Revolutionizing Global Trade Finance | MERGE Buenos Aires 2025 | Xbo.com Stage

get started now. We'll start with just uh doing some some introductions. Uh my name is Roger Broen. I'm the director of solutions architecture for Chainlink Labs. Prior to that, I spent a couple of decades working for Centure and top five consulting firms doing a variety of things in IT from architecture to big data and AI.

And I've spent the last four years uh building out the solutions architecture team at Chainlink Labs. Uh Bruno, you want to introduce yourself? Hello everyone. Uh it's a pleasure to be here. Uh I'm Bruno Gross, the head of emerging technology and digital assets at the Bank.

Uh Inter is is a was the first digital bank in Brazil. uh 7 years ago seven or eight years ago uh with more than 25 years uh of of uh IT career I'm working a lot with uh software engineering blockchain artificial intelligence and now quant computing too uh it has been the most innovative uh bank digital bank in Brazil uh it was the first one that created a super app in the country uh with more than 80 80 products uh that's not financial product right integrated with the the bank uh so it's it's a pleasure to be here to talk about our trade finance use case for directs uh Sergio I am ser I am the chief innovation officer at 7 is IT company that provide professional service for uh financial institution in Brazil in Latin America and we help the this financial institution to implement tokenization solutions and and uh support to blockchain networks for this institutions and I have I have a lot of experience in enterprise architect and I have been work with blockchain since 2016. uh basically in use uh solutions for enterprise blockchain. Hello my friends, good morning. My name is Juan War.

uh I was working in Microsoft uh until last month I moved to another financial institution but uh during my time in Microsoft I I lead the all projects related to CBDC web3 defy not only Brazil but uh in Latin America in other countries like like the Norway Thailand and the Hong Kong and the other central banks. My my my core role core is about the innovation right applied in innovation that uh I have I have been work a lot with the AI ahk ai right apply for example blockchain I start my pos in this way in my parallel life I'm a defy web3 his search in this way that's a part of the and uh we and Bruno me and Bruno here we analyze this project uh about the trade finance and we are pushing and uh together with my my friend here Roger and and the Sergia money that's a complicated project because uh uh it's involved many projects in the same project right we are talking about supply chain we are talking about DVP PVP in the same project in this way I believe the idea here is to talk a little bit more about not all details but a little bit more how to to explore trade finance not only Brazil, Hong Kong, Brazil, Dubai, Brazil, Caribbean, any any central bank is feasible to to explore and use this use case. That's great. Thanks everyone. So, Sergio, why don't we we start off with the basics here.

Why don't you explain to us what the Drex is, the Drex project and how it has the potential to really modernize the Brazilian financial system and also create a foundation for global interoperability. The DR project uh is a Brazilian CDBC project and the central banking of Brazil start this this pilot of the project two years ago. as uh to support the this it's not uh only to issue as the BC but uh this entire platform to uh support the tokenization of econom uh uh economic tokenization uh there are two parts there we have a name g the cruise of Brazil And uh we have a uh direct for wholesale is this this is a token issued by central banking and we have to to u direct for retail this issued by the author regulate financial institution and uh it's delivered by the the clients of the banks And through the tokenization of the through the deposit token tokenizide. Yeah. And and this this is the this entire infrastructure and but not of only the technology but this starts a legal framework to support uh to the regulation to support this econom tokenized econom this uh to support the entire tokenization of economy.

in Brazil. This open the many possibilities of the new kind of a digital assets and cross and to uh for payments uh inside and between Brazilian companies but to proer crossboard payments. Sir you want? Yeah. Well, I have a question.

There's a one challenging using blockchain in instations. It's about um uh how uh a private we need to balance the transparency compliance using blockchain but you need to provide user confidentiality of the transactions too. And uh uh how can you explain impact of the the security on on in this case mainly in institution. Okay. Financial institution.

Thank you Ymani. Uh what is the idea my friends and uh what is the main blocker today in the in the directs is it to solve the part of the privacy right not only privacy we have the other details about the utilization of the directs or go on to production right we we we have some layers in the infrastructure for example the direct right imagine that we have the layer one for example the hyperledger basm okay and imagine that you have another layer for example one one layer for privacy and this the same layer we can use for interpretability. That's another example. Imagine that have the Brazil okay and the communication integration with another CBDC. Imagine that is another another central bank use or fabric or cord or the the the access is via only APIs that we start the to to to increase the complexity in this project right that's a part of the project that we are involved now um and the the the nature of the blockchain is to to be transparent right but what what is the idea we cannot uh uh we we must avoid any any problem about the confidentiality and the and the privacy because we we are we are talking about the transaction about the the money right it's a digital money but it's a money right in this way uh we develop one solution based on ZKP that we can apply in the in the the solution for example about the PVP not only in PVP but for example in the in the process of the supply chain imagine that I have one one platform that we include a private information in this in this platform and this way I I I we will talk a little bit more about this but uh for example it's not the only transaction that must be private right is information about the logistics company and any car you bon that the company that's my mind about the trade finance platform in this way we have the some possibility to to to keep the privacy to keep the security in this way I realize concept about the zero trust CBDC that we can apply I any any country in any central bank that we can close create a shield around the CBDC we can we are talking about the confidential computing we are talking about the the ZK roll up uh and many other security observability and I work with the with the Bruno in another project about the postquantum cryptography that's another component another component that we can apply for example in digital signature of the CBDC in this way we have techn technology for this to protect the CBDC.

That's the the the part of the the the hard work of the to launch one CBDC, right? That's that's a it's not a problem. I I I see the opportunities to create a new solution. ZK roll and the homorphic encryption we have a lot. Hey Roger after if you can talk a little bit more about the the price that the chain link has has one solution but Bruno we are worked together in the direct project I don't know if you know my friend we have the two phase in the index project phase one only the public bounce tokeniz now we have the 13 use case and this use case that we are talking here is a for me is the most important use case in the in this list right Bruno in is in the core part of the direct right?

Yeah. is uh work with the central bank work to create the technology and explain for for everyone here my friend how how in is exploring the trade finance how collaboration contribution from the inter and you my friend thank you John uh in is has been actively involved in the the drax project right working uh with the central bank and the Microsoft chain link and other banks in Brazil. This is a a ru collaborative approach, right? It's not a approach only from the central bank. It's a uh it's a project that uh the central bank involved all the the financial system on that uh and we are trying since the the the first phase we are trying to uh do more than the minimal uh use case that we are working on.

As Jean told uh uh we worked in a Pix Pixia a post post cryptograph post quantum cryptographic solution for Drax on the first phase uh and now for the first phase uh for the second phase we have uh three we was we was selected for three use case the liquidity pool for tokenized public bounds uh this the receivable uh use case for for credit card right credit card receivable in in DAX that's important use case too uh and this trade finance use use case that is the idea is to connect the DAX with an central bank uh using chain link solution right we are uh we are really collaborating with with the central bank and the other banks to find a private solution to create useful use case for for DRAs because we already have picss in Brazil that's a successful use case right uh for for uh instant payment and then we we need to work together to find useful uh useful use case for DX to justify this approach. Right? So, uh the trade finance is is important use case because we we know that the trade finance has has a lot of is is full of friction, right? The delay, the the inter a lot of intermediaries, physical documents and the liquidity problems, right? So uh we we are trying to solve these problems or or reduce these problems working with tokenization of of commodities in Brazil and using EBL uh to to control the the shipment of the the products and the uh reduce uh reduce the frauds and create more trust in all the supply chain uh of the trade finance.

of a commod from Brazil to a stand another account, right? Uh and I I I want to ask Roger to talk more about how the chain link uh chain link is a is a global global uh how do I say a global one of the most important technology used to connect blockchain different blockchains and I I want to ask you to talk us more about how uh chain link can solve this and help integrate all how all the systems that is necessary for the trade finance use case. Yes, of course. Thank you, Bruno. Yes.

So, so chain link realizes that uh there is no longer going to be essentially just one chain to rule them all. There's going to be many many chains, many many blockchains. And we knew from the very beginning that it was was quite excuse me quite critical that those chains be connected in the most secure fashion available. So when we talk about CCIP, our crosschain interoperability protocol, it is a full-blown protocol and that allows us to send tokens and messages and actually both in something that we call programmable token transfer that allows you to send tokens and instructions on what to do with those tokens when they land on the destination chain. So that is one key aspect of that.

And we're the only solution available that has level five security because we built this from the very beginning to be uh available for use for financial institutions globally for sending real large amounts of value that has to be absolutely secure and you know this is built on our our technology that has been running successfully in very adversarial environment i.e. Ethereum mainet, you know, protecting DeFi with price feeds and various other technologies from our oracles successfully since 2019 with no incidents, no no value lost. So part of that interoperability solution is connecting the chains that will be involved in this process and another part of the solution is our oracles which we was our first generation technology to get data from other off-chain sources and then write those successfully onchain in a very secure decentralized you know censorship resistant and very secure manner. Now the next generation that technology that we're working on is something called the chain link runtime environment which allows us to combine not only crosschain capabilities and the abilities to pull data from web two style systems web tool APIs but the next generation that we'll be working on and likely using in this use case as well is essentially a decentralized consensus driven workflow engine which allows the data points to be either blockchains to read and write from blockchains or for those endpoints to be APIs which you can actually read and write from the APIs and then perform decentralized compute on that information as needed work on it through a workflow with various branches and branching logic and then be be able to come to consensus on those values and write that information back out to the blockchain.

So I don't have you know time in this session to go into much of the more of the technical details of how all that works but please find me running around the conference if you're interested. will be happy to tell you much more detail on how all of that works. So, just kind of to to sum that up, we we're getting a lot of interest in financial institutions because we've set the standard as far as security and reliability as far as these crosschain solutions. And that's why we're excited to be working uh on the project with everyone here in the Brazilian Central Bank. All right, I think that kind of sums up my bit on this.

Can we um can we talk a little bit Sergio at 7Com you support a broad range of financial institutions in Latin America. What trends or demands are you seeing from clients in terms of tokenized assets and frictionless crossber payments? Well, we have a lot of demands about tokenization uh tokenization of the uh tradition real world assets in form of technization. But the main question now for mainly in Brazil is about the regulation. uh because the uh financial ecosystem in Brazil is very regulated and you need clear uh more clear rules about how to use how to tokenize uh these assets and how to can if for for example the same way the stable coin is a how a bank in Brazil can use stable coin to crossber payments.

But uh and uh the last year and this year too, the central bank and the secured exch secured and uh CBM, the securities index exchange commission in Brazil launch a series of the public consultation to create rules about uh how can uh the financial institution Brazil can use uh stable coin or tokenized assets. But uh after the uh final version of the this regulation, I think I see a lot of new projects starting in Brazil and can can this could be a legal framework for other countries in Latin America too. Okay. Uh I have a question to you. It's a blockchain trade finance.

This is not a new uh blockchain based trade finance is not a new concept. Uh but many of the early pilots filed to gain traction. Uh what makes this new wave powered by CDBC crosschain protocols fundamentally different? Okay. What is the idea of the the trade finance is facilitate exchange, right?

Okay, imagine that you have the two rivers. The first one is about the supply chain. Imagine that I tokenize the soy beans here in Brazil and then you sell this for another country. Doesn't matter. Uh we we stud a lot of the companies that start with the trade finance platform and the most part of these companies uh fail.

Why? because we have a no consent, no privacy, use only few companies to to start and to create this company right and uh we have the about the Marco Polo trade lens but in parallel in the policy we we talk with the the GSBN that's a is a company about the trade finance is a based on on on blockchain that's a is a big point because we comment about the the paperless environment that's a part of electronic bill of landing that we must apply in this type of the project, right? Because when we start the logistic process to for example soybeans, meat and any any other uh component or product, we must guarantee that we deliver the this this goods, right? That's the part of the process. In this way, we we must keep the interoperability.

Imagine that we create the or marketplace and for example we need connect with the GSBN. We need to connect with the other because we can we can realize or determine the for example one flow between Brazil and any country but we need connect and to be interoperable with the other blockchain platforms. In this way for me the the the key word here is interoperability and the electronic bill of land but without law for example we don't have one law in Brazil to force the utilization of the electronic bill of land what is this is to to to take the form and put this information for example in blockchain in multimal environment and in this way the platform that we are working the idea is to be interoperable and and keep the privacy with the consent flow create analogy here about the open bank in Brazil right that have the consent to to to get information that's here is almost the same we can put many banks many companies the same platform include uh federal heaven service to analyze the the complete flow of the the goods the the federal heaven service for example is is a is a is a is analyzed For example, how to uh uh how to to to get one tax use the pax and the other information for example use the oracles to collect this to capture this index and use this platform that's the part of the flow my friend a lot of actors Bruno my friend we are involved in the core of this right and uh but what what is the real benefits in your opinion my friend about the the trade finance the the the user the end user right from the the the customer of the of the inter what is the what is the benefits about the the the customers the farmers not only the trade finance but in the in the part of the supply chain. What do you think of it? Uh as a as a bank we we see that that the mo the most important benefits is to give more credit with a lower interest right for our clients.

when we create we create trust between all the the the participants of the the trade finance and the supply chain. Uh we we can give more credit with Lauren test to everyone. Uh giving the opportunity for SMA SM right small and companies to and farmers to to export their productions. uh giving them access to to to the clients all all of the world, right? All of the world.

Uh and create opportunity for everyone to to become part of this of this uh how do I say glo global trade finance, right? global trade supply chain uh and work together with another another financial companies uh to reduce risks for everyone, right? And when we create trust and reduce risk, we can give the opportunity for more people being involved on this. Uh and that's that's the the the main benefit of this supply uh this trade finance use case for us as a bank, right? Where give access to our clients uh to the market, global market, right?

Uh so I have I have a question to to Roger. Uh Roger, you know that the Sable coin is been has been uh an important part of the trade finance and cross body uh cross body payment. So I I want to ask you to talk more about the benefits of using uh stable coins and the how chain link can ensure uh this connection between between the the the part uh the the different systems and the stable coins uh to improve the the trade finance. Yeah. Yeah.

Great question RTO. So I would say one of the technologies that is in use today uh Bank of Columbia is using this is a chain link technology called proof of reserve and proof of reserve is a key technology for stable coins because most of the stable coins that are you know currently successful are ones that are stable coins their value is preserved on chain because they are backed by some sort of real world asset whether it be bonds or some other type of financial instrument. um it's really important that the things that are backing those stable coins are always essentially more or exactly the same as the value of these coins that are minted on chain. So what proof of reserve does is allows you know third party auditor to access the financial systems that hold these assets and make an onchain attestation from the auditor saying that there is this much of the asset backing the stable coin to make sure that it is you know one more transparent you could see this value on the blockchain and also to make sure that there's never a way for these uh uh stable coins to have more of them minted than is actually back so that their value is always preserved. Now, one of the key strongest uses of a proof of reserve is since this value is written on chain, you can write it into the smart contracts into the minting function that before the minting function is executed or during the minting function, it can check the proof of reserve and make sure that the new total supply of stable coins that is about to be minted is not going to be more than what is backed by that collateral.

and and that gives beyond just transparency that gives another layer in defense and depth in case some sort of hacker tried to exploit some sort of flaw that they detected in the smart contract and was trying to perform an infinite mint attack or something along those lines. So, um that's one of the the technology is extremely popular with with stable coins or any type of real world asset that is tokenized value against something else uh something else. I mean other examples are like tokenized gold or tokenized silver or other types of of commodities that people can attest to that are available. So um that's that's one part of the technology. The other part the technology with CCIP it makes the accounting for these stable coins can be quite simple because it supports so many crosschain interoperability bits.

It can be mint and burn, lock and burn, unlock and mint, any various combination of those that you need to to support. CCIP supports all of those uh cross token transfer protocols. So, in closing and to wrap this up, I'd like to ask each of you to to share one one final thought here as we're getting close on time. What is the one thing that you believe needs to happen in 2025 for these crosschain financial use cases like trade finance we're talking about today become a reality in production at scale. You want to kick it off Bruno?

Yeah, I think that it's uh we will not have only one blockchain right to solve uh everything. So I think that interop uh in Brazil we have uh this regulatory being being uh being it's it's it's been discussed by the central bank uh and you solve uh some some gaps in the regulatory uh in the regulatory area uh this year. So I think it's the most important part of the interoperability and the regulator. Okay. Yes, I agree.

I think the regulator the support of the regulatorators in each contract and the collaboration with the the participants is very important to support this kind of solution. Okay, sure. Yeah, for me the the the key word is interpretability, right? Because we we don't have a unique sit network to to to support the all central banks around the world, right? And uh and to be honest, we we idize the utilization of these stable coins basin for example in the soybeans, meat and any other commodities, right?

But when I I I remember one one one word or phrase one expression in the white paper of the BIS about the the dynamo right that's a mitigate the counting party risks that's a part of this process and theme and financial inclusion for me I believe that if you can include this in this and and you have the another it's not a problem but it's concern that's why I mention about the stable coin we can push this project until the end finalize and we can we cannot wait the the the directs right for example if you if you if you don't have the direct launch in this year or next year we can push and in production this this project for me that's uh that's important with the utilization of this stable coin for example for example based on on on soy beans or other commods that's the that's my my my dream my Rich. Yeah. And I would say and then in closing, you know, my my ideas on what needs to happen in 2025 are exactly what you guys said. So I'll echo those again. We need regulatory clarity.

Uh and we need interoperability because we know that it's not going to be a single chain that that rules the world. It's going to be interoperating with all of those. And that's kind of the the vision of CCIP. Eventually, we'd like it turned into almost like the TCIP of the internet where now you go to send someone an email, you don't think, oh, are they on the internet? You just send an email and then everything goes.

So, we envision a future where everything is connected with CCIP and you want to talk to someone on the blockchain. You don't even think about it. You can just send the message, send the tokens, and interoperability is is solved for you. And then one final thing I would say on that is that um I know that the US has been really really uh anti- crypto and anti-blockchain in the past. So I'm also personally really excited that we should see some regulatory clarity there as well.

So as we come together globally with regulatory clarity, I think it's going to be a very very exciting time for all of us in this industry and very excited for use cases like this. So thank you all very much. That's it. Thank you. That's it.

Thank you all. [Applause]