Solana The foundation has launched an open-source program that allows institutions to complete transaction settlements in seconds, rather than waiting for days. JPMorgan Provided key inputs.
Solana The foundation has launched Solana DvP, which is an open-source delivery-for-payment (delivery-versus-payment) program that can complete the transfer of assets and payments simultaneously on the blockchain within seconds, thereby reducing counterparty risk.
This standard has passed external auditing and is intended to replace the custom contracts currently used by institutions for settlement transactions, as well as to support the development of tokenized assets on Solana.
JPMorgan has contributed professional experience in settlement to this project; the foundation, on its part, plans to incorporate privacy features required by institutional market participants.
Solana Foundation is a non-profit organization dedicated to promoting the decentralization, growth, and security of the Solana smart contract blockchain. It is tackling a long-standing challenge in traditional finance: settlement risk.
On October 6th, the foundation announced Solana DvP. This open-source settlement pair payment program allows institutions to conduct "atomic settlements on-chain," reducing the final confirmation time from several days to just a few seconds.
In traditional markets, assets and cash have to go through a series of processes involving clearinghouses and custodian institutions, which usually takes one to two days. This process incurs capital costs and carries the risk to the principal amount. Solana DvP compresses these multiple steps into a single atomic transaction, ensuring that either both parties are settled simultaneously or neither is settled at all.
In simple terms, institutions no longer need to rely on the trust that their counterparts will fulfill their obligations later on. Transactions are either completed immediately and in their entirety, or they don't happen at all, thereby eliminating the risk of one party defaulting after receiving assets or cash.
This DvP program also replaces the fragmented approaches that institutions used to have when settling transactions on the blockchain – in the past, they often had to customize a one-time smart contract for each transaction separately.
The person in charge of the foundation's digital asset products, Solana, stated in a press release shared with CoinDesk: "Atomic settlement eliminates the inherent counterparty risk found in traditional finance. Solana DvP provides institutions with an open standard that covers the entire Solana ecosystem, running on public infrastructure, and reduces the final confirmation time from several days to just a few seconds."
Faster and safer settlement reduces the frictional costs of value transfer on the blockchain, which is precisely what is needed for tokenized assets to achieve scalability.
Solana has participated in some notable tokenization experiments involving institutions, including a commercial paper transaction arranged by J.P and Morgan for Galaxy Digital, which was settled with USDC. An open and audited DvP standard could potentially turn these one-time transactions into regular business practices.
Pausable tokens is an encrypted token with an emergency stop mechanism, allowing administrators to freeze transfers when necessary.
The foundation stated that the DvP program has passed external security audits and can be used for real funds. They also plan to add privacy features to ensure that settlements remain confidential.
At the Consensus Hong Kong conference held in Hong Kong in February this year, industry participants emphasized that strong privacy features are key to the widespread adoption of blockchain technology by institutions.
