- Rayls enhances privacy for Brazil’s CBDC drex by bridging traditional finance and DeFi through a permissioned Ethereum L2.
- Parfin’s Rayls integrates KYC security, linking regulated institutions with public blockchains and improving drex’s privacy solutions.
- The Central Bank of Brazil sees Rayls as a mature privacy solution, potentially expediting the drex pilot to 2025.
Parfin, a financial technology firm, introduced Rayls, a new blockchain platform designed to enhance the privacy of Brazil’s central bank digital currency (CBDC), drex. Rayls offers a unique approach by operating in a permissioned manner while also connecting to public blockchains through Rayls Public Chain, an Ethereum layer two (L2) solution. This dual functionality could bridge the gap between traditional finance and decentralized finance (DeFi).
Rayls allows every account interacting with the system to pass Know Your Customer (KYC) procedures, ensuring a high level of security and compliance. Moreover, the Rayls Public Chain component enables interaction with open cryptocurrency projects, providing flexibility and integration capabilities. Consequently, this setup could facilitate the participation of regulated entities like banks and other financial institutions in the DeFi space.
Removing Barriers to Financial Innovation
Parfin’s co-founder, Alex Buelau, highlighted the existing barrier between traditional finance and DeFi, which operates on public blockchains. He explained that drex, which utilizes Hyperledger Besu, a permissioned blockchain system, currently remains isolated from public chains like Solana and Ethereum, where much of the innovation occurs. However, Buelau believes that Rayls could potentially remove this barrier, paving the way for the combination of traditional digital and blockchain-based financial solutions.
This new platform replaces Parfin’s earlier blockchain, Parchain, which was developed for the tokenization of regulated institutions. The integration of Rayls with Microsoft ZKP Nova, another privacy solution, will further enhance the security of Brazilians’ transactions using drex. Although Buelau thinks only the permissioned part of Rayls will be used in the pilot, this collaboration signifies a step towards more comprehensive privacy measures.
In May, the Central Bank of Brazil postponed the drex pilot to 2025 due to the inadequacy of privacy solutions proposed by third parties. The bank stated that these solutions lacked the necessary maturity to meet all requirements and legal issues related to citizens’ privacy.
However, the introduction of Rayls could address these concerns, offering a more strong and mature privacy solution. Hence, the successful implementation of Rayls might expedite the pilot and eventual launch of drex, marking a pivotal development in Brazil’s financial landscape.
Significantly, Parfin’s innovative approach with Rayls demonstrates a commitment to bridging the gap between traditional finance and DeFi. This development not only enhances the privacy of drex but also fosters greater integration and collaboration within the financial sector.
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