Last week, the Depository Trust and Clearing Corporation (DTCC), a leading financial market infrastructure (FMI), announced the results of its Smart NAV industry pilot, which leveraged DTCC’s digital asset capabilities and Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to demonstrate how traditional financial institutions can deliver key mutual fund data onchain.
Chainlink co-founder Sergey Nazarov joined Caroline Hyde and Ed Ludlow on Bloomberg Technology to discuss the pilot’s impact on accelerating real-world asset tokenization throughout the global financial system.
“I think what this shows is that real-world asset tokenization is taking a more mainstream institutional interest level,” Nazarov said.
As the industry-standard decentralized computing platform, which has enabled over $10.5 trillion in transaction value, Chainlink provides a comprehensive suite of oracle services that are critical for creating and securing data-driven tokenized real-world assets throughout the multi-chain ecosystem.
Nazarov underscored how blockchains and oracle infrastructure like CCIP solve fundamental problems that allow both core financial products – treasuries, money market funds, bonds – and assets that weren’t previously securitized – carbon credits, real estate, and private equity – to achieve a superior state onchain.
“The big difference here is that the asset can have critical information about it continually updated and the holder or buyer of the asset doesn’t have to search for that data and they don’t need to have any special expertise,” he explained. “Also, the data can move across chains – that was the other big part of the collaboration.”
Contrary to the idea that decentralized finance (DeFi) and traditional finance (TradFi) are in opposition, Nazarov believes traditional banks and FMIs will ultimately be “the biggest net users” of blockchain technology.
“They’re going to generate the most assets; they’re going to generate the most payments; and, importantly, they’re going to do it in a way that complies with legal requirements,” he explained, reiterating his view that virtually all real-world assets will be reformatted into a fundamentally superior state onchain, where transactions can be performed in a way that is guaranteed instead of probabilistic.
“In my opinion, if you want to go to the hundreds of trillions that will be in the blockchain format, you need the global CSDs, the central banks, the big commercial banks to basically adopt the technology for its value,” he said. “That’s what this collaboration with the DTCC has been about, is providing the technical value in ways that benefits both the traditional financial system and consumers, and the web3/blockchain community.”