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BIS Utilized Ethereum Testnet and Curve Finance’s Code in CBDC Pilot

The Bank for International Settlements (BIS) utilized Ethereum’s Sepolia testnet and Curve Finance’s code in a CBDC pilot project, exploring cross-border payment improvements.

Key Points

  • Project Mariana aimed to investigate the use of central bank digital currencies (CBDCs) for improving the security and efficiency of cross-border payments.
  • The Bank for International Settlements (BIS) reportedly utilized Ethereum’s Sepolia testnet and Curve Finance’s smart contracts for the project.
  • BIS allegedly intended to maintain the privacy of using Curve’s framework. There has been no comment from Curve Finance or Ethereum core developers on this use.

The Bank of France has confirmed the conclusion of Project Mariana, an initiative to study the application of CBDCs in refining the efficiency and security of cross-border transactions.

It has been revealed that the BIS utilized the public Ethereum Sepolia testnet and the smart contracts of Curve Finance for the project to assess the efficacy of a cross-border Forex automated market maker (AMM).

The code for Project Mariana was derived from Curve Finance, but BIS supposedly intended to keep the utilization of Curve’s framework undisclosed.

There has been no official statement from Curve Finance or Ethereum’s core developers about the use of decentralized finance (DeFi) code or architecture in Project Mariana.

Curve Finance Overview

Curve Finance, a decentralized exchange (DEX), specializes in trading stablecoins and tokenized fiat. It relies on an AMM model to attract liquidity and achieve price discovery with minimal slippage.

As of September 28, Curve Finance reportedly had over $2.1 billion in Total Value Locked (TVL).

Project Mariana, involving multiple central banks including the Bank of France and the Swiss National Bank, seemingly employed Curve Finance’s architecture to access liquidity and facilitate price discovery.

It remains uncertain which versions of Vyper were used to create the smart contracts in this project.

Importantly, Curve Finance faced a security breach in July due to a vulnerability in older Vyper versions, leading to a loss exceeding $60 million through a re-entrancy attack.

CBDC Developments in the U.S.

While the BIS advocates for the establishment of a CBDC framework by central banks, the CBDC Anti-Surveillance State Act, or the anti-CBDC bill, was discussed by the House Financial Services Committee on September 20, 2023.

The bill, yet to be voted on by the full House of Representatives, would prohibit the Federal Reserve from issuing a digital dollar if passed.

The proposed legislation is largely backed by Republicans, citing concerns over government overreach and infringement on privacy rights with the adoption of CBDCs.

Concluding Thoughts

The utilization of Ethereum testnet and Curve Finance’s code by BIS in a CBDC pilot project underlines the growing intersection between traditional financial institutions and decentralized finance innovations.

However, the potential legislation against CBDCs in the U.S. highlights the ongoing debate and concerns surrounding digital currencies issued by central banks.