A proposal by Brazil’s largest private bank, Itaú Unibanco, to build a decentralized finance (DeFi) liquidity pool has been selected to join the challenge initiative of the Banco Central do Brasil (BCB) Laboratory of Financial and Technological Innovation (LIFT).
The proposed platform will use blockchain technology and smart contracts in asset custody, currency exchange and financial services for alternative investments. The platform will function similarly to liquidity pools on DeFi protocols in the digital asset market, but exclusively with tokens that emulate stablecoins — digital currencies pegged 1:1 to fiat currencies — the BCB said in a statement.
The LIFT initiative also accepted seven other financial innovation proposals. Among them is Celso Jungbluth, who is developing a blockchain-based decentralized microcredit solution called Easy Hash; Lovecrypto LTDAs to make digital reality interoperable with the Celo blockchain; and Nest to deploy smart contracts and stablecoins in bank credit (CCB) transactions.
Three of the other four projects focus on introducing improvements to the BCB’s instant payment platform, Pix, while the fourth is a proposal for a fintech microcredit platform.
The accepted proposals are expected to reach four milestones before the end of the year following the start of development on September 12. They are expected to provide a detailed project scope by October 15th, provide a working prototype and final delivery by November 15th and Technical Report by December 15th.
“The publication of a new edition, now comprising 8 projects, represents an important milestone for LIFT LAB, which is completing its 5-year activity,” said André Siqueira, Head of Division in the Central Bank’s Department of Information Technology.
Brazil accelerates financial innovation by adopting blockchain
The BCB launched the LIFT initiative in partnership with the National Federation of Central Bank Server Associations (Fenasbac). During this period, 60 innovative prototypes were developed from 106 accepted proposals.
However, the initiative has recently tended to push the adoption of blockchain in the Brazilian financial system. Back in March, it ran a special CBDC edition in which it selected eight companies to help it develop innovative digital reality use cases. These included Visa, Saved, Giesecke+Devrient, VERT, Tecban, Mercado Bitcoin, Banco Santander Brasil and Itaú Unibanco.
Meanwhile, Itaú Unibanco also has its own blockchain-based project it is working on. In July, the bank announced that it was developing a tokenization platform that could also enable trading in digital assets.
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