The long-anticipated link between the established domain of traditional finance and the new landscape of decentralized technology is being built, and its footing will be with the Ethereum network. Joe Lubin, co-founder of Ethereum and the CEO of blockchain software giant Consensys, confirms SWIFT—the dominant global messaging system that underpins international banking—is using the Linea blockchain to build out its new crypto payments ledger. Lubin’s confirmation represents one of the most notable endorsements of blockchain technology by the legacy financial system to date. Yearly SWIFT handles, on average, $150 trillion of the world’s transaction volume and is now officially poised to enter the on-chain world of decentralized finance (DeFi). This action holds potentially immense significance in the evolution of global payments.
A “Soft Roll Out” for a Seismic Shift
The news was revealed in stages, creating a stir in both financial and crypto circles. SWIFT initially announced a major pilot project involving over 30 leading financial institutions to explore a 24/7 real-time crypto payments system but stopped short of naming its blockchain partner. The speculation, however, was rampant.
The confirmation came directly from Joe Lubin during a fireside chat at the recent Token2049 conference in Singapore. He explained that SWIFT had to “soft roll out” the news to the banking sector. The reaction, he noted, was overwhelmingly positive. “I believe the sentiment was, ‘thank you for doing this.’ It’s about time to bring the two streams, DeFi and TradFi, together,” Lubin said.
Why Linea? Speed, Cost, and Ethereum’s Security
For an organization such as SWIFT, the choice of blockchain is paramount. Linea, a Layer-2 built by Consensys, is an excellent option. The primary Ethereum blockchain could be thought of as a secure, yet often congested, superhighway. Layer-2s like Linea offer high-speed express lanes built on top of that highway. The Layer-2s bundle up thousands of transactions off-chain, before settling them back on-chain into a single verified batch on Ethereum.
The technology leveraged by Linea is called “zk-rollup” which allows them to process transactions off-chain and then commit them back onto Ethereum all while retaining the security of Ethereum by committing a single verification of the batch. This technology allows Linea to charge approximately one-fifteenth (1/15) of the transaction fees the users would pay on the Ethereum mainnet, and offers a much higher throughput user experience as well. Linea has locked over $2.27 billion in assets on their platform, proving it to be a trusted and serious player in the ecosystem.
The Banking Titans Are on Board
This is not a fringe experiment. The list of firms in traditional finance (TradFi) that are involved in the trials is read like a who’s who of global banking. Firm’s like the Bank of America, Citi, JPMorgan Chase, and Toronto-Dominion Bank are all engaged in the process of testing SWIFT’s new blockchain payment rail on Linea. Their engagement certainly add’s a great deal of credibility to the project and indicates that the industry is seriously exploring this new technology.
A New Challenger to Ripple and the Cross-Border Market
With its Ethereum-based solution, SWIFT is now competing directly with already existing blockchain-based payment systems, namely Ripple’s XRP Ledger. Ripple has been targeting banks and cross-border settlement for years. The unique combination of SWIFT’s unmatched network of more than 11,000 banks, combined with Linea’s new technology, creates an equally formidable new player in the race to modernize cross-border payments.
Beyond Payments: A Glimpse into a “User-Generated” Future
While you’re hearing them talk about payments first, Lubin teased an even bigger vision for platforms like Linea. He described a “user-generated civilization” that could be built on platforms like Linea. In other words, decentralized networks grant communities the ability to create their own infrastructure, rules, and application from the ground up instead of tapping into the top-down hierarchy we traditionally associate with banking or governance. The Linea project started off as a way to streamline payments, but it could ultimately be the first step towards an open and collaborative financial ecosystem.
