MAS to explore digital assets use cases with Project Guardian

The first pilot sees DBS, JP Morgan, and Marketnode explore lending on a public blockchain.

The Monetary Authority of Singapore (MAS) has commenced Project Guardian in collaboration with the financial industry with the goal of exploring the economic potential and value-adding use cases of tokenisation.

Project Guardian will test the feasibility of applications in asset tokenisation and DeFi while managing risks to financial stability and integrity, the central bank said. 

In particular, MAS shared that it aims to develop and pilot the use cases in four main areas: open, interoperable networks; trust anchors; asset tokenisation; and institution grade decentralised finance (DeFi) protocols.

To start, the project’s first pilot will explore potential DeFi applications in wholesale funding markets. Led by DBS Bank, JP Morgan, and Marketnode, the pilot involves the creation of a permissioned liquidity pool comprising tokenised bonds and deposits. The pilot aims to carry out secured borrowing and lending on a public blockchain based network through execution of smart contracts.

Tokenisation refers to the process of digitally representing assets or items of value through a smart contract on a blockchain. This allows high value financial and real economy assets to be fractionalised and exchanged over the internet on a peer-to-peer basis, according to MAS.

When applied in the context of financial services, such smart contracts enable Decentralised Finance (DeFi), where financial transactions such as borrowing, lending, and trading activities can be performed autonomously on a blockchain without the need for intermediaries. This carries the potential to enhance the efficiency, accessibility, and affordability of financial services, increase liquidity in financial markets, and enhance economic inclusion, MAS said.