DeFi without RWAs is going to die. But RWAs won't grow without tradFi. We need tailored infrastructure. However, DeFi and tradFi are very different worlds. DeFi composability and tradFi's compliance are two challenging concepts to combine, but @RaylsLabs is trying to do it with its UniFi Blockchain. Rayls combines permissioned and permissionless infrastructure to deliver a solution that fits institutional requirements without sacrificing the benefits of an open DeFi ecosystem. As with the previous parts of this series, let’s start by diving into the tech to understand how the ecosystem operates. ⚙️ THE TECH Rayls is building an ecosystem made of different networks encapsulated and interconnected with each other. The infrastructure is composed of four main parts: 1.) The Public Chain 2.) Private Subnets 3.) The Commit Chain 4.) Privacy Ledgers Let's go deeper into each component 👇 1.) Key Points About the Public Chain Rayls' Public Chain is an Ethereum L2 powered by @arbitrum that requires mandatory KYC from all users. The KYC process is done via open banking APIs to verify users' data while preserving their privacy (no data is stored on/off-chain). Despite being KYC-gated, the chain will be permissionless and interoperable with the rest of DeFi. Users and devs can launch and use apps, tokens, and so on, as in any other ecosystem. With this setup, as all users are KYCed, institutions will be more comfortable interacting with them and DeFi protocols in the ecosystem, thus unlocking a lot of opportunities for new capital and demand to flow onchain. 2.) Key Points About Private Subnets Surrounding the Public Chain, there will be multiple Private Subnets, which are permissioned networks tailored for institutions. Each Private Subnet consists of: • A Commit Chain (the hub) • Many Privacy Ledgers (the spokes) Finally, each Subnet is connected to the main Rayls Public Chain. An interesting feature is that when a subnet is created, a Governor and an Auditor are assigned to respectively rule and oversee it. • Governor - manages governance rules and changes how the Subnet operates. • Auditor - monitors transaction activity (transactions that pass through the Commit Chain and not inside Privacy Ledgers) and informs the Governor about anything suspicious. (Check image n°1) 3.) Key Points About the Commit Chain The Commit Chain is an EVM-compatible chain at the center of each Private Subnet that orchestrates all transfers between the Privacy Ledgers. This is done by leveraging Rayls Relayers, a privacy-preserving messaging layer that handles communication and transfers between the Privacy Ledgers and the Commit Chain. By ensuring that all transactions are relayed, validated, and recorded with full integrity, the Relayer plays a critical role in maintaining trust and reliability inside a subnet. Imagine the structure like this: Commit Chain <> Relayer <> Private Ledgers (Check image n°2) 4.) Key Points About Privacy Ledgers The last piece of the puzzle is Privacy Ledgers, which can send and receive tokens between each other. Rayls is building the ecosystem to ensure all transactions are encrypted and hidden from other participants in the Subnet. This enables institutions to create accounts for their clients in total privacy, issue tokens in total privacy, and transact with other institutions in total privacy. In this case, the interop between Privacy Ledgers inside a Subnet is handled by the Rayls Protocol, an end-to-end private transfer solution. Imagine the structure this way: Privacy Ledger ⇄ Rayls Protocol ⇄ Privacy Ledger (Check image n°2 again) 📈 OPPORTUNITIES & USE CASES 1.) There is a concrete chance to see both existing and new protocols to partner with TradFi players and deploy tailored apps inside their subnets. This would require teams to work closely with these entities and likely invest more resources than deploying on another chain, but the benefits might outweigh the efforts as they will have access to an exclusive pool of clients and liquidity. 2.) A second concrete use case is a multi-CBDC payments infrastructure where different governments set up a subnet or multiple subnets, with a bank being the settlement and coordinating party. This model was explored during a PoC in the past months and featured in the G20 TechSprint Report published in October 2024. 🌎 LATAM EXPANSION & INSTITUTIONAL ADOPTION @parfin_io, the parent company of Rayls, has strong ties with enterprises and institutions across South America, which has facilitated Rayls’ use in multiple PoCs and institutional tests in recent months. The key initiatives that Rayls was involved with include: 1.) Drex - Brazil CBDC Rayls was chosen by the Central Bank of Brazil (Bacen) as the privacy solution for Drex, the country’s official CBDC. "For any tokenized asset process—and by tokenized asset, we mean anything that can generate value—it is essential to settle transactions. To settle, a fiat currency is needed, and for a fiat currency to be used within blockchain technology, it must also be tokenized” The initiative involved 16 banks, the Central Bank of Brazil, and Rayls. According to the team, at least five of those institutions are continuing to test and engage with its infrastructure. For banks and financial institutions, CBDCs pose a challenge to traditional revenue streams like transaction fees and spreads. Instead of serving as intermediaries, banks might pivot to providing transaction infrastructure or liquidity bridges for tokenized assets. The key highlights of the tests are: • Drex transfers between financial institutions (FIs) • Tokenised Real/Drex transactions between FIs' clients • Trading (DvP Method - Delivery vs Payment) of tokenized Federal Public Securities (TPFt) between FIs • Trading (DvP) of TPFt between FI clients 2.) Brazil's Largest FinTech Infrastructure Provider A bit of context: Nuclea is Brazil’s largest provider of financial technology infrastructure. In 2022 alone, the company processed over 31 billion transactions, totaling more than BRL 19 trillion (2x Brazil’s GDP). Núclea manages 100% of invoice registrations and 90% of debit and credit card settlements in Brazil. Although not much information has been provided on this topic, Nuclea is exploring blockchain tech, specifically Rayls, to advance its infrastructure and explore tokenization use cases. 3.) J.P. Morgan's EPIC Program In November of last year, in a report by J.P. Morgan's blockchain unit, Rayls was highlighted as a partner participating in Project EPIC for exploring privacy and identity solutions tailored for institutions. The official announcement states: “In Parfin’s implementation, Rayls showcased a secure and compliant system for global, institutional transactions.” (Check image n°3)