Just a few days ago, Chainlink unveiled its cross-chain interoperability protocol, CCIP, with the intention of making it simpler to transfer funds between blockchains. However, the co-founder of Chainlink has much more ambitious goals than merely connecting public blockchains.
Chainlink Co-Founder Sergey Nazarov’s Bold Vision and CCIP Protocol
The legislative climate will eventually let them link to open blockchains like Ethereum, according to Sergey Nazarov, who predicts that banks and other financial institutions will launch their own blockchains that are likely restricted or permissioned in some form. Furthermore, he claimed that if this thesis is true, it might significantly increase the value of cryptocurrency.
You have this public blockchain and internet of contracts primarily defined by DeFi, and you have this bank-chain world, which I think will be primarily defined by real-world asset tokens. The next stage will be getting these two worlds to overlap. And when that happens, beyond the efficiencies and the gains for each of these groups, then you will see the blockchain industry as a whole, I think grow very, very rapidly by trillions of dollars.
Nazarov
CCIP Protocol
Token transfers between chains are made possible by the recently introduced protocol, which acts as a technical infrastructure. It makes use of the Chainlink network, which has a track record of giving trustworthy data to blockchains, generally from real-world data, such as pricing information.
But in the case of CCIP, the network makes it possible for information to be shared between blockchains, guiding the movement of assets in a secure way. Even though the network is currently running on the mainnet, it is still in an early access stage and is being tested in conjunction with other cryptocurrency projects like Synthetix and Aave.
So I’ve been selling these banks blockchain stuff for about six, seven years. And the historical pattern has been that when there is a downturn in crypto prices, the banks lose interest. But this time is the first time after the four cycles that I’ve been through that this hasn’t happened. And I think the reason it hasn’t happened is because their clients want blockchain stuff,
Nazarov
In addition, the infrastructure has been tested in the conventional banking system before it was recently introduced. Over a dozen financial institutions have been investigating CCIP for directing token transfers across public and private chains over the current Swift messaging infrastructure.
Why Nazarov Thinks Banks Will Need Their Own Blockchains?
Nazarov outlined his reasoning for believing that banks will create their own blockchains based on Chainlink’s experience working with Swift and banks.
According to Nazarov, there are three steps to adopting a bank. Custody is the primary emphasis of Stage 1, which comprises only maintaining crypto assets on their native networks. Stage 2 includes the tokenization of physical goods, which is equivalent to creating derivative assets. This begs the question of which chain these assets will be added to. Nazarov said that at this point, banks realize they must create their own chains if they are to have complete control over their tokenized real-world assets.
Stage 3 starts to take shape when banks begin to create financial protocols on their own chains. Basically, it mirrors the current DeFi landscape but inside a more constrained regulatory environment. Nazarov predicts Chainlink will play a role in this.
In that third stage, they’re invariably going to be dealing with us because we power the vast majority of DeFi. They’re going to need market data, they’re gonna need identity data, they’re gonna need automation, they’re going to need functions. All the stuff we make, they’re going to need. I know that because I’ve already seen a lot of the designs, and the designs are basically copying the DeFi (protocols) we already power.
Nazarov
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