Grayscale identifies Chainlink as critical. It connects crypto to traditional finance, anchoring the next wave of blockchain expansion and tokenization.
Grayscale has boldly stated that Chainlink will be at the center. This is applicable to the next big phase in the adoption of blockchain. They refer to the project as the “critical connective tissue.” This is a good link between crypto and traditional finance.
Chainlink: Essential Infrastructure for Tokenization and DeFi
In a recent research report, the asset manager made an important argument. Chainlink’s expanding set of software tools is coming out. It is a critical infrastructure for tokenization. It also supports the settlement of cross-chain. Furthermore, it is driving the overall move towards real-world assets on the blockchain rails.
A new research report by Grayscale highlights this. It says that Chainlink has become important infrastructure. This is for the growing tokenized assets sector. The report highlights data feeds of Chainlink. It also refers to compliance tools.
Additionally, cross-chain interoperability is very important. These services help to overcome barriers. They make it easier to follow the financial systems based on the blockchain. This is supported by Chainlink’s CCIP protocol. It is designed for transferring the data and assets on blockchains. It was recently tested. This included initiatives with J.P. Morgan’s Kinexys and Ondo Finance.
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Grayscale believes that the software technologies offered by Chainlink will be centric. This is the case for many blockchain applications. This includes tokenization and decentralized finance.
Chainlink is commonly referred to as a crypto “oracle.” However, it is more properly called modular middleware. This allows on-chain applications to safely utilize off-chain data. They are also able to interact between blockchains. They can also resolve enterprise-grade compliance requirements.
Powering Tokenization and Cross-Chain Interoperability
Public blockchain technology has huge potential. It has the potential to radically transform digital finance. It reduces reliance on centralized intermediaries. However, most financial assets remain off-chain. Therefore, they must be tokenized to bridge onto blockchains.
Regulatory compliance, dispute resolution and customer service will still require some intermediaries. Chainlink directly solves these problems. It provides the connectivity and integration between crypto and traditional finance seamlessly. It supplies necessary infrastructures. This endorses the use of blockchain in financial apps.
Chainlink is a very active contributor to tokenization. This enables registering assets off-chain on-chain. These assets include securities, real estate, and commodities. Tokenization allows for more efficient settlement. It is also possible to interact with smart contracts. It provides potential for reducing costs.
Partnerships with S&P Global and FTSE/Russell showcase Chainlink’s growing footprint. This is evident in tokenized finance. The market of tokenized assets has grown. It grew from $5 billion in early 2023. It is roughly $35 billion today.
However, it still accounts for only 0.01% of the global fixed income and equity markets. This is an indication of big growth potential.
LINK Token Drives Ecosystem Incentives Across Blockchain Finance
Chainlink is used in several stages of tokenization. Proof of Reserve is a verification of off-chain backing of assets. Automated Compliance Engine (ACE) is ensuring KYC/AML compliance. Data Feeds are a source of off-chain pricing. The Cross-Chain Interoperability Protocol (CCIP) effectively transfers assets across blockchains.
Apart from oracles and CCIP, Chainlink provides modular services. These include external API calls. They additionally give low-latency data streams. It also offers Verifiable randomness (VRF). Automation and enforcement of compliance are a package of the Chainlink Runtime Environment (CRE).
The LINK token fuels the ecosystem and incentives of Chainlink. It has a supply which is capped at 1 billion. Almost 700 million LINK are in circulation. Chainlink is a protocol that generates both on-chain revenue. For example, CCIP fees. It also generates off-chain revenue by way of enterprise contracts.
The LINK Reserve program is a program of converting service revenue into LINK. It is currently holding roughly 800,000 tokens (approximately $11 million). LINK staking is at 4% – 5% annualized.
In conclusion, Chainlink is a platform that is positioned as foundational infrastructure. It is vital to blockchain finance. Its modular solutions, cross-chain capabilities and enterprise partnerships make it a vital connective layer. This applies to the real assets on blockchains.