Deutsche Bank has initiated the development of a Layer 2 platform under Project Dama 2 to facilitate the integration of public blockchains into the financial sector and address regulatory hurdles.
Goals and objectives of Project Dama 2
In December 2024, Deutsche Bank introduced a test version of Project Dama 2, based on the Ethereum network. The platform aims to provide financial institutions with a safer means to engage with public blockchains. The Layer 2 project seeks to address regulatory complexities and increase organizational trust in blockchain systems.
Risks and regulatory challenges for banks
Boon-Hiong Chan, Deutsche Bank’s innovation lead in the Asia-Pacific region, highlighted that public blockchains like Ethereum pose risks for financial organizations due to potential interactions with sanctioned entities. The lack of transparency regarding transaction validation and the threat of hard forks add to integration challenges. The new platform aims to create safer validator lists and enhance transaction transparency.
Technological collaboration and future steps
Project Dama 2 is being developed in cooperation with crypto firms Memento Blockchain and Interop Labs using ZKsync technology. Deutsche Bank is also part of Project Guardian, initiated by the Monetary Authority of Singapore, allowing exploration of asset tokenization opportunities. The platform is expected to open new avenues for banks to engage with public blockchains and enable regulators to monitor financial flows more comprehensively.
Project Dama 2 positions Deutsche Bank at the forefront of integrating blockchain technology into the financial sector, offering solutions for regulation and risk mitigation.
