducted on a ZKsync test network as part of UBS’s ongoing efforts to explore scalable and private blockchain solutions. UBS has previously ventured into blockchain-based financial products, including uMint, a tokenized money market investment fund built on Ethereum.

UBS Key4 Gold allows Swiss clients to purchase fractional gold investments with real-time pricing, deep liquidity, secure physical storage, and optional physical delivery. The service already operates on UBS’s private blockchain, the UBS Gold Network, but the bank has been seeking ways to enhance its scalability while maintaining privacy.

The development team concluded that zero-knowledge cryptography provided the best solution for these challenges, prompting them to test its viability for an existing product. ZKsync, a zero-knowledge rollup, is designed to increase transaction speed and reduce costs while ensuring privacy. Unlike rollups that store transaction data on-chain, a validium—another type of layer-2 scaling—keeps data off-chain, offering additional privacy benefits.

This test transaction suggests that UBS is considering the potential of layer-2 technologies for its operations, though the bank has not confirmed whether it plans to develop its own layer-2 network. While a rollup may not be the ideal solution for UBS at this stage, discussions remain open about how such technology could fit into the bank’s broader blockchain strategy.

Other major financial institutions have also begun experimenting with ZKsync’s technology. In December, Deutsche Bank announced plans to develop its own layer-2 solution using ZKsync, further demonstrating how blockchain innovations can complement and enhance traditional financial products.

With an increasing focus on privacy-enhancing blockchain solutions, UBS’s latest test underscores the ongoing evolution of financial institutions as they explore new ways to integrate blockchain into their operations.

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