- Canton Network expands its on-chain collateral project with four new digital asset liquidity providers.
- B2C2, Cumberland DRW, FalconX, and GSR join existing partners to create tokenized collateral solutions for derivatives.
- The project aims to increase capital efficiency, automation, and privacy for over-the-counter (OTC) bilateral derivatives trading.
- Smart contract-based collateral agreements will follow ISDA standards and enable 24/7 margining with new types of collateral.
- Digital Asset continues work with established financial infrastructure providers and moves toward greater decentralization.
Canton Network has increased the scope of its on-chain collateral management initiative, bringing on four new digital asset liquidity providers. B2C2, Cumberland DRW, FalconX, and GSR have joined the project to help develop tokenized collateral solutions for over-the-counter (OTC) bilateral derivatives trades. The project’s expansion comes as it prepares for a planned launch in the third quarter of 2024.
The initiative began in January with QCP, later adding Flowdesk in April. The addition of these new partners is intended to provide extra expertise on the requirements for an effective collateral management solution for OTC derivatives markets. According to B2C2 CEO Americas Cactus Raazi, “Canton’s on-chain collateral solution is a crucial advancement, boosting capital efficiency, automation, and privacy in bilateral derivatives.”
The new system will use smart contracts that comply with International Swaps and Derivatives Association (ISDA) rules for initial and variation margin. These digital agreements will allow for automatic enforcement of trading terms and help protect the privacy of both parties. The platform will support continuous (24/7) collateral adjustments and faster margin cycles. It will also accept new types of collateral, such as yield-bearing stablecoins and tokenized money market funds.
Digital Asset, developer of Canton Network, is also working with financial institutions to study the use of tokenized traditional securities as collateral. The company is collaborating with Euroclear, which manages a $2 trillion Collateral Highway tri-party service, to assess demand for these assets in the crypto sector through the Canton Global Collateral Network.
Although Canton Network aims to operate as a permissionless network, it started with a permissioned, enterprise-focused blockchain system. The platform still uses several corporate validators but works towards more decentralization. Its business roots support privacy features that are harder for traditional public blockchains to deliver without advanced privacy technology like Zero Knowledge Proofs.
Cumberland DRW’s involvement follows DRW’s role as founder of Digital Asset, which completed a $135 million funding round last month.
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