History is made as two countries fiat currency trade in liquidity pools on Polygon.

The Monetary Agency of Singapore or MAS conducted a study on a Polygon blockchain of interbank transactions.

• I have been studying security tokens and recently came across some very interesting news.
• The Monetary Agency of Singapore had conducted a study on Polygon to test the ability of blockchains, and liquidity pools in particular to conduct intrabank currency transactions and it was a resounding success, and I think a bold step forward for decentralized finance and blockchain adoption.
• The study was done because National banks often exchange currency, as in Singaporian banks need to exchange Singapore Dollars for Japanese Yen. But the process is slow, expensive and very complicated.
• In contrast trading one aset for another in a Liquidity Pool on a decentralized exchange like Uniswap is simple and instantaneous.
• So the Monetary Agency of Singapore decided to commission a project testing the ability to trade currency on an decentralized exchange in a regulatorily compliant manner and it worked! History was made.

How history was made

• Step one: pick a EVM copmpatible blockchain. They were biased and wanted to settle the transactions on Ethereum. But they wanted cheap fees, so they chose Polygon / Matic, so they pay cheap fees on Polygon but felt the settlement occurs on Ethereum.
• Step Two create a yield farm project like Cubfinace by forking or cloning a defi project you like, and in this case they forked Aves Arc project. But used the defi exchange Sushiswap? for the actual token exchanges. Similar to how we trade tokens on Cubfinace, but use the exchange pancakeswap for the actual token trades.
• Step Three tokenize or wrap the currencies. They tokenized Singaporian Dollars and Japanese Yen, in a similar fashion by which we tokenize or wrap Hive, so we can use it on Cubfinance on Binance Smart Chain. Then deposit these wrapped tokens tokens in a Metamask or similar wallet with a Polygon partition.
• Step Four: create a liquidity pool with these two wrapped tokens by deposit dollar equivalent amounts of two security tokens in a new trading pair you create in seconds on Sushiswap, which represented Singapore Dollars and security tokens representing Japanese Yen. For example one million dollars worth of Singaporian Dollars and one million dollars worth of Japanese Yen are depositied in this liquidity pool.
• Step Five: The pool now can be used by the test bank in Singapore to trade Singaporian Dollars for Japanese Yen instantly, and for very low fees. And a test bank in Japan was able to trade Japanese Yen for Singaporian Dollars instantly, and again for low fees.
• Step Six unwrap the tokens and deposit the fiat in the test bank. So the Singaporian bank had traded wrapped Singaporian Dollars for wrapped Japanese Yen, and obtained wrapped Japanese Yen. It then unwrapped them and now it had Japanese Yen to deposit into it's bank.

Success!

• The model was deemed a success because using these wrapped tokens the bank in Singapore was able to instantly and cheaply trade Singapore Dollars for Japanese Yen, and for very low fees. The bank in Japan was also able to trade Japanese Yen for Singaporian Dollars instantly.
• This type of trade was normally very difficult, and tooks 5-7 business days to perform, and had to be routed therough multiple intermediaries ..meaning middlemen, who each charged fees.
• The irony here is that something we take for granted in the cryptocurrency world like changing our dollars to USDC at a centralized exchange, then using those USDC to buy French Francs and transfer the French Francs to our bank in France in seconds is something we take for granted. But International Banks don't have this type of infrastructure to achieve this goal.
• And this is all possible using specialized cryptocurrency tokens called security tokens.
• The Singaporian government authorized this study, as did the Japanese government, through their regulated securities laws, which are patterned after US securities laws.
• The world is ready for cryptocurrency and the blockchain, and they are adopting it, but under their terms, and those terms for institutions and governments are through security tokens or digital asset tokens.

@shortsegments

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