Chainlink, a leading web3 oracle network and cross-chain transfer protocol, is gaining traction among traditional financial institutions (tradfi) for its role in bringing assets on-chain.
Sygnum and Chainlink Collaboration
On July 3, Sygnum, a digital asset bank, announced its collaboration with Chainlink and Fidelity International, an investment management firm and Bitcoin ETF issuer. This partnership aims to bring Net Asset Value (NAV) data — the calculation of an investment fund’s value — on-chain.
Powering Fidelity’s Institutional Liquidity Fund
The NAV data will support Sygnum’s tokenized offering of Fidelity International’s Institutional Liquidity Fund. This fund invests in AAA-rated assets, boasting $6.9 billion in assets. In March, Matter Labs, the company behind ZKsync, allocated $50 million of its treasury reserves to the fund via Sygnum.
Bridging Traditional Finance and Blockchain
Fatmire Bekiri, head of tokenization at Sygnum, emphasized the importance of setting standards to foster collaboration across blockchain companies, regulated financial institutions, and asset managers. “NAV data is a critical building block that underpins the traditional fund industry today,” Chainlink stated. The company developed a chain-agnostic method for broadcasting NAV data, allowing it to propagate across any blockchain.
Growing Adoption Among Tradfi Institutions
The price of Chainlink’s LINK token is down 2.4% in the past 24 hours, according to CoinGecko. Despite this, the adoption of Chainlink among tradfi institutions continues to grow. In May, the Depository Trust & Clearing Corporation (DTCC) published findings from a pilot distributing NAV data for mutual funds across blockchains. This pilot was conducted in partnership with Chainlink and 10 major financial institutions.
Chainlink’s Role in Tokenization Pilots
Chainlink’s cross-chain interoperability protocol (CCIP) plays a key role in tokenization pilots launched by major financial institutions, including BNY Mellon, Citi, BNP Paribas, ANZ Bank, Lloyds Banking Group, and SIX Digital Exchange.
The Future of Fund Tokenization
“Fund tokenization is likely the largest digital asset trend happening today,” said Sergey Nazarov, Co-founder of Chainlink. He believes that tokenized funds offer global reach and efficiency benefits far greater than traditional methods. Over time, this approach is expected to transform the asset management industry.
Rapid Growth in Tokenized Assets
According to Rwa.xyz, the value of tokenized U.S. treasuries, bonds, and cash equivalents has surged in 2024. The sector currently boasts a $1.77 billion market cap, reflecting more than 120% growth since the start of the year.
Conclusion: Chainlink’s Impact on the Financial Industry
Chainlink’s role in providing NAV data and enabling cross-chain interoperability is driving the tokenization trend among tradfi institutions. As more mainstream institutions explore tokenization, Chainlink’s technology is set to play a pivotal role in the future of asset management.
