Chainlink’s Cross-Chain Protocol Could Change Web3 Landscape

Leading blockchain data oracle provider Chainlink has launched its latest product, a cross-chain interoperability protocol. The CCIP is now live on mainnet bringing new capabilities to the Chainlink ecosystem.

On July 17, Chainlink announced the deployment of its Cross-Chain Interoperability Protocol (CCIP). It has entered a “Mainnet Early Access” phase on the Avalanche, Ethereum, Optimism, and Polygon blockchains. 

Chainlink CCIP Capabilities

The blog post noted that leading DeFi protocols in derivatives and lending were adopting CCIP. These include Synthetix and Aave, which have integrated the system. 

Ecosystem advocate “@ChainLinkGod” gave a rundown of what CCIP actually does. 

“To create a truly interoperable Web3 ecosystem, data and value needs to be able to move seamlessly between chains,” he said. 

Security remains a big challenge for cross-chain bridges, which have seen billions of dollars lost in recent hacks. 

Moreover, CCIP has more security features and additional layers of protection, such as the “Active Risk Management” (ARM) Network and transfer rate limits.

New Features and LINK Price Reaction

It also provides ‘Simplified Token Transfers,’ a plug-and-play solution for transferring any tokens cross-chain. ‘Programmable Token Transfers’ enable additional instructions to be included about the intended use of the tokens on the destination chain.

‘Arbitrary Messaging’ is another CCIP feature that sends arbitrary data from one blockchain to another. This enables the creation of native cross-chain smart contracts which could be used for cross-chain DeFi lending. 

Furthermore, reliable transaction execution is achieved through prices quoted on the source chain via a gas-locked fee payment mechanism. This confirms execution regardless of destination chain gas spikes and network congestion, it explained. 

Additionally, Swift and several major financial institutions and infrastructure providers are collaborating with Chainlink and CCIP, ChainLinkGod added. 

“Solving the cross-chain connectivity problem will unleash an unprecedented wave of innovation in Web3,” concluded Chainlink. Moreover, Chainlink co-founder Sergey Nazarov elaborated: 

“Just like key standards such as TCP/IP remade a fragmented early internet into the single global internet we all know and use today, we are making CCIP to connect the fragmented public blockchain landscape and the growing bank chain ecosystem into a single Internet of Contracts.”

LINK prices gained 5.6% in reaction to the announcement. As a result, LINK was trading at $7.08 at the time of writing. 

The token has had a solid week with a 15% gain returning above $7 for the first time since late April. However, LINK remains a painful 86.5% below its peak price of $52.70 in May 2021.