The Solana Foundation has launched an open-source settlement framework aimed at allowing institutional trades to reach finality within seconds instead of the one to two days common in traditional markets. JPMorgan contributed its settlement expertise to the project.
The nonprofit foundation announced Solana DvP on Oct. 6. The delivery-versus-payment system is designed to execute asset and payment legs atomically on the Solana blockchain, so both sides of a transaction settle together or neither settles.
That differs from conventional financial markets, where securities and cash can move through several clearinghouses, custodians and other intermediaries before settlement is completed. The process can tie up capital and create principal risk if one side delivers while the other fails to fulfill its obligation.
With Solana DvP, an institution does not need to rely on a counterparty to complete the other side of a transaction later. If both conditions are met, the trade settles as a single atomic transaction; if either side cannot complete, the transaction does not settle.
The framework is also intended to eliminate some of the custom development currently required for on-chain institutional settlement. Instead of creating separate smart contracts for individual transactions, market participants can use a shared DvP standard.
Catherine Gu, Solana Foundation’s head of product for Digital Assets, said atomic settlement removes counterparty risk found in traditional finance. She described Solana DvP as an open standard available across the Solana ecosystem and built on public infrastructure, with finality in seconds rather than days.
Faster settlement could reduce the operational friction and costs associated with moving value on-chain, an issue that becomes increasingly relevant as tokenized assets expand.
Solana has already hosted institutional tokenization activity, including a commercial paper transaction arranged by J.P. Morgan for Galaxy Digital that settled in USDC. The foundation’s DvP framework could provide standardized infrastructure for similar transactions rather than requiring bespoke settlement arrangements.
JPMorgan’s Role
JPMorgan supplied input during the development of the DvP system, drawing on its experience with settlement processes. The bank helped inform requirements covering settlement deadlines, escrow isolation and features that regulated token issuers may require.
Those capabilities include pausable transfers and transfer hooks supported by Solana’s Token-2022 standard. Pausable tokens contain an emergency mechanism that allows an administrator to stop transfers when required.
Rhodel D’souza, head of markets digital assets at J.P. Morgan, said institutional participants need shared, open infrastructure that can support scale without adding settlement risk or counterparty exposure. He said JPMorgan was pleased to contribute its settlement knowledge.
DvP Competition
Solana DvP is entering an area where other blockchain-based settlement projects are already operating. Its distinguishing feature is its positioning as an open standard running on public infrastructure.
JPMorgan’s Kinexys has tested a cross-chain DvP transaction with Ondo Finance, connecting its permissioned payments infrastructure with the public Ondo Chain testnet.
ClearToken has taken another approach, offering DvP settlement through fully permissioned and regulated applications operating on the decentralized, privacy-enabled Canton Network.
The Solana Foundation said Solana DvP has completed external security audits and is ready to support real funds. Privacy capabilities are also planned to enable confidential settlement.
Institutional adoption will likely depend partly on those privacy protections. At Consensus Hong Kong in February, institutional participants identified robust privacy features as an important requirement for broader blockchain adoption in traditional financial markets.
