It's no secret any more. Today, the majority of major financial institutions are interested in tokenisation and are studying solutions to deploy as many real-world assets as possible on the blockchain.
"With this in mind, they are currently encountering two major problems: interoperability between blockchains but also the transmission of data with the real world," explains Zakaryae Boudi, CEO of FeverTokens, a smart contracts platform for companies working with several French and American banks on this subject.
Chainlink therefore aims to respond to these two issues to position itself as a central partner in the tokenisation of assets.
👉 An alternative to traditional bridges
Currently, to move from one blockchain to another, bridges are still the industry's preferred solution. Problem is, according to a report by Chainalysis, more than a third of the sums stolen from the crypto ecosystem in 2022 were stolen via bridges, i.e. more than $2 billion.
"Bridges are clearly a back-up solution until something better comes along," notes Frédéric Ocana, cybersecurity project manager at the Banque de France from 2017 to 2021.
Created in 2017 by Steve Ellis, Ari Juels and Sergey Nazarov, the current CEO, Chainlink first became known for its oracles, a set of data that allows smart contracts to link with the world outside the blockchain. In this area, Chainlink is a leader, as the company secures more than 45% of the oracles on the market according to data aggregated by DefiLlama.
Based on this expertise, It has developed what is currently its flagship product, CCIP (Cross-Chain Interoperability Protocol), a network of decentralised oracles aimed at making it as easy as possible to move from one blockchain to another by providing a standardised solution for sending data or cryptocurrencies.
Participants in the network will operate a node in return for payment in LINK, Chainlink's native cryptocurrency. As in a traditional Proof-of-Stake system, participants will be incentivised to perform their work well by escrowing an amount of LINK within the network. In the event of a breach of the rule, some of the immobilised tokens may be confiscated.
"It is the entire network that guarantees the veracity of data transmitted between the off-chain and on-chain worlds," explains Zakaryae Boudi. CCIP is therefore positioned as a kind of layer 0, the infrastructure on which blockchains such as Bitcoin or Ethereum are built.
In this respect, Chainlink's direct competitors to CCIP are Axelar, which has worked with JP Morgan in particular, or LayerZero, backed in particular by the Andreessen Horowitz fund (a16z).
CCIP was officially launched this summer on the Mainnets of Avalanche, Ethereum, Optimism as well as Polygon. The main decentralised finance protocols to be available there concern derivatives as well as lending protocols such as Aave.
"Just as Web2 needed TCP/IP to connect isolated islands of computer networks, Web3 needs an interoperability standard to connect islands of blockchain networks," explain the Chainlink teams.
To date, Chainlink claims "more than $8 trillion in value transferred on-chain" via its CCIP network and has already managed to forge partnerships with the sector's main heavyweights such as Circle and Coinbase.
👉 Institutional ambitions
Beyond the crypto world, Chainlink wants to position itself as a benchmark player for financial institutions in the traditional world. At the end of September 2022, the company announced that it was working with the Swift banking network, which is accelerating on the issue of tokenisation (read our article ). Today, it is working with BNY Mellon, BNP Paribas, Citi, Clearstream, Euroclear and SIX Digital Exchange (SDX), among others.
CCIP enables businesses to connect and interoperate with blockchain directly via their existing backend systems. "Chainlink provides a wide range of reassuring parameters for institutional clients, particularly in terms of regulation," explains Zakaryae Boudi. "They were able to position themselves in this niche very early on and because of their longevity in the ecosystem, today appear to be one of the most credible players in the market."
