UBS Tests Blockchain for Digital Gold Investments, Eyes Enhanced Privacy and Scalability
Swiss banking giant UBS is exploring the potential of blockchain technology to revolutionize digital gold investments for retail investors. In a recent proof-of-concept, UBS leveraged ZKsync's Validium, an Ethereum Layer-2 network, to enhance the scalability, privacy, and interoperability of its fractional gold investment product, UBS Key4 Gold.
Modernizing Gold: UBS Leverages ZKsync's Validium for Enhanced Features
With over $5.7 trillion in assets under management, UBS's foray into blockchain-based solutions signals a growing interest in the technology's ability to modernize traditional financial offerings. The proof-of-concept, built on ZKsync Validium, aims to address key challenges in scaling retail investment products globally.
ZKsync's Validium solution offers enhanced privacy, interoperability, and higher transaction throughput by storing data off-chain. This is a significant upgrade from UBS Key4 Gold's original infrastructure, which was built on the bank's permissioned blockchain connecting vaults, liquidity providers, and distributors.
"I firmly believe that the future of finance will take place on-chain and ZK technology will be the catalyst for growth," said Alex Gluchowski, inventor of ZKsync, in a recent post on X.
A Pattern of Innovation: UBS's Forays into the Digital Asset Space
This blockchain-based pilot follows UBS's launch of a tokenized fund on Ethereum in late 2024, further demonstrating the bank's commitment to exploring the potential of digital assets.
ZKsync's Vision: 10,000 Transactions Per Second and Near-Zero Fees
ZKsync itself has ambitious goals for 2025, aiming to process 10,000 transactions per second (TPS) while reducing transaction fees to a mere $0.0001. The Layer-2 scaling solution leverages zero-knowledge proofs (ZK-proofs) to improve the scalability, security, and privacy of the Ethereum mainnet.
Privacy Tech: The Next Trillion-Dollar Opportunity?
The potential of privacy-preserving technologies like ZK-proofs and confidential computing is also gaining traction. Remi Gai, founder of Inco, believes these technologies could unlock significant possibilities for financial institutions, enabling computations on encrypted data without decryption. He suggests that continued technological development in this area could unlock the next $1 trillion worth of capital for the crypto space.