From a pandemic-era municipal token to a Swiss-wide institutional blockchain. How a city built a permissioned, Proof of Authority network for finance, notarisation and beyond – and what leaders can learn from the approach.
Most blockchain projects in the public sector never survive the pilot stage. Lugano’s did – and then scaled it into a national platform. What began in 2020 as a pandemic response to support local merchants has evolved into SwissLedger: a permissioned blockchain network backed by over 35 public, private and academic entities, with production use cases ranging from municipal payments to art certification and open banking infrastructure.
This post draws on a presentation by Dr. Lorenzo Barisone, data scientist and project lead at the City of Lugano’s innovation hub, delivered during a meeting of the LF Decentralized Trust European Chapter, which Espeo Software helped organise. What follows synthesises his presentation, the audience Q&A, and publicly available SwissLedger material.
What Lugano Set Out to Solve
In 2020, the City of Lugano faced a problem that had nothing to do with blockchain. The pandemic lockdowns were pushing consumer spending online and away from local businesses. The city government’s concern was civic engagement: if residents stopped physically visiting and buying from local shops, the economic and social fabric of the city would erode.
The response was MyLugano – a city app with a built-in payment token called LVGA (often searched as LUGA). The idea was simple: give residents a concrete financial incentive to shop locally, powered by blockchain technology. It worked. Today, roughly 40,000 users transact with LVGA across more than 500 merchants in a city of 68,000 residents.
“Everything has started in 2020 with the pandemic. The worry of the municipality was that with the lockdown people were getting used to buy online and reduce the civic engagement in leaving the city and buying locally.”
– Dr. Lorenzo Barisone, City of Lugano
LVGA and MyLugano: How the Closed-Loop Cashback Model Works
LVGA is a municipal payment token authorised by the Swiss financial authority (FINMA). It is pegged to the Swiss franc at a fixed rate of 100 LVGA = 1 CHF. Users can buy LVGA with Swiss francs, but they cannot convert LVGA back to francs. This one-way conversion is the design’s core feature, not a limitation: it keeps the value circulating within the local economy.
Step 1: A customer pays at a participating merchant using any payment method – cash, credit card, Bitcoin, Tether or LVGA itself.
Step 2: The customer receives up to 10% cashback in LVGA, credited directly to their MyLugano wallet.
Step 3: The customer spends the earned LVGA at any of the 500+ participating merchants.
Step 4: The merchant receives the LVGA and can use it within the network, keeping value in circulation.
The MyLugano wallet is a multi-asset wallet: users can store and pay with LVGA, Bitcoin (via Lightning), Tether (USDT) and Ethereum. Merchants that join the network accept all of these. The city itself accepts LVGA, Bitcoin and Tether for municipal taxes, fees and parking.
The system also enables targeted policy interventions. Each year, the City of Lugano gives 200 CHF worth of LVGA to residents turning 18, redeemable only at merchants classified as cultural attractions. The same mechanism can be applied to sustainable shopping incentives, health and wellbeing programmes, or tourism campaigns in other parts of Switzerland.
“You really can buy everything with a LVGA in Lugano. From bars and restaurants to cultural activities, but also a car or electronics. And the city of Lugano accepts any kind of payment of taxes and fees in LVGA, Bitcoin and Ethereum.”
– Dr. Lorenzo Barisone, City of Lugano
According to a 2022 survey, 21% of respondents were actively using LVGA. Among residents under 35, usage was around 30% – higher than cash. The highest-age active user at the time of the presentation was 94 years old, with the concentration of users between 20 and 40.
From 3Achain to SwissLedger: What Changed and Why
In 2021, the City of Lugano launched 3Achain – a public permissioned blockchain initially built to support the LVGA token. The network grew from a city-level experiment to attract over 30 supporting entities. In 2025, the project was formally rebranded as SwissLedger, reflecting a shift in ambition: from a city experiment to a Swiss-wide platform for the banking industry and public administration.
The name change was not cosmetic. SwissLedger is conceived as national-scale digital infrastructure – or, as Dr. Barisone framed it during the session, “a sort of highway or railroad: a public good managed by the public where any private actor can ride at the same rules and with the same infrastructure.”
Governance and Trust Model: Permissioned, Proof of Authority, Validators
SwissLedger uses a Proof of Authority (PoA) consensus mechanism. This means block validation is performed not by anonymous miners or stakers, but by entities whose institutional reputation is at stake. The result is fast, energy-efficient validation with clear accountability.
~35 entities – relay transactions across the network
Subset of nodes with block-inclusion rights – requires majority approval
Approves new node membership – transitioning to association/foundation model
All nodes in the network are identical in their base capability: they can relay and resubmit transactions. A subset of nodes have additional validator privileges – they can include transactions in blocks. Adding a validator node requires majority approval from existing validators. Adding any node to the network requires approval from the SwissLedger consortium, which is currently the City of Lugano but is planned to transition to a publicly founded association or foundation.
The network operates as a public good: there are no transaction fees. The only cost for participating entities is the infrastructure cost of running a node.
Technical Architecture: EVM Compatibility, Anchoring and Layering
SwissLedger is built on the Ethereum Virtual Machine (EVM), meaning it supports standard Ethereum smart contract development – ERC-20 tokens, standard tooling and developer workflows. The chain was built from scratch by technical partner Noku rather than forking an existing client like Besu.
Core Ledger Layer – where transactions and assets are recorded.
Smart Contract Layer – for deploying application logic (ERC-20, custom contracts).
API and Integration Layer – enabling banks, fintechs and applications to connect to the blockchain.
Compliance Layer – anti-money-laundering AI detection for fraudulent behaviour.
Security Layer – cryptographic and cybersecurity protections.
Asset Tokenisation Module – SwissLedger is one of the blockchains available within Tether’s Hadron tokenisation platform.
A critical design choice is anchoring to Bitcoin and Ethereum. SwissLedger periodically writes cryptographic proofs of its state to these public, permissionless blockchains. Even though SwissLedger itself is permissioned, the integrity of its records can be independently verified against external chains beyond the control of any single party. This addresses the common concern with permissioned ledgers: “who watches the watchers?”
Use Cases Beyond Payments: Notarisation, Certification and Onboarding
Verify Lugano – Document Timestamping
Verify Lugano is a production-ready service for notarising public administration documents on SwissLedger. When a public officer certifies a document, a cryptographic hash of the file is recorded on the blockchain with a timestamp. Anyone can subsequently verify a document’s authenticity by uploading it to the Verify Lugano portal. If the file hash matches the on-chain record, the document is confirmed as unaltered since certification.
“Blockchain can be a solution especially because transparency can be obtained through the decentralised architecture. There could be an increase in traceability reducing the opportunity of manipulation and unauthorised access.”
– Dr. Lorenzo Barisone, City of Lugano
Artchain – Physical Art Certification
Artchain, developed by OFFICINEBIT, is the first blockchain-based certification system for physical artworks that completely replaces the legal validity of traditional paper certificates. The entire collection of Italian sculptor Arnaldo Pomodoro is now certified on SwissLedger through the Arnaldo Pomodoro Foundation.
KYB and KYC Services
Weekend Group, based in Geneva, provides Know Your Business (KYB) and Know Your Customer (KYC) services for financial institutions using a Layer 2 on SwissLedger, providing an auditable, tamper-proof record of compliance activities.
Why This Targets Finance: The Swiss Open Banking Context
Unlike the European Union and the UK, Switzerland has taken a voluntary, market-led approach to open banking. Swiss banks are not required by regulation to adopt open banking solutions. At the same time, Switzerland’s DLT regulatory framework is among the most advanced in the world.
This creates a gap: the regulation enables innovation, but there is no public mandate to build shared infrastructure. SwissLedger positions itself to fill this gap by offering API-driven blockchain infrastructure as a public good – ideal for open banking applications where multiple institutions need to share data and processes on equal terms.
“What the City of Lugano is proposing is the blockchain as a sort of digital platform – like a city in physical terms – where any kind of company can provide their digital services at the same rules, with the same infrastructure.”
– Dr. Lorenzo Barisone, City of Lugano
Dr. Barisone referenced a 2023 Bank for International Settlements (BIS) publication on the concept of the “Finternet” – treating digital financial infrastructure as a public good. SwissLedger, he argued, is one of the first concrete implementations of this idea.
To advance the financial services roadmap, the City of Lugano has established a lab for financial innovation with two tracks: a technical collaboration with major Swiss banking technology providers (Avaloq, HCLTech Confinale Wealth Solutions, UBQ, Noku) and an academic collaboration with the University of Lugano (USI) and SUPSI. Five working tables have been opened covering tokenisation, custody, trade finance, decentralised data identity, and legal framework.
What Leaders Should Take Away
When asked during the Q&A why most blockchain projects fail after the pilot stage, Dr. Barisone was direct: the problem is adoption, not technology.
“The majority of blockchains that have failed were anchored to one specific use case with no applications or scalability criteria.”
– Dr. Lorenzo Barisone, on why blockchain pilots fail
- Start with a real adoption driver: LVGA and the 10% cashback model created genuine, repeated daily usage by 40,000+ people before the infrastructure was extended to other use cases.
- Treat blockchain as public infrastructure: SwissLedger’s zero-transaction-fee, public-good model removes the economic barrier that prevents smaller entities from participating.
- Anchor trust externally: Periodic anchoring to Bitcoin and Ethereum provides public verifiability independent of the consortium.
- Design for policy, not just payments: The ability to target LVGA distributions – cultural spending for 18-year-olds, sustainable shopping incentives, tourism campaigns – demonstrates that a municipal token can be a policy instrument.
- Privacy requires layers, not absolutes: Tiered KYC levels control what users can do – basic profiles get 5% cashback, fully verified profiles unlock peer-to-peer transactions and 10% cashback.
Frequently Asked Questions
SwissLedger is a public permissioned blockchain network promoted by the City of Lugano. It evolved from the 3Achain project (launched 2021) and uses a Proof of Authority (PoA) consensus mechanism where only authorised entities can validate transactions. Over 35 entities – public, private and academic – support the network by operating nodes.
LVGA (often searched as LUGA) is a municipal payment token issued by the City of Lugano, pegged to the Swiss franc at 100 LVGA = 1 CHF. Users earn up to 10% cashback in LVGA when shopping at over 500 participating merchants via the MyLugano app. LVGA cannot be converted back to Swiss francs, keeping value circulating locally.
Both – it is public permissioned. Transactions are publicly visible on the SwissLedger blockchain explorer, but only authorised entities can operate nodes and validate transactions. Private companies can join, operate nodes, and deploy smart contracts after a short legal audit.
SwissLedger periodically writes cryptographic proofs of its state to Bitcoin and Ethereum. The integrity of records can be independently verified against public, permissionless blockchains beyond the control of any single consortium member.
Verify Lugano is a production-ready service for notarising public administration documents. When a document is certified, its cryptographic hash and timestamp are recorded on SwissLedger. Anyone can later verify by uploading the file – if the hash matches, the document is confirmed as authentic.
Yes. SwissLedger is EVM-compatible. Of the roughly 35 network entities, 23 are private companies. No transaction fees – the only cost is node infrastructure.
Further Reading
- SwissLedger – official website with network overview, partner list, and documentation.
- SwissLedger Whitepaper (PDF) – full technical and governance documentation.
- MyLugano – official LVGA token and cashback programme site.
- What is the LVGA Token? – MyLugano’s official explainer on the token mechanics.
- Lugano Accelerates Financial Innovation with SwissLedger and Swiss Digital Key – City of Lugano official announcement (March 2025).
- Bitcoin Suisse Becomes a Trusted Validator on SwissLedger – Bitcoin Suisse press release.
- Lugano Accelerates Financial Innovation with SwissLedger – Switzerland Global Enterprise coverage.
- A Growing Circle of Trust: Welcoming Our 10th Central Bank Member – LF Decentralized Trust blog.
This post is based on a presentation delivered during a meeting of the LF Decentralized Trust European Chapter. Espeo Software helped organise the session. The full talk is available on the LF Decentralized Trust YouTube channel, and the European Chapter’s work can be followed on GitHub. Direct quotes have been lightly edited for readability. Views expressed by the speaker are his own and do not necessarily represent the official position of the City of Lugano.
