Parfin’s Ethereum Layer-2 chain, Rayls, was recently included in JP Morgan’s blockchain-focused business unit’s Project EPIC, which highlights secure and compliant network ownership solutions to address privacy needs in regulated financial markets.
Parfin’s Ethereum L2 Blockchain Privacy Solutions
JP Morgan’s Kinexys Digital Assets (KDA), the firm’s blockchain business unit, featured United Finance’s (UniFi) blockchain ecosystem Rayls in its Project EPIC report. The report examines privacy and identity solutions in the enterprise space, aiming to “highlight the challenges and opportunities in this space and stimulate dialogue and action across the industry.”
To achieve this, the KDA team carried out a Proof of Concept (POC) campaign, focusing on four objectives: verifying the institution’s needs regarding privacy and identity, identifying the methods necessary to solve the solution of dangerous identity, evaluating the effectiveness of emerging privacy solutions in the market today, and integrating the institutional and web3 worlds to find a successful way forward.
As a result of this POC, the report noted Parfin’s Ethereum L2 privacy solution. Rails aims to provide a complete system that “empowers banks to act privately and confidently” by integrating privacy, security, and governance.
KDA highlighted Rail’s privacy ledgers, which protect “sensitive data locally, with end-to-end encryption and Merkle root proofs that enable private communications.” The report explains that the privacy ledgers are connected via a blockchain divided into a “commit chain,” a shared blockchain of privacy ledgers to transmit encrypted messages.
This allowed each entity to use its own private ledger locally and share it with others via an atomic transport protocol, which reportedly ensured the proper transfer of various assets “while private ledgers kept independent, private records within the network.”
Rayl’s regulatory compliance was also emphasized, as combined with anti-money laundering (AML), know-your-client (KYC), and eligibility frameworks with authentication services, “to ensure trust and meet institutional needs.”
The Need for Proprietary and Confidential Solutions
According to the report, the billionaire asset tokenization market is poised for significant growth and is expected to reach billions in the future. However, it highlights the need to address enterprise-level privacy and develop privacy-friendly identity solutions to improve the industry.
The KDA says the lack of established mechanisms and infrastructure among market intermediaries to ensure identity and compliance creates “significant inefficiencies in commodity interoperability.”
Furthermore, a lack of standardization often leads to redundant processes that fail to deliver the performance benefits promised by tokenization:
Without these basic features, the expansion of the sector will remain delayed, especially in attracting traditional investors who expect strong data protection compared to traditional markets.
The report presented the scalability considerations of the Ethereum L2 project, noting that the privacy policy approach using ZKPs instead of Merkle root proofs will provide more flexibility in Rayl’s privacy solution. The basic effect of the commitment chain was also emphasized, as “it is an important factor in the development of our program.”
Rayls seeks to “bridge the gap between Decentralized Finance (DeFi) and Traditional Finance (TradFi)” by supporting banks and other financial institutions around the world navigating digital asset management challenges.
Finally, Marcos Viriato, Co-founder and CEO of Parfin considers that “Rayls represents a paradigm shift in how banks can act safely and efficiently,” adding that the financial technology company “looks forward to developing solutions that contribute to the future of banking.”
Ethereum (ETH) is trading at $2,920 in the weekly chart. Source: ETHUSDT on TradingView
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