This week, global financial messaging provider, Swift, announced it’s collaborating with more than a dozen of the world’s largest financial institutions and infrastructure providers to transact with a variety of public and private blockchains through a single integration of Chainlink Cross-Chain Interoperability Protocol (CCIP).
Yesterday, Chainlink co-founder Sergey Nazarov joined Nasdaq TradeTalks’ Jill Malandrino to discuss why this collaboration marks a significant milestone in traditional finance’s adoption of blockchain technology and how Chainlink’s full suite of web3 services can facilitate each stage of the journey on-chain.
“The players involved in this are the largest financial players on the planet and the largest market infrastructures on the planet,” Nazarov said. He predicted that even if only “a small portion” of the value controlled by these institutions were to flow on-chain via CCIP, the blockchain industry’s value could increase tenfold.
He said CCIP allows banks to move beyond simply custodying digital assets to being able to transfer assets between chains and ultimately create more advanced use cases for smart contracts in decentralized financial (DeFi) products.
By allowing banks to use Swift’s established messaging standard to transact trillions of dollars throughout the multi-chain economy, Nazarov said CCIP’s abstraction layer could broaden the realm of DeFi similar to how TCP/IP expanded the internet.
“Essentially, what this does is it creates an internet of contracts out of the multitude of different chains, both public and private,” he explained. “And that’s the goal of CCIP, using the same security model that has made Chainlink able to process over $7.7 trillion dollars in transactional value so far.”
He underscored traditional finance’s inevitable adoption of DeFi due to user demand. “Everybody in the banking sector is going to travel the same path,” he said.
On the horizon, Nazarov believes the potential to create tokenized real-world assets will further incentivize banks to broaden their reach on-chain. In the final stage of adoption, he predicted banks will offer their own DeFi products powered by Chainlink’s decentralized data and services such as Automation.
“Over time, I fully expect that the crypto markets and the global financial system will really become one thing,” he explained. “Because crypto and blockchains are the superior model, and we just need to create the technology that will allow that transition to happen in a secure and efficient way that serves the interests of everyone involved.”
Watch the full segment.