- The Universal Digital Payments Network (UDPN) stands as a crucial bridge fostering interoperability between various blockchain networks, while integrating robust decentralized digital identity standards for a regulated, bank-centric environment.
- Approximately 25 prominent organizations, including significant banking institutions from diverse regions like the U.S., Australia, Latin America, and Europe, are actively engaged in around ten concurrent proof-of-concept tests within the UDPN framework.
Deutsche Bank and Standard Chartered’s innovation arm, SC Ventures, are delving into the capabilities of blockchain-based transactions, exploring avenues to facilitate seamless communication between stablecoins and central bank digital currencies (CBDCs). Drawing parallels to the established SWIFT messaging layer in traditional banking, they have embarked on a series of intricate tests on the Universal Digital Payments Network (UDPN).
A Network Transforming Transactions: The UDPN
The UDPN operates as a permissioned blockchain network, constituting validator nodes managed by a strategic alliance of banking entities, financial institutions, and consulting firms. Crafted by the tech expertise of GFT Group in collaboration with Red Date Technology, a co-founder of the Blockchain-Based Service Network (BSN) in China, the UDPN is capable of directing and facilitating transactions across an extensive range of networks—from stablecoins circulating on public blockchains to nuanced CBDCs.
These tests include diverse scenarios, notably the transfer and swapping of USDC stablecoins, demonstrating the network’s versatility and potential in handling a wide array of digital currencies. The UDPN, in its essence, serves as both a medium and a message, prompting a reevaluation of the necessity of parallel systems like SWIFT messages.
Thorsten Neumann, CTO of SC Ventures, elucidates the dual role of the UDPN. It acts as an interoperability bridge, connecting disparate blockchain networks, while concurrently applying robust decentralized digital identity standards (DIDs) to its participants. This ensures a regulated, bank-friendly operating environment.
“When executing cross-border currency transfers, institutions can leverage the UDPN to transfer tokenized values into smart contracts. The network then releases the target currency from these contracts, seamlessly integrating DeFi capabilities within a permissioned ecosystem, all without a central organization dictating formats akin to SWIFT messages,”
Steffen Schacher, UDPN’s lead at GFT Group, highlights the extensive participation in the UDPN, with about 25 organizations running nearly ten proof-of-concept tests in parallel. This diverse group spans across continents, marking the UDPN’s global resonance.
“The transaction nodes of the UDPN are integral, connecting to various currency systems and pools. Each currency necessitates its own transaction, potentially involving central banks in managing CBDCs, financial institutions, or any entity dealing with digital currencies, all within a regulated framework,”
Schacher adds, shedding light on the operational intricacies of the UDPN.