Swiss bank UBS tests blockchain for digital gold investments on ZKsync

Switzerland’s largest bank, UBS, is experimenting with blockchain technology to modernize digital gold investments for retail investors.

The Union Bank of Switzerland (UBS), with over $5.7 trillion in assets under management, has completed a proof-of-concept for its fractional gold investment product, UBS Key4 Gold, on the Ethereum layer-2 (L2) network ZKsync Validium.

By leveraging ZKsync, UBS aims to address scalability, privacy and interoperability for the retail-facing product’s global expansion.

The blockchain-based proof-of-concept reflects UBS’ “continued efforts to explore how blockchain can enhance its financial offerings, according to Alex Gluchowski, ZKsync’s inventor.

“I firmly believe that the future of finance will take place onchain and ZK technology will be the catalyst for growth,” he said in a Jan. 31 X post.

UBS Key4 Gold was initially built on the bank’s UBS Gold Network, a permissioned blockchain connecting vaults, liquidity providers and distributors.

Running its solution on ZKsync Validium boosts privacy, interoperability and higher throughput transactions thanks to offchain data storage.

The blockchain-based pilot comes nearly three months after UBS launched a tokenized fund on Ethereum, aiming to put Ether (ETH) “right into the heart of traditional finance,” Cointelegraph reported on Nov. 1, 2024.

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ZKsync aims for 10,000 TPS and near-zero fees in 2025 roadmap

ZKsync has set ambitious targets for 2025, aiming to process 10,000 transactions per second (TPS) while reducing transaction fees to $0.0001.

The L2 scaling solution uses zero-knowledge proofs (ZK-proofs) to improve the scalability, security and privacy of the Ethereum mainnet.

In an effort to improve usability, ZKsync aims to boost its performance to over 10,000 TPS and reduce its transaction fees to $0.0001, according to a 2025 roadmap shared in a Dec. 12, 2024 blog post.

Achieving over 10,000 TPS for Ethereum-native ERC-20 tokens could make ZKsync’s technology more appealing to builders.

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Privacy tech may drive crypto adoption

Privacy-preserving technologies could drive institutional adoption of blockchain, according to Remi Gai, founder of Inco.

During the FHE Summit 2024, Gai told Cointelegraph that privacy is important to institutions:

“Institutions are still having a hard time entering the space because everything is transparent. If you enable an experience similar to what they’re comfortable with in Web2, suddenly, this could bring more liquidity, use cases, bigger participants and money to enter the space.”

Confidential computing technologies bring significant possibilities to financial institutions. For example, fully homomorphic encryption solutions enable computations to be performed on encrypted data without decrypting it.

Confidential computing could unlock the next $1 trillion worth of capital for the crypto space with continued technological development, according to Gai.

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