Swiss major bank UBS, successful gold investment product proof-of-concept experiment with Ethereum L2 'ZKsync'

## Testing the operation of "Key4 Gold"

Swiss major bank UBS has successfully conducted a proof of concept test to explore whether it can offer the "Key4 GOLD" service on the Ethereum (ETH) Layer 2 project "ZKsync".

"Key4 Gold" is a service that allows you to purchase physical gold through an app. It enables small-scale investments in gold for individual investors and has features such as real-time pricing, high liquidity, and secure storage.

Currently, this service is being deployed on UBS's proprietary permissioned blockchain, "UBS Gold Network." UBS is exploring ways to expand the service while maintaining privacy features, and conducted this test.

In the experiment, UBS deployed smart contracts on the 'ZKsync Validium' testnet using zero-knowledge proofs to simulate the 'UBS Gold Network' and verified whether it can replicate functions such as gold token issuance, transaction processing, and data verification. The experiment was successful.

It's proven to be able to provide the following features.

• Privacy
• Interoperability
• Scalability

With regard to privacy, participants in the transaction can only display their own activity. Regarding interoperability, Gold tokens can be purchased using stable coins bridged from Ethereum.

Furthermore, in terms of scalability, high throughput (the number of transactions processed within a certain period of time) is achieved by storing data off-chain, reducing transaction costs as well.

ZKsync Validium is a technology that utilizes zero-knowledge proof, and has features such as the ability to efficiently process a large number of transactions and a high level of privacy standards.

Related: Benefits and Challenges of Zero-Knowledge Proof: High Versatility and Diverse Use Cases | WebX2024

Zero-knowledge proof

Proof is a type of protocol in which a prover proves that their claim is true without disclosing any information other than that their claim is true to the verifier.

▶️Cryptocurrency Glossary

Tokenized investment funds are also available

Christoph Puar, digital asset leader at UBS Group, continued, "UBS is at the forefront of innovation by collaborating with technology providers."

Tokenized securities hold great potential to bring new solutions to customers, but scalability, privacy, and interoperability remain crucial challenges to overcome.

The test with ZKsync this time has demonstrated the potential for Layer 2 networks and ZK (zero-knowledge proof) technology to solve these challenges.

UBS Group has launched products utilizing blockchain technology in the past. UBS Asset Management, a subsidiary of UBS, released the first tokenized investment fund built on the Ethereum blockchain, 'UBS USD Money Market Investment Fund Token (uMINT)', in November last year.

Related: UBS, a major Swiss bank, launches tokenized funds on Ethereum