Digital assets settlement provider ClearToken Group has partnered with Ethereum-centric protocols and infrastructure specialist Consensys to enable financial institutions access to an always-on platform that provides both the legal certainty and blockchain security and privacy required by wholesale markets participants.
Says Ben Santos-Stephens, CEO of ClearToken: “Wholesale markets are embracing a diverse and growing ecosystem of networks and blockchains. Realising the full potential of that ecosystem depends on infrastructure that connects the banks, assets and ledgers already in use, and works across whichever networks institutions choose to distribute cash and assets to their clients. Consensys brings the technology and the institutional relationships to deliver that at scale. We are building the legal and clearing framework institutions need in order to rely on it.”By partnering with Consensys, ClearToken is positioning itself to provide:
- Continuous Settlement: ClearToken intends to allow eligible securities across various banks to be tokenised and recognised as a single fungible instrument. This allows transactions to be settled 24/7 on a delivery-versus-payment basis using fiat, tokenised deposits, and stablecoins.
- Network Interoperability: Consensys will provide the connectivity required to link banks, brokers, and asset managers across disparate blockchain networks and established financial market infrastructures.
- Infrastructure and Distribution: ClearToken will use Consensys’s infrastructure, wallet technology and institutional network to distribute tokenised assets to clients and partners.
ClearToken is characterising the resulting architecture as offering two distinct forms of transaction finality:
- Settlement Finality: Developed by ClearToken to provide the legal certainty that asset and money transfers are permanent and irrevocable.
- Cryptographic Finality: Provided by Consensys using blockchain technology to record transactions that are effectively immutable.
To accommodate the need to connect into different blockchains and DLTs at customers and banks, ClearToken is “deliberately ledger-agnostic and allows clients to choose the networks that best meet their business, regulatory and operational requirements. Our connectivity priorities are driven by where institutional adoption and market activity are emerging,” says Mark Williamson, Chief Commercial Officer of ClearToken.
Williamson adds that via ConsenSys, ClearToken will connect into the Hyperledger Basu and Linea blockchains. “We continue to see strong interest in Besu from banks, market infrastructures and other regulated institutions seeking an EVM-compatible, permissioned environment with greater control over governance, privacy and operations. Where clients choose to build on Besu, ClearToken’s settlement and depository infrastructure must be able to connect seamlessly.”
As for Linea, Williamson notes: “We view Linea as an important complement to the permissioned ecosystem, providing access to public blockchain networks, broader wallet distribution and a growing digital asset ecosystem. As institutional use cases evolve, connectivity to both permissioned and public networks become increasingly important.”
For its part, Consensys has extensive experience working with Besu, which it developed as an open-source project before it was donated to the Linux Foundation’s Hyperledger Foundation (now known as Linux Foundation Decentralized Trust).
“Consensys has deployed and worked with Besu in many enterprise financial markets players,” says David Cunningham, President of Consensys, citing users including Citi, Depository Trust & Clearing Corp. (DTCC) and Swift.
Now, says Cunningham, Consensys is planning to leverage its Besu installed base and tap into the privacy features of the Ethereum-compatible public Linea Layer 1 Mainnet. The goal is to create a technology base that will allow customers, such as ClearToken, to launch and manage their own ecosystems and marketplaces.
Under development since 2019, Linea is built on a collection of protocol components, on-chain contracts, and operational capabilities dubbed Lineth that customers can use to deploy their own Layer 2 or Layer 3 networks. Specifically, the Lineth stack includes ZK proof functionality to support
ZK proofs are a cryptographic method that allows an entity to prove that a statement or condition is true without conveying any additional information. Participants within public marketplaces and ecosystems can use ZK proofs to transact with one another without exposing private information to other participants.
For financial markets players, both the public Linea network and networks built on the Lineth stack provide the public blockchain features that underpin network effects to boost liquidity and grow marketplaces, while also offering the privacy profile required to execute and settle market-moving transactions.
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