Solana Foundation unveils a program to settle institutional trades in seconds. JPMorgan gave input

Solana Foundation, a non-profit dedicated to the decentralization, growth, and security of smart contract blockchain Solana, is taking a big swing at one of traditional finance’s old headaches – settlement risk.

On Oct. 6, the Foundation unveiled Solana DvP, an open-source delivery-versus-payment program that lets institutions settles trades “atomically on-chain,” with finality in seconds instead of days.

In traditional markets, assets and cash move through a chain of clearinghouses and custodians over one to two days, tying up capital and leaving room for principal risk. Solana DvP compresses these multiple legs into a single atomic transaction, such that both legs settle together, or neither does.

In plain English, institutions no longer have to trust the counterparty to deliver later. The trade either completes in full instantly, or it doesn’t happen at all, eliminating the risk of one party defaulting after receiving the asset or the cash as a part of the trade.

The DvP program also replaces the patchwork that institutions currently face when settling trades on-chain, where they’ve had to commission custom, one-off smart contracts for each deal.

“Atomic settlement removes counterparty risk that is inherent in traditional finance. Solana DvP program provides institutions with one open standard across the Solana ecosystem, on public infrastructure, with finality in seconds instead of days,” Catherine Gu, head of product, Digital Assets, Solana Foundation, said in a press release shared with CoinDesk.

Faster, safer settlement lowers the friction cost of moving value on-chain, which is precisely what tokenized assets need to scale.

Solana is already involved in notable tokenization experiments involving institutions, including a J.P. Morgan–arranged commercial paper deal for Galaxy Digital settled in USDC. An open, audited DvP standard could turn those one-off deals into regular business.

The latest effort has inputs from JPMorgan, too. The investment bank fed the project with decades of settlement-related information, helping shape requirements around deadlines, escrow isolation, and the token extensions regulated issuers rely on, such as pausable tokens and transfer hooks under Solana’s upgraded token standard, Token-2022.

Pausable tokens are crypto token featuring an emergency-stop mechanism so that the administrator can freeze transfers when required.

“A shared, open standard for atomic delivery-versus-payment is exactly the kind of foundational infrastructure institutional market participants require to operate at scale without introducing settlement risk and counterparty exposure. We were pleased to contribute our settlement expertise,” Rhodel D’souza, head of markets digital assets at J.P. Morgan, said.

The foundation says the DVP program has passed external security audits and is ready for real funds, with privacy features planned so settlements can stay confidential.

At Consensus Hong Kong in February this year, institutions emphasized that robust privacy features are key to mass adoption of blockchain technology by institutional players.