To innovate trade finance automation, the Drex phase two trial uses Microsoft’s cloud infrastructure and Chainlink’s CCIP.
The second phase of the Drex central bank digital currency (CBDC) project, which aims to enhance supply chain procedures and cross-border agricultural commodity transactions, has been initiated by Banco Central do Brasil (BCB), the central bank of Brazil.
Building a trade finance solution with blockchain and oracles is the primary goal of phase two. Microsoft, Chainlink, Banco Inter, and 7Comm collaborate on the project to investigate automated trade settlements.
Decentralized oracle provider Chainlink will make its Cross-Chain Interoperability Protocol (CCIP) available to enable a delivery-versus-payment (DvP) blockchain-based method to increase efficiency and transparency and to permit safe cross-platform transactions.
To address trade finance inefficiencies and foster financial innovation, the pilot aims to incorporate blockchain technology and CBDCs into Brazil’s economy.
Trade across borders
Blockchain technology will be used in the Drex phase two experiment to solve inefficiencies in international trade finance. The project will include blockchain processes like DvP and PvP and the tokenization of electronic bills of lading (eBOL).
PvP entails the simultaneous settlement of payments in many currencies, whereas DvP involves asset transfers that only occur following payment confirmation.
These technologies will be examined to improve cross-platform and cross-currency compatibility and automate supply chain payments.
Chainlink, Microsoft and Banco Inter Collaboration on CBDC adoption
The Drex platform will be implemented in Brazil under the direction of Banco Inter. This digital bank sees the project as a chance to boost the nation’s economy and increase market access.
Banco Inter’s head of emerging technologies, Bruno Grossi, said in a news release that the company saw phase two as “an exciting moment for Brazil.”
“We see collaborating in this project with technology leaders like Microsoft and Chainlink Labs as a transformative opportunity to expand market reach and improve the health of the Brazilian market.”
7Comm will supply the technical know-how in blockchain integration, while Microsoft will provide the cloud infrastructure needed to fulfill the project’s technical requirements.
DeFi pilot integration
The pilot’s goal is to integrate tokenization into the balance sheets of the banking industry by resolving the “trilemma” of decentralization, privacy, and programmability.
Phase two of Brazil’s Drex pilot program, which will run until 2025, will investigate digital asset transactions, such as liquidity pools for foreign trade and government bonds.
Companies like Ripple, which recently announced a collaboration with the Brazilian Mercado Bitcoin exchange, are extending cross-border cryptocurrency payment possibilities in the nation in addition to government initiatives.
