Last week, Chainlink Labs’ Managing Director of Business Development, William Herkelrath, joined Diana Barrero Zalles, Head of Research and Sustainability at the Global Blockchain Business Council (GBBC), for a presentation on why the world’s top banks and financial institutions are moving on-chain and how Chainlink’s secure interoperability solution would allow any entity to interact with any blockchain through their existing infrastructure.
Herkelrath outlined blockchain’s potential by referencing a 2021 World Economic Forum report indicating $867 trillion in traditional assets that could be delivered on-chain. In order to realize blockchain’s essential promise as the foundation for a more efficient and secure alternative financial system, however, he said individual chains must be able to break free from data silos and interact with each other through infrastructure that facilitates “a shared source of truth.”
As more assets move on-chain, more chains are created. With an ecosystem of “hundreds and maybe soon thousands” of chains functioning as independent “islands,” Herkelrath said, “We still haven’t really achieved what we think we’re going to achieve with the concept of web3, because we don’t have interconnectivity between the languages that all of these parties are speaking.”
He pointed to universal interoperability as the key to unlocking a “cascading effect” within the blockchain industry.
“If we can have a shared source of truth, that is a tremendous operational efficiency,” he said. “If, in fact, we move to blockchain but we still do this type of a model where everyone is doing their own little thing in their own little silo, we haven’t actually taken advantage of what the blockchain offers. But if we use the blockchain, instead, to bring all of these components into a single source of truth, then we can truly take things to the next level.”
Chainlink is engineered to remove an assortment of “hardware burdens” preventing institutions from interacting with a growing number of blockchains. Herkelrath said the “secret sauce” of the Chainlink Network – secured by high-quality node operators including Swisscom, LexisNexis, and Deutsche Telekom – is consensus by means of decentralization.
“We firmly believe that this future is powered by decentralization,” he said.
Decentralized systems are architected to be more resistant to adversaries including adversarial artificial intelligence (AI) than traditional centralized financial systems. Whereas centralized systems are susceptible to a single point of failure, decentralized systems increase the number of points needed to compromise an entire entity by orders of magnitude.
Herkelrath said Chainlink’s battle-tested infrastructure, which has so far enabled over $7.7 trillion in transaction value throughout the decentralized economy, “makes it almost impossible” for an adversary to manipulate the system to the degree that bad data could be published on-chain.
Through a growing number of decentralized services such as VRF, Automation, and Proof of Reserve, as well as its forthcoming Cross-Chain Interoperability Protocol (CCIP), which would standardize token movement and messaging across the multi-chain economy, Herkelrath said the ultimate goal of Chainlink’s blockchain-agnostic infrastructure is to facilitate a “common ledger.”
“I don’t think most people realize the sheer value of transparency and open data that’s available for all, so that everybody in the system can work with the same rules under the same conditions,” Barrero Zalles agreed.
“Truth, in essence, is one,” she said. “It shouldn’t be many different versions of truth, because that undermines the concept of truth. And when we are operating under data silos, like happens so much in the financial system today, it just leads to a lot of inefficiencies.”
Watch the full presentation.