During a recent Chainlink meetup in Seoul, Chainlink co-founder Sergey Nazarov spoke about how Chainlink’s Cross-Chain Interoperability Protocol (CCIP) is the final piece of the puzzle connecting DeFi and TradFi into a global internet of contracts.
“Where we are today is that we’re able to provide data, compute, and now cross-chain value,” Nazarov said of Chainlink’s essential web3 infrastructure. “These are really the three things that you need to build an advanced application that can cryptographically guarantee outcomes for people.”
Cryptographically guaranteed smart contracts must be able to access data, computation, and cross-chain value while remaining secure, deterministic, and resistant to manipulation.
“If I build an application and you build an application, our two applications can interact – and your application can never screw over my users, and my application can never screw over your users,” Nazarov explained. “No one’s going to make a choice about how to screw over anybody, because it’s not possible to make that choice.”
He reiterated the critical distinction between “paper promises” that rely on the good faith of a brand or institution and smart contracts that rely on cryptography to ensure an agreement is automatically executed when the predetermined conditions are met.
“The current internet – while it’s very good at transmitting information – it isn’t good at making sure that what you were promised is what happens,” he explained. “And that’s a big problem, because the world that we’re moving towards in the global markets is a world where more and more banks will probably start choosing not to give people their money.”
Nazarov explained how CCIP is a universal language connecting smart contracts on separate blockchains, much like TCP/IP joined distinct protocols into a unified internet. As such, CCIP allows web3 developers and users to build and consume any app on any chain. “The only thing that matters is that the apps do something valuable,” he said.
CCIP also allows more than 11,000 traditional financial institutions to interact with the multi-chain economy. Nazarov believes that as cross-chain applications offer more utility, more traditional financial institutions will want to interact with them, leading to “hundreds of trillions of dollars” flowing on-chain.
With both DeFi applications and banks using CCIP as a global interoperability standard, he predicts the banking and crypto sectors will eventually merge into one superior alternative financial system.
“A world where people can rely on systems and applications in a way where those systems cannot change their mind is what is going to eventually define what the global financial system is,” Nazarov said.
Watch the full presentation.