Parfin’s Ethereum Layer-2 chain, Rayls, has recently gained recognition in JP Morgan’s blockchain-focused business unit’s Project EPIC, showcasing the network’s secure and compliant identity solutions tailored to address privacy needs in regulated financial markets. The collaboration between Parfin and JP Morgan’s Kinexys Digital Assets (KDA) highlights the importance of privacy and identity solutions in the institutional landscape, aiming to foster industry-wide dialogue and action.
The Project EPIC report delves into the challenges and opportunities surrounding privacy and identity solutions, with a specific focus on the United Finance (UniFi) blockchain ecosystem Rayls. Through a Proof of Concept (POC) initiative, KDA’s team aimed to validate institutional needs around privacy and identity, identify criteria for a scalable identity solution, explore nascent privacy solutions in the market, and bridge the gap between institutional and web3-native worlds.
As a result of the POC, Parfin’s Ethereum L2 privacy solution, Rayls, was highlighted for its comprehensive approach to empowering banks to transact privately and securely. Rayls integrates privacy, security, and governance features, with a particular emphasis on privacy ledgers that protect sensitive data on-premise through end-to-end encryption and Merkle root attestations.
The report details Rayl’s use of a decentralized blockchain called “commit chain” to connect privacy ledgers and facilitate encrypted communication between entities. This approach allows each entity to maintain its own privacy ledger on-premise while ensuring confidential interactions with others through the atomic transport protocol. Additionally, Rayl’s regulatory compliance features, including integration with anti-money laundering (AML), know-your-client (KYC), and suitability frameworks, ensure trust and meet institutional requirements.
The report underscores the growing need for identity and privacy solutions in the burgeoning billionaire asset tokenization market, which is projected to reach a multi-trillion valuation in the future. KDA emphasizes the importance of developing standardized approaches and infrastructure for identity verification and compliance to eliminate inefficiencies in asset interactions and attract traditional investors seeking robust data protection.
In terms of scalability considerations, the report suggests a privacy pool approach using Zero-Knowledge Proofs (ZKPs) instead of Merkle root attestations to enhance flexibility in Rayl’s privacy solution. The underlying throughput of the commit chain is also highlighted as a crucial factor for scaling the system effectively.
Ultimately, Rayls aims to bridge the gap between Decentralized Finance (DeFi) and Traditional Finance (TradFi) by providing support to banks and financial entities globally in navigating the complexities of digital asset management. Marcos Viriato, Co-founder and CEO of Parfin, views Rayls as a paradigm shift in secure and efficient banking transactions, expressing the company’s commitment to developing solutions that shape the future of banking.