Chainlink Co-Founder Foresees Trillions in Value as Banks Embrace Blockchain Technology
Chainlink has recently unveiled its cross-chain interoperability protocol, aiming to revolutionize the seamless transfer of money between different blockchains. However, according to Sergey Nazarov, the co-founder of Chainlink, the ambitions of this project go far beyond merely connecting public blockchains. Nazarov envisions a future where banks and financial institutions will launch their own blockchains, potentially controlled or permissioned, and eventually connect them to public blockchains like Ethereum, leading to a massive value boost for the crypto industry.
The newly launched protocol acts as a technical infrastructure that facilitates the transfer of tokens from one blockchain to another. Leveraging the robust Chainlink network, known for providing reliable real-world data to blockchains, the protocol now facilitates the secure exchange of information between blockchains. Though currently operational on the mainnet, the protocol is still in its early access phase and is being put to the test in collaboration with renowned crypto projects like Synthetix and Aave.
Notably, this interoperability infrastructure has already undergone trials within the traditional banking system before its public launch. Major financial entities, including Swift, the global inter-bank messaging network, and a host of other financial institutions, have been actively exploring the Cross-Chain Interoperability Protocol (CCIP) to enable token transfers across both public and private chains through the existing Swift messaging infrastructure.
Sergey Nazarov expressed his observations about the shifting dynamics in the banking sector’s attitude toward blockchain technology. In the past, when there were downturns in crypto prices, banks tended to lose interest. However, this time around, the banks have shown sustained interest, primarily driven by the demands of their clients who want to explore blockchain solutions.
Nazarov outlined a three-stage process of bank adoption of blockchain technology. In Stage 1, banks focus on custody services for crypto assets demanded by their customers. In Stage 2, banks move to tokenize real-world assets and face the critical decision of choosing which blockchain to host these assets. Nazarov believes this is the stage where banks will realize the need to establish their own chains to have full control over their tokenized real-world assets.
Stage 3 marks a deeper integration of blockchain technology within banks as they develop financial protocols on their proprietary chains, mirroring the existing decentralized finance (DeFi) landscape but within a regulated framework. Chainlink is expected to play a significant role in this stage as well, providing essential market data, identity data, automation, and other functions that are vital for DeFi operations.
Moreover, Nazarov anticipates that stablecoins could serve as the entry point for banks into the blockchain space. For instance, Societe Generale has already developed its stablecoin on a public blockchain. Nazarov predicts that all banks will eventually introduce their stablecoins, and they might choose CCIP to ensure cross-chain usability for their stablecoins.
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