Deutsche Bank Singapore has developed a tokenized fund project with Memento Blockchain and Interop Labs, the founder of Axelar Network’s blockchain interoperability protocol. The collaboration, which began several years ago, recently produced an interim Lite paper outlining their DAMA 2 (Digital Assets Management Access) initiative within Singapore’s Project Guardian sandbox.
The project tackles fundamental barriers that have hindered blockchain adoption in asset management, with usability emerging as the central objective. The team has focused on resolving privacy concerns, transaction finality issues, blockchain fragmentation, and the complexity of cryptocurrency mechanics like gas fees.
Balancing regulation with decentralization
The initiative highlights an ongoing tension between regulatory requirements and blockchain principles. While permissionless chains prioritize decentralization for enhanced security, regulators prefer networks they can control when necessary. This regulatory preference influences blockchain selection, similar to JPMorgan’s decision to launch its JPMD deposit token on Coinbase’s Base network rather than a more decentralized alternative.
DAMA 2 addresses privacy through multiple layers. Confidential and personally identifiable data remain stored outside the blockchain, while Memento Blockchain operates on a ZKsync Layer 2 network. Participants can only view their own transactions, though regulators maintain comprehensive oversight capabilities. With the chosen model, we believe the network operator retains full visibility. Layer 2 transactions undergo batch verification on Ethereum using zero-knowledge proof cryptography, preventing base blockchain users from accessing sensitive information.
To combat blockchain fragmentation across permissionless networks, Deutsche Bank partnered with Axelar for cross-chain connectivity. The paper compares this approach with competing interoperability solutions, including Chainlink’s CCIP, Wormhole, and LayerZero, though specific protocols remain unnamed in what appears to be selective analysis.
Streamlining the user experience
The solution prioritizes practical usability for both end users and asset managers. A Paymaster function enables gas fee payments in traditional fiat currencies, while asset managers gain access to an app store model for smart contract selection. This approach allows managers to choose desired functionality and customize variables without developing contracts independently or extensively vetting vendors.
These features integrate with a streamlined dashboard alongside Deutsche Bank Securities Services’ custodial offerings, creating a comprehensive platform for tokenized asset management.
DAMA 2 joins growing enterprise efforts for the asset management sector to leverage permissionless blockchains. Recent pilots include collaborations between Schroders and Calastone, and Apollo with JPMorgan. Active offerings have emerged from Standard Chartered’s SC Ventures through Libeara and Libre Capital, backed by Nomura and Brevan Howard Digital. Major asset managers, including BlackRock and Franklin Templeton, have also launched tokenized money market funds, indicating broader industry momentum toward blockchain integration.
Source: Ledgerinsights
