Brazil's Largest Private Bank To Develop DeFi Liquidity Pool

The central bank of Brazil has picked proposals for eight new projects for its latest edition of the Laboratory of Financial Innovations and Technologies (LIFT) program and among them is a decentralized finance (DeFi) liquidity pool from the largest private bank in the country, Itaú Unibanco.

The Banco Central do Brasil's LIFT public program aims to strengthen financial inclusion and as per a CoinDesk report Tuesday, the platform developed by Itaú will use blockchain and smart contracts to allow customers to exchange tokens as well as stablecoins tied to the real, U.S. dollar, or other fiat currencies.

Itaú's project is a "platform that, through blockchain and smart contracts, allows custody, currency exchange and alternative investments," The Block reported, citing a central bank statement. "The use case consists of creating a liquidity pool, with tokens that emulate stablecoins that can have parity with the [Brazilian] real, dollar or some other fiat currency, with its operation being similar to that of liquidity DeFis that operate in the digital asset market," it added.

Interestingly, as per previous reports, Itaú Unibanco is also set to launch an asset tokenization platform capable of converting traditional finance products into tokens. It formed the Itaú Digital Assets, a new unit of the private bank focused on blockchain tech and digital assets, which will offer crypto custody services. The custody services will be first available to institutional clients and then to retail customers by the end of the year.

Itaú is the largest Brazilian bank, according to S&P Global, and holds total assets worth $371.38 billion.

There are several blockchain projects among the selected projects as well. One proposal from the fintech company Lovecrypto aims to convert a stablecoin based on the Celo blockchain to Brazil's central bank digital currency or CBDC. Meanwhile, another project called Delend Tecnologia aims to create a decentralized credit protocol targeted at small- and medium-sized businesses.