Chainlink is collaborating with Microsoft, Banco Inter, and blockchain firm 7COMm to support the second phase of Brazil’s central bank digital currency (CBDC) pilot, known as DREX. This initiative, announced on November 19, 2024, aims to enhance trade finance by automating cross-border agricultural transactions through blockchain technology.
Chainlink, a leading blockchain oracle provider, has teamed up with Microsoft, Banco Inter, and blockchain finance firm 7COMm in the development of DREX, Brazil’s Central Bank Digital Currency (CBDC). This collaboration is part of the second phase of the DREX pilot, focusing on streamlining cross-border trade and enhancing financial systems through blockchain and AI technologies.
The primary goal of this project is to create a more efficient and transparent trade finance system. By leveraging Chainlink’s Cross-Chain Interoperability Protocol (CCIP), the initiative aims to enable seamless settlements of agricultural commodity transactions across currencies and platforms. A key feature of the pilot is the tokenization of Electronic Bills of Lading (eBoL) to improve logistics and trigger automated payments, a significant step toward integrating supply chain data with financial transactions.
Microsoft’s involvement adds a layer of advanced technology infrastructure, supporting the programmability and interoperability required for DREX’s success. The project exemplifies how blockchain can enhance traditional finance by integrating real-world assets into a decentralized ecosystem, which aligns with Brazil’s efforts to modernize its financial systems.
This initiative is expected to highlight the potential of CBDCs in global trade, offering scalable solutions for cross-border commerce while addressing privacy, security, and interoperability challenges. The successful implementation of DREX could set a benchmark for other nations exploring CBDC innovations
Key Details of the Collaboration
- Objective: The pilot project focuses on improving cross-border agricultural trade and streamlining supply chain operations by leveraging blockchain solutions. Specifically, it aims to automate the settlement of agricultural commodity transactions across different platforms and currencies.
- Technology Utilization: Chainlink will employ its Cross-Chain Interoperability Protocol (CCIP) to facilitate interoperability between Brazil’s DREX and foreign central banks. This technology is designed to ensure secure and efficient transaction settlements, enabling automated payments triggered by supply chain data.
- Tokenization: A significant aspect of the pilot involves tokenizing Electronic Bills of Lading (eBoL) on-chain. This will help automate payments to exporters during the shipping process, thereby enhancing transparency and efficiency in global trade finance.
- Collaborating Entities:
- Chainlink: Provides CCIP for cross-chain transactions.
- Microsoft: Supplies cloud infrastructure essential for the project’s technical needs.
- Banco Inter: Leads the implementation of the DREX platform.
- 7COMm: Offers expertise in blockchain integration.
Expected Outcomes
The pilot is expected to demonstrate how blockchain technology can transform trade finance by unlocking mechanisms such as Delivery versus Payment (DvP) and Payment versus Payment (PvP). These features will address inefficiencies in current systems and pave the way for broader CBDC integration into Brazil’s economy. Angela Walker from Chainlink emphasized that this collaboration could significantly impact how tokenized assets function at scale within the financial ecosystem. Overall, this partnership represents a significant step towards modernizing Brazil’s financial infrastructure through innovative technology solutions
