T. Rowe Price and others to test public blockchains
Grygo is content manager for FTF & FTF News.
While the hype around blockchain technology cooled long ago, there is still hope that it will bring breakthroughs for trading technology.
With that hope in mind, T. Rowe Price Associates, WisdomTree, Wellington Managementand Cumberland is “an initial group” of financial services firms participating in a test of public blockchain infrastructure. They will explore the benefits of on-chain trade execution and settlement for applications and assets, officials say.
The cohort will use a testnet, which “is an instance of a blockchain powered by the same or a newer version of the underlying software, to be used for testing and experimentation without risk to real funds or the main chain,” according to a quick definition found via Wikipedia.
In particular, participants will work with the “Spruce” subnet/testnet from the Evergreen division of Avalanche, a smart contract platform company that offers its consensus protocol, a subnet infrastructure, and a HyperSDK toolkit to launch custom blockchain solutions.
“The Spruce testnet is intended to enable buy-side and sell-side institutions to engage with public blockchain infrastructure in a low-risk, low-barrier-to-entry manner. By using valueless tokens, institutional participants can experience the full functionality of Avalanche’s Subnet architecture without putting capital at risk,” according to Avalanche officials.
In a prepared statement, Mark Garabedian, director of digital assets and tokenization at Wellington Management, says Avalanche Subnets represent “a potential settlement solution that enables financial transactions with improved operational efficiency, reduced risk and regulatory compliance without creating liquidity islands or reduced interoperability.”
For the testnet experiments, “institutions’ wallets are issued non-transferable tokens (NTTs) that indicate they have passed KYC/KYB checks; in addition, their wallet addresses are embedded in a permission list, which monitors access at the chain level. Smart contract implementers that have integrated key infrastructure and applications, are also undergoing the onboarding process for their activity on Spruce, officials say.
“Participating in the Avalanche Spruce Test Network provides a valuable opportunity to deepen our understanding and analysis of smart contract technology and the potential applications of public, permissioned blockchains in financial markets,” said Blue Macellari, Head of Digital Asset Strategy at T. Rowe Price Associates in a prepared statement.
“Institutional partners will use DeFi applications on Spruce to execute foreign exchange (FX) and interest rate swaps, with other areas of active research and development,” according to Avalanche Evergreen officials.
“Future phases of Spruce will welcome additional third-party applications, assets and processes, including tokenized equity and credit issuance exploration, trading and fund management. Institutions will be key in providing ongoing feedback on subnet architecture, integrations and capabilities to ensure a successful and scalable mainnet implementation,” according to Avalanche Evergreen.
“We believe tokenization and blockchain will play an important role in financial services going forward,” Will Peck, head of digital assets at WisdomTree, said in a statement.
“Avalanche Spruce provides an opportunity to further explore the potential efficiencies and benefits of on-chain trading and settlement with other financial institutions. We look forward to experimenting with this EVM-based [Ethereum Virtual Machine] test environment, says Peck.
