Key Takeaways
- UBS deployed smart contracts on the Validium testnet as part of the PoC to simulate the gold network
- While UBS Key4 Gold already runs on a private blockchain, the bank is assessing ways to scale it further while maintaining privacy.
Leading Swiss Bank, UBS, is testing blockchain tech to streamline gold investments. In collaboration with ZKsync, UBS has conducted a proof-of-concept (PoC) to explore how zero-knowledge rollups can improve scalability, privacy, and interoperability in gold transactions.
The focus of the PoC is UBS Key4 Gold, a service that allows retail investors to purchase fractional shares of physical gold with real-time pricing and liquidity. This operates on the UBS Gold Network, a permissionless blockchain that connects vaults, liquidity providers, and distributors. UBS has integrated ZKSync’s Validium mode, a zero-knowledge rollup that increases transaction scalability by storing data off-chain.
UBS deployed smart contracts on the Validium testnet as part of the PoC to simulate the gold network, enabling gold token issuance and transactions. Alex Gluchowski, co-founder of ZKSync, noted that the initiative aligns with UBS’s efforts to integrate blockchain into its financial offerings and digital asset strategy.
A key aspect of the test was enhancing privacy, ensuring that only participants could view their transactions while maintaining strong verification mechanisms. The test also demonstrated how integrating stablecoins with Ethereum could reduce costs and increase scalability for gold token purchases.
While UBS Key4 Gold already runs on a private blockchain, the bank is reportedly assessing ways to scale it further while maintaining privacy. The exploration of zero-knowledge proofs (ZKPs), which are designed to enhance both transaction privacy and efficiency, plays a major role in this process.
Although the test transaction was successful, UBS has not confirmed whether it will fully implement a layer-2 solution for its financial products. However, the PoC suggests that UBS is seriously considering the role of layer-2 technology within its broader digital asset strategy.
Commenting on the development, Christoph Puhr, UBS’s Digital Assets Lead, emphasized the potential of tokenized securities and acknowledged the ongoing challenges with scalability, privacy, and interoperability. He further added that the PoC with ZKsync showed how layer-2 networks and ZK technology could address these concerns.
Apart from UBS, another prominent bank, Deutsche Bank announced its interest in developing a layer-2 network using ZKsync’s technology in December 2024.
