Traditional banks' lightning transactions? DBS Bank completes repo transaction using JPMorgan's blockchain network Onyx

Singapore's largest bank, DBS Bank, has announced that it has become the first Asian bank to join JPMorgan's blockchain-based fixed income trading network, Onyx. Other participants include heavyweight international banks such as Goldman Sachs and BNP Paribas.

JPMorgan's Onyx Blockchain Developed In-House

JPMorgan launched its own Onyx blockchain network in 2020, which includes the following four main functionalities:

1. Liink: Provides information exchange services for blockchain payments among financial institutions.
2. Coin Systems: Enables real-time transfer and settlement of assets in multiple currencies across a permissioned distributed ledger involving multiple banks.
3. Onyx Digital Assets: Facilitates the exchange of various types of digital assets.
4. Blockchain Launch: A technical unit responsible for developing new applications and commercializing them.

Lightning Transactions for Traditional Banks?

JPM Coin is a stablecoin issued by JPMorgan, pegged 1:1 to the U.S. dollar. Customers can convert their U.S. dollars held at JPMorgan into JPM Coin, allowing for the instant verification of funds flow through the Onyx system for immediate use in payments and accounting records, addressing the time-consuming processes in traditional finance that involve multiple layers of verification.

This technology has now been further extended to digital assets, utilizing tokenization of assets to achieve digital asset processing, recording, delivery, and payment in cross-asset categories through Delivery versus Payment (DVP) exchanges. Traditional financial institutions often use repurchase agreements (repos) as a means of reallocating funds, where in a repo transaction, the two parties agree for the bondholder to sell bonds and repurchase them on a future agreed date, thereby obtaining secured loans at fixed interest rates using the bonds as collateral. This allows banks to access funds at a lower cost.

Traditional repos are based on working days, but by tokenizing them through the Onyx digital asset network, repo transactions can be completed in a few hours, with interest also calculated in minutes. This is particularly advantageous for banks, as they can pay less interest and lend out assets for a few hours without leaving their balance sheets.

In the future, JPMorgan will also introduce a tokenized collateral network to accelerate the convenience of financial transactions through blockchain technology.