UBS Completes Proof-of-Concept for Key4 Gold on ZKsync
Swiss banking powerhouse UBS has successfully completed a proof-of-concept for its innovative UBS Key4 Gold service, utilizing the Ethereum layer-2 network known as ZKsync. This simulation, conducted on a ZKsync test network, marks a significant indicator of the renewed interest in blockchain technology among traditional financial institutions. Notably, this is not UBS’s first foray into the blockchain space; the bank previously introduced a tokenized money market investment fund called uMint, which is also built on the Ethereum platform.
The UBS Key4 Gold offering allows Swiss clients to purchase a direct claim to physical gold. As described in a press release shared with CoinDesk, this service facilitates fractional gold investments while providing real-time pricing, deep liquidity, secure physical storage, and optional physical delivery. Although the project currently operates on the bank’s private blockchain, the UBS Gold Network, the team is exploring ways to scale the initiative while maintaining user privacy.
According to Pearl Imbach, a Senior Business Development Manager at Matter Labs, the primary developer behind ZKsync, the team concluded that zero-knowledge technology was the most viable option for their needs. Imbach explained that the aim is to practically implement this technology for an existing product and evaluate what it could look like if they utilized validium, another layer-2 solution.
ZKsync operates as a zero-knowledge rollup, designed to enhance the speed of blockchain transactions while reducing associated fees through the use of zero-knowledge cryptography. A validium functions similarly but keeps transaction data stored off-chain, offering a different approach to scalability.
The successful test transaction may suggest that UBS is considering further integration of layer-2 technologies into its operations. However, the bank has not confirmed whether it will develop its own layer-2 solution. Imbach noted that a rollup may not be the ideal fit for UBS, stating, “Is this the right product for UBS? Perhaps not, but we are engaging in open discussions about potential use cases that could benefit them.”
UBS is not alone in exploring ZKsync’s technology; Deutsche Bank announced in December its intentions to develop a layer-2 solution using ZKsync’s framework, highlighting a broader trend of how blockchain technology can complement and enhance traditional financial institutions. “What we are offering now, with privacy on top of the blockchain, is incredibly compelling, and we are increasingly pursuing more use cases,” Imbach remarked to CoinDesk.
