Future

DeFi

Brazil is incorporating decentralized finance (DeFi) principles into its development of an in-house “synthetic” central bank digital currency (CBDC), Drex, which was previously called the Brazilian digital real.&nbsp;
Roberto Campos Neto, president of Banco Central do Brasil, highlighted the country’s need for a multidimensional CBDC that addresses the “trilemma” of decentralization, privacy and programmability — challenges that traditional markets have struggled to resolve.&nbsp;&nbsp;
While presenting on Oct. 3 for a Markus’ Academy event on The Future of Financial Intermediation, Neto <a data-ct-non-breakable="null" href="https://www.youtube.com/watch?v=x27Mz_CdwtI" rel="null" target="null" text="null" title="null">said</a>:
<blockquote>
 “We wanted to have three dimensions of benefits that you cannot get on just a normal CBDC. We wanted to insert the tokenization concept into the balance sheet of the banks.”
</blockquote>
<h2 id="compounding-effect-of-open-finance-platform-and-cbdc">Compounding effect of Open Finance platform and CBDC</h2>
Alongside the CBDC development, Brazil plans to speed up its nationwide tokenization efforts through an Open Finance platform. The central bank envisions Open Finance as a marketplace that provides users with multiple options for banks and payments, including CBDCs.
<figure>
 <img alt="Brazil tests DeFi elements, compatibility in Drex CBDC pilot" src="https://s3.cointelegraph.com/uploads/2024-10/019256cd-0faa-7b43-8d51-930ff342b916" title="">
 <figcaption style="text-align: center;">
 The user interface of Brazil’s Open Finance platform. Source: Banco Central do Brasil
 </figcaption>
</figure>
<a data-ct-non-breakable="null" href="https://www.bcb.gov.br/conteudo/home-ptbr/TextosApresentacoes/Ap_RCN_Brunnermeier_3_10_24.pdf" rel="null" target="null" text="null" title="null">According</a> to the document referred to by Neto, the marketplace will promote “competition by channel and for principality.”
Through Drex, Brazil aims to introduce the concept of tokenization to banks and bring the DeFi ecosystem into the regulatory perimeter.
<figure>
 <img alt="Brazil tests DeFi elements, compatibility in Drex CBDC pilot" src="https://s3.cointelegraph.com/uploads/2024-10/019256ce-47c9-7f4b-8169-da74450d3660" title="">
 <figcaption style="text-align: center;">
 Brazil’s CBDC aims to solve the trilemma of decentralization, privacy and programmability. Source: Banco Central do Brasil
 </figcaption>
</figure>
<h2 id="working-toward-cbdc-compatibility-with-defi-ecosystems">Working toward CBDC compatibility with DeFi ecosystems</h2>
In the first phase of the CBDC pilot, Brazil experimented with decentralization elements. The ongoing second phase focuses on digital asset transactions, including liquidity pools for government bonds and international trade finance. 
The second phase is expected to extend into 2025, with no fixed deadline
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/elon-musk-twitter-ban-brazil-crypto-community" rel="null" target="null" text="null" title="null">Elon Musk’s X ban dispute with Brazil takes toll on local crypto community</a>
In addition to government efforts, private crypto firms continue to expand digital asset payment options for Brazilians.
On Oct. 3, blockchain payments network Ripple announced a partnership with the Brazilian Mercado Bitcoin exchange <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/ripple-mercado-bitcoin-launch-crypto-payments-brazil" rel="null" target="null" text="null" title="null">to launch cross-border crypto payments</a>.
With the new payment tool, businesses in Brazil will be able to make “faster, cheaper, more efficient cross-border payments” worldwide 24/7 and settle payments in minutes, Ripple said.
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/anti-aging-multi-millionaire-bryan-johnson-almost-devoted-life-crypto/" rel="null" target="null" text="null" title="null">Anti-aging tycoon Bryan Johnson almost devoted his life to crypto</a>

Brazil tests DeFi elements, compatibility in Drex CBDC pilot

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