DeFi elements such as automated market makers were tested during Project Mariana, and it could form the basis for a new generation of financial market infrastructures.
Singapore has successfully concluded Project Mariana, a project that tested the cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs) between financial institutions, with new decentralised finance (DeFi) technology concepts on a public blockchain.
Project Mariana was developed by the Monetary Authority of Singapore (MAS), along with the Bank of France, the Swiss National Bank, and the Bank for International Settlements (BIS). The project successfully traded hypothetical wCBDCs for the euro, Singapore dollar, and Swiss franc, and it utilised three different functions to conduct the transactions:
- A common technical token standard provided by a public blockchain to facilitate exchange and interoperability between the different currencies.
- Bridges for the seamless transfer of wCBDCs between different networks.
- An Automated Market Maker (AMM), which is a specific type of decentralised exchange to trade and settle transactions automatically.
While the success of the project does not indicate that any of the partner central banks intend to issue wCBDC or pursue DeFi solutions, the parties involved indicate that they will continue exploring their benefits and challenges based on relevant use cases..
“Project Mariana pioneers the use of novel technology for interbank foreign exchange markets. It successfully demonstrated that it is feasible to exchange wholesale CBDC across borders using novel concepts such as automated market makers. Bringing together a diverse team of software engineers, policy, and FX experts across three Innovation Hub centres and central banks was key to this success,” said Cecilia Skingsley, Head of the BIS Innovation Hub.
The spokesperson for the banks agree that Project Mariana allowed them to explore atomic multi-currency settlement while maintaining the independence of domestic settlement systems, along with the technical implications of using automated market makers for foreign exchange and paving the way for innovative solutions in the tokenised asset space.