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Sergey Nazarov On Building DeFi As A “Conflict Of Interest-Free” Alternative Financial System

During CoinDesk’s Consensus 2023 event in Austin, Texas, Chainlink co-founder Sergey Nazarov gave a compelling presentation about how Chainlink is building infrastructure that powers DeFi as a “conflict of interest-free” alternative to traditional finance.

Nazarov identified conflicts of interest as a pernicious problem plaguing both domestic and globally connected financial systems for hundreds of years. He explained how Chainlink’s decentralized oracle networks and web3 services are architected to prevent systems from being corrupted by malicious actors through tactics like data manipulation and overleveraging.

The key idea behind conflict of interest-free infrastructure is that it makes manipulating the system it powers impossible. “You cannot manipulate the Chainlink data source in order to steal and extract value from DeFi,” he said.

As traditional finance continues to experience crises of faith resulting from conflicts of interest, Nazarov said more people will migrate to DeFi as a conflict of interest-free alternative powered by infrastructure such as Proof of Reserve, which he described as an “obvious” solution to catastrophes like last year’s FTX collapse.

Nazarov said the Chainlink Network, which has historically proven resistant to various attack vectors and enabled more than $7.7 trillion in transaction value, continues to produce “the entire decentralized stack of tools and systems that developers need” to continue to build manipulation-resistant protocols.  

“This architecture will be the future of the entire global financial system,” he said.

Beyond generating this technology, Nazarov said Chainlink is focused on creating a “sustainable and incentive-aligned” ecosystem through programs like Chainlink BUILD and Chainlink SCALE, which allow dApps and blockchain ecosystems in the Chainlink Network to securely scale as they generate more user revenue and require more infrastructure. 

Finally, he said Chainlink continues to engineer secure middleware that will allow capital markets and banks to interact with the growing multi-blockchain economy. He believes growing interest from banks and financial institutions indicates DeFi will ultimately evolve from an alternative financial system to the status quo.

“We will become how the world works,” he said.

Watch Sergey Nazarov’s full presentation at Consensus 2023.

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