What is Rayls, the UniFi blockchain ecosystem

In this series of articles, we introduce Rayls, a blockchain designed for institutions, merging the best ideas from TradFi and DeFi into a product that we believe can bridge these two worlds.

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Rayls was initially developed by a multidisciplinary team of engineers, cryptographers, and bankers at Parfin, a British-Brazilian blockchain startup, following more than two years of product research with some of the world’s largest financial institutions.

The First UniFi’d Blockchain

Rayls (previously known as Parchain) is a fundamentally different EVM blockchain tailored for financial institutions. It blends the strengths of DeFi and TradFi to forge a hybrid approach we like to categorise as UniFi.

With Rayls, financial institutions can create their own permissioned EVM ‘subnet’ blockchain called VEN (Value Exchange Network) that uses Zero-Knowledge and Homomorphic Cryptography to provide full privacy of transactions to its participants. This enables the creation of environments that offer the level of compliance and security required by financial institutions.

Since each participants of the subnet runs their own ledger, the system provides infinite scalability, while also securely connecting each subnet to the Rayls Public Chain.

At the same time, anyone can use the Rayls Public Chain which is a permissionless and publicly available Ethereum L2. Users that choose to connect directly to the Rayls Public Chain cannot use the native privacy features and are required to pass KYC before they can transact.

This setup enables institutions to provide their clients with safe and compliant access to the latest DeFi protocols and access larger liquidity pools, and for DeFi developers to potentially access new clients and liquidity.

Why UniFi?

Today, the public blockchain ecosystem is flourishing. Every year, thousands of tokens, decentralised apps (dApps), companies, projects, and blockchains are launched, attracting millions of users worldwide.

Despite facing regulatory challenges, the DeFi industry continues to advance and notch up small victories toward mainstream acceptance. From Paul Tudor Jones taking positions in Bitcoin to the IPO of Coinbase and the approval of Bitcoin ETFs, financial institutions are increasingly feeling the pressure to adapt to this new reality. Many regret missing out on the fintech revolution and are determined not to let history repeat itself.

Over the years, numerous attempts to onboard financial institutions onto blockchain rails have failed to achieve a transformative impact in the financial sector. These attempts have mostly been done by permissioned blockchain systems that create isolated islands and often lack interoperability with public blockchains. As such, there are very few benefits in adopting the technology, and these projects tend to fall into disuse and abandonment.

In addition, several challenges have prevented its widespread adoption of blockchains in financial institutions. The challenges include:

a. The evolution of blockchain technology and the emergence of the Ethereum Virtual Machine (EVM) as the standard for smart contracts, tokens, and dApps.

b. The heavy regulation of financial institutions, which must comply with both domestic and international laws and regulations.

c. The need for transactional privacy by financial institutions as a fiduciary duty to their clients and to prevent sensitive information leakage to competitors.

d. The immense volume of transactions by financial institutions, necessitating scalable solutions beyond the capabilities of conventional blockchains.

Any solution that proposes to bridge the gap between DeFi and TradFi, would therefore have to be compatible with the EVM standard, interoperable with other systems and with Public Blockchains but crucially do these things while allowing institutions to comply to regulations and provide the level of security that they require.

Rayls: A new Approach

Rayls is the first EVM blockchain that combines a public chain protected by KYC with a system of permissioned subnets called VENs (Value Exchange Networks), which allow participants (e.g., banks or other financial institutions) to transact with each other in complete privacy, powered by Zero Knowledge Technology and Homomorphic Encryption. Importantly, each VEN can establish its own governance rules to ensure compliance with local laws and regulations and to accommodate various use cases.

All components within Rayls are EVM compatible. Participating financial institutions manage their own Privacy Ledger (represented by the black dots in the above illustration), a single-node, fast EVM blockchain. These Privacy Ledgers enable participants to maintain their data privacy within their IT environments while still connecting to other VEN participants for private token transactions using advanced cryptography.

Rayls: A UniFi’d Blockchain for All

Rayls bridges TradFi and DeFi, serving everyone from retail users to sophisticated financial institutions. Since all Rayls users undergo KYC, institutions and users can transact with each other with more confidence.

Developers can deploy dApps, tokens and smart contracts in the Rayls Public Chain (Developers also need KYC) or in any other part of the system — at the VEN level or even at the individual Privacy Ledger level (VENs and Privacy Ledgers are permissioned so the developer would need to request permission to do so).

Some of the key features of Rayls include:

• Full EVM compatibility
• Native Interoperability with Public EVM chains
• Privacy of transactions with ZK and Homomorphic Encryption
• Public and Permissioned blockchains under the same system
• Liquidity Aggregation Layer
• Infinite scalability

Rayls is the ideal environment for both TradFi and DeFi use cases. From tokenisation projects to RWA and CBDC, Rayls has the speed and compliance mechanism to support any use TradFi case, while also supporting DeFi protocols, crypto tokens, stablecoins and NFTs in a secure and collaborative ecosystem.