During TOKEN2049 Singapore, Chainlink co-founder Sergey Nazarov delivered a keynote on how Chainlink facilitates the intersection of DeFi and TradFi into a more secure, efficient global financial system in the shape of an internet of contracts.
As the industry-standard decentralized computing platform, Chainlink offers a comprehensive set of services that have enabled over $15 trillion in transaction value on the path toward scaling onchain finance to billions of global users. This year, Chainlink is at the forefront of an $867 trillion market opportunity for issuing tokenized real-world assets and stablecoins onchain.
“Now there’s a new component to what Chainlink does, which is basically the ability for real-world assets and next-generation DeFi applications to reinvent the global financial system,” Nazarov said.
Over the past year, Chainlink has been central to TradFi’s growing interest in fund tokenization as the most widely used provider of net asset value (NAV) data. “TradFi needs much more data,” Nazarov explained.
In May, the DTCC collaborated with 10 of the world’s largest financial institutions to demonstrate how Chainlink’s Cross-Chain Interoperability Protocol (CCIP) can bring NAV data onchain. In June, Chainlink announced a collaboration with Fidelity International and Sygnum to bring NAV data for Fidelity International’s $6.9 billion Institutional Liquidity Fund onchain.
Chainlink Proof of Reserve (PoR) has also established a new standard for digital assets, decentralized exchanges, and crypto ETFs – funds that give investors access to the value of an underlying asset without directly owning it – such as the ARK 21Shares Bitcoin ETF (ARKB) and the 21Shares Core Ethereum ETF (CETH).
Nazarov underscored CCIP’s solution to TradFi’s cross-chain connectivity problem. As illustrated by Swift’s proof of concept, over 11,000 banks can use CCIP to securely transfer tokenized assets between public and private blockchains. Among those banks is ANZ, one of the largest institutional banks in Australia, which integrated CCIP to atomically settle transactions using stablecoins as payment for tokenized green financial products.
“This is a great example of what you’re going to see more and more of in the TradFi world,” Nazarov said. “It’s going to be the movement of stablecoins in a delivery versus payment transaction in return for an asset on another chain.”
CCIP achieves the highest level of cross-chain security and features a separate Risk Management Network that independently monitors for suspicious activity. It also enables Programmable Token Transfers, which allow digital assets to move between blockchains with directions for how they should function on the destination chain.
“You can actually wrap a token in instructions so that when it reaches its destination, it ends up triggering the event that it’s intended for,” Nazarov explained. “This means that people who want to use that chain don’t even need to integrate with it; they can simply use the chain through CCIP.”
He defined DeFi’s future as trillions of dollars in net new value flowing onchain from traditional markets.
“The fundamental goal of all this is to get as much value from the TradFi community – which has hundreds of trillions of dollars in value – into the blockchain ecosystem on a single set of standards,” he said.
Looking toward a future where legal barriers between DeFi and TradFi have dissolved, he envisioned a single Chainlink-powered global financial system:
“TradFi will be the largest customer of DeFi, and DeFi will be defined and diversified by its ability to create yield and reliable markets for real-world assets – that’s the kind of world I think we’re going towards.”
Watch Sergey Nazarov’s full keynote at TOKEN2049 Singapore.