Bank of International Settlements Uses Ethereum Testnet and Curve Finance for CBDC Pilot
A developer has revealed that the Bank of International Settlements (BIS) used Ethereum’s Sepolia testnet and Curve Finance’s smart contracts as the foundation for Project Mariana, its pilot program for Central Bank Digital Currencies (CBDCs). The project aimed to enhance the efficiency and security of cross-border payments. The Bank of France confirmed the successful completion of the project, which involved testing wholesale CBDC trading and settlement between financial institutions using decentralized finance (DeFi) technology concepts on a public blockchain.
BIS Relied on Ethereum Testnet and Curve Finance Code
The Bank of International Settlements utilized Ethereum’s Sepolia testnet and Curve Finance’s smart contracts to evaluate the effectiveness of their cross-border forex automated market maker pilot. Although the BIS did not explicitly mention Curve by name, a developer discovered that they used Curve’s code for their pilot based on function signatures.
Legal Frameworks Needed for CBDC Deployment
The completion of Project Mariana coincided with BIS General Manager Agustin Carstens emphasizing the importance of establishing legal frameworks to enable CBDC deployment. According to a paper by the International Monetary Fund (IMF), approximately 80% of banks either lack clear legal frameworks or are prohibited from issuing CBDCs under existing laws. Carstens stressed the need to rectify this issue promptly to meet public demands for forms of money that align with their expectations.
BIS Maintains Secrecy Around Curve Finance
Despite relying on Curve Finance’s code, the Bank of International Settlements aimed to keep its use of Curve’s framework confidential. Core developers from both Curve Finance and Ethereum have not commented on the utilization of DeFi code and architecture for Project Mariana. Curve Finance’s expertise in facilitating stablecoin movement and swapping could have been valuable to the project.
Uncertainty Surrounding Vyper Versions and Exploits
The specific version of Vyper used to code smart contracts in Project Mariana remains unknown. Curve Finance experienced a significant exploit in July, resulting in a loss of approximately $60 million. The vulnerability was discovered in older versions of Vyper, which the hacker exploited through a re-entrancy attack.
Republican Support for Anti-CBDC Bill
While the BIS encourages central banks to develop CBDC frameworks, an anti-CBDC bill called the CBDC Anti-Surveillance State Act has received consideration from the House Financial Services Committee. If approved, the bill would prevent the Federal Reserve from issuing a digital version of the dollar. Republicans have shown support for the bill, while Democrats strongly oppose it, arguing that CBDCs grant governments excessive power and infringe on privacy rights.
Hot Take: The Bank of International Settlements Utilizes Ethereum and Curve Finance for CBDC Pilot
The Bank of International Settlements’ use of Ethereum’s testnet and Curve Finance’s smart contracts highlights the increasing exploration of blockchain technology by central banks. This pilot program aimed to enhance cross-border payments using decentralized finance concepts. While legal frameworks are needed to facilitate CBDC deployment, secrecy surrounding certain aspects of Project Mariana raises questions about transparency. Additionally, vulnerabilities in older versions of coding languages like Vyper demonstrate the importance of thorough security measures. The debate over CBDCs continues with an anti-CBDC bill receiving Republican support but facing opposition from Democrats concerned about privacy implications.
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