The Canton Network announces the addition of B2C2, Cumberland DRW, FalconX, and GSR, four major digital asset liquidity providers, to its on-chain collateral initiative. This marks a significant expansion of the project, which began in January of this year. The new additions join Flowdesk and QCP as design partners, providing expertise on application requirements. The application will be open to all OTC bilateral derivatives traders upon its launch in Q3.

This collaboration will leverage the Canton Network’s unique privacy capabilities to create an on-chain collateral and margin management solution for bilateral derivatives. The move will address inefficiencies and constraints in the crypto derivatives market, which stem from the lack of a comprehensive and accessible regulatory framework.

Existing bilateral markets are often fully or over-collateralized, creating capital inefficiencies, while the use of tri-party agents for collateral management adds additional costs. Digital Asset’s collaboration with these leading market participants will introduce an automated and cost-effective alternative powered by the Canton Network.

“We’re pleased to welcome these new partners to the Canton Network as we expand the scope and impact of our on-chain margining initiative. This will serve the demand for enhanced privacy and capital-efficient infrastructure, and prove out the use case for traditional financial derivatives markets,” said Georg Schneider, Head of Financial Products at Digital Asset. “We look forward to welcoming the firms on board and working closely with them to shape the future of finance.”

“At B2C2, we believe the widespread adoption of digital assets depends on infrastructure that matches traditional finance standards,” stated Cactus Raazi, CEO Americas at B2C2. “As a top liquidity provider in institutional crypto markets, we’re dedicated to building scalable solutions that connect traditional and digital finance. Canton’s on-chain collateral solution is a crucial advancement, boosting capital efficiency, automation, and privacy in bilateral derivatives.”

“We are excited to support Canton’s on-chain collateral solutions within our bilateral derivatives business,” said Chris Zuehlke, Partner at DRW and Global Co-Head of Cumberland. “Our firm has long championed the adoption of blockchain technologies, and this initiative perfectly aligns with our mission to make markets more efficient through innovative solutions. We believe interoperable, privacy-enabled networks like Canton will play a critical role in the convergence of traditional and digital markets. As one of the largest liquidity providers in crypto options, we know first-hand that institutional investors are ready for this type of collateral management solution.”

“We’re pleased to contribute as a design partner in developing on-chain collateral settlement for bilateral derivatives,” said Joshua Lim, Global Co-Head of Markets at FalconX. “Exploring applications like this allows us to test new infrastructure that could support more efficient and secure trading between institutional participants.”

“The promise of crypto is true ownership of value, and seamless flexibility in its utilization. By developing solutions for on-chain derivative margin optimization on Canton, Digital Asset is bridging the liquidity gap between crypto-native players wanting access to institutional capital and traditional players venturing into the ever-expanding digital assets space. That capital efficiency unlock is here to stay,” said Simranjeet Singh, Head of DeFi Trading at GSR

The collaboration will deliver a solution with several key capabilities, including on-chain collateral agreements encoded as smart contracts, which will enable the automatic execution and enforcement of terms in line with ISDA CSA Initial and Variation Margin compliance requirements. Using the Canton Network, parties gain real-time access to data shared only among transaction participants– allowing for streamlined automated margin workflows, instant tokenized collateral pledging, and improved dispute resolution. The solution also ensures the privacy of collateral transactions, limiting the access of confidential terms and on-chain movements to the relevant counterparties.

The ability to provide on-chain collateral and margin management for bilateral derivatives on the Canton Network will offer several key advantages, including 24/7 margining regimes where margin can be paid on demand, shorter margin cycles, reduced risk and margin requirements, and the incorporation of novel collateral types such as yield-bearing stablecoins or tokenized money market funds.

Source: Canton Network