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Sergey Nazarov Says Chainlink’s Facilitating A Seismic Shift In Global Finance

Last week, Chainlink co-founder Sergey Nazarov joined Nasdaq TradeTalks host Jill Malandrino to discuss how Chainlink’s decentralized oracle infrastructure makes it possible to reformat all the world’s value into a superior onchain global financial system.

He outlined three main benefits blockchains and oracles bring to capital markets. 

First, blockchains allow collateral to move more quickly and efficiently between counterparties to maximize interest earning potential. “One day of interest on a hundred billion dollars – that’s a lot of money,” Nazarov said.

Second, tokenized real-world assets (RWAs) open new markets and new possibilities like fractionalization and programmability for “assets at the edge of the financial system” that aren’t tangible or easy to trade and transact with. 

Third, Nazarov said tokenization and onchain finance induce an overall “seismic” improvement in the ability for both asset issuers and purchasers to manage risk because “you have a way to know more about the asset when it’s onchain.” 

Through Chainlink’s comprehensive suite of oracle services, Nazarov said traditional assets can be transformed into RWAs that serve as a golden record. He explained how Proof of Reserve (PoR), which continuously updates RWAs to reflect the status of collateral, and Cross-Chain Interoperability Protocol (CCIP), which allows RWAs to move freely between private bank chains and public blockchain applications, facilitate the creation of a superior asset class.     

“All of these things together will play a very big role in creating a new format for all value and that format will convey critical information in real time to asset holders that allows them to make informed buying and selling decisions in ways that are today not possible,” he said.

“Any asset that doesn’t convey that real-time information that allows the holders to manage that risk will be an inferior asset; it will be an asset that essentially has more risk and is therefore less attractive.”

Last week, crypto ETF issuer 21Shares announced it integrated PoR to boost the transparency of bitcoin reserves backing the ARK 21Shares Bitcoin ETF (ARKB). Nazarov said the next stage in institutional adoption of onchain finance will feature traditional financial institutions generating more Chainlink-powered RWAs such as ANZ’s tokenized reef credits

“After that, you’ll get to another stage where the banks will get really creative, because banks and asset management firms – all these folks are essentially very good at packaging things into financial products that can, at large volumes, flow into the global financial system.”

He envisioned a world where RWAs created on private bank chains flow into the public blockchain realm and vice versa via CCIP, creating a global internet of contracts that constitutes a “once in a few generations shift” in how value is packaged, managed, and transacted. 

“In the next five years, I think we’ll see the migration of value into this tokenized smart contract-based form – and then five years beyond, we’ll see a rapid progression of really all value to be put into this format.” 

Watch Sergey Nazarov’s full conversation with Jill Malandrino on Nasdaq TradeTalks. 

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