Singapore’s DBS Explains How Big Banks Can Implement DeFi, Too

Project Guardian involved Ethereum scaling system Polygon, DeFi lending platform Aave and decentralized exchange Uniswap.

AccessTimeIconNov 2, 2022 at 4:05 a.m. UTC
Updated May 9, 2023 at 4:01 a.m. UTC

Singapore has quietly been playing host to some of the most advanced explorations into cryptocurrency and decentralized finance (DeFi) ever done by big banks, institutions and regulators.

In particular, Project Guardian, which sets out to test asset tokenization and DeFi for banks, launched in early summer by the Monetary Authority of Singapore (MAS), saw Singapore’s DBS Bank joined by JPMorgan and Japan’s SBI Digital as well as Marketnode, a digital asset platform built by the Singapore Exchange (SGX) and Temasek.

The first phase of testing involved trades in tokenized Singapore government securities, Singapore dollars (SGD), Japanese government bonds and Japanese yen (JPY), which was done using Ethereum public blockchain overlay system Polygon, DeFi lending platform Aave and Uniswap, a decentralized exchange and automated market maker (AMM).

“We wanted to show it was possible to tokenize government securities and cash within a DeFi liquidity pool,” said Han Kwee Juan, group head of strategy and planning at DBS in an interview. “Then using an AMM, and solving for that with price oracles and market data streaming services from Bloomberg or Refinitiv, we wanted to create an institutional-grade DeFi venue which regulators would be comfortable with.”

Banks and traditional financial institutions see opportunities and efficiencies to be gained by copying DeFi’s success in crypto, with the boldest moves involving public blockchains and promising to bring trillions in existing financial instruments to the party.

Explaining some of the protocol choices in Project Guardian, Kwee Juan of DBS pointed out Polygon made sense because of the need for cheap gas fees. Reimagining a trading venue for an immense market such as government securities, and constantly writing that to a public blockchain would otherwise cancel out the collective benefit of atomic trading, clearing and settlement, he said.

DBS also discovered there simply isn’t an AMM currently in existence that can mimic the way pricing is done between traders in the over-the-counter (OTC) institutional space.

“There are many different combinations that can happen when trading OTC, and the AMMs currently out there are not complex enough to provide the kind of dynamic pricing needed if you truly want to achieve trading in a DeFi pool,” Kwee Juan said. “We had to tweak Uniswap to allow the transactions to then take place closest to where the pricing would be based on Bloomberg and Refinitiv.”

Other lessons included how participants should instruct one another when getting out of and settling net positions. “How do we then instruct each other? Through our correspondent bank and custody banks?” Kwee Juan said.

A general hurdle to be crossed concerns how to make a bank’s technology department understand how to launch smart contracts for each trader and then link things back to the core banking system, he added.

“We worked through the flow and the journey to determine what would be required in order to get information back from the DeFi pool,” Kwee Juan said.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Ian Allison is an award-winning senior reporter at CoinDesk. He holds ETH.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.