DTCC and Chainlink Conclude Pilot Program Enhancing Tokenization in Finance
Summary:
The Depository Trust and Clearing Corporation (DTCC), along with blockchain oracle Chainlink, have successfully completed a pilot program aimed at enhancing the tokenization in traditional finance. The Smart NAV Pilot program used Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to standardize delivery of net asset value (NAV) data across blockchains. Added benefits of this program included improved automated data management, minimized disruption on market routines, and broader API solutions for price data. Several major US banks participated in the pilot, including JPMorgan, BNY Mellon, and others. This initiative aligns with a broader trend of major finance firms showing interest in asset tokenization.
The Depository Trust and Clearing Corporation (DTCC), known as the world's biggest settlement system, has just concluded a pilot program with Chainlink, a blockchain oracle. Several major U.S. banking corporations were also involved in the program, created with the intent of enhancing the tokenization of conventional finance funds. This endeavour, named the Smart NAV Pilot program, was meant to create a standardized approach to offering net asset value (NAV) data related to funds across various blockchains. It accomplished this through the use of Chainlink's Cross-Chain Interoperability Protocol (CCIP), stated a report from DTCC on 16th May.
The report concluded that when structured data is made available on-chain, and established roles and processes were formulated, such foundational data could be incorporated into numerous on-chain applications. Examples would be tokenized funds or "bulk consumer" smart contracts, which are contracts entrusted with data for numerous funds. These capabilities have the potential to allow further industry analysis as well as initiate a range of downstream use cases. Examples of such cases could include applications linked to brokerage, improved data spreading, and simpler access to historical fund data.
According to the DTCC report, the pilot program assisted in achieving superior data management automation, reduced impact on the market practices of traditional financial establishments, and provided possibilities for customers to access historical data without manual record maintenance. It also offered more extensive Application Programming Interface (API) solutions for price data.
Several U.S. banking corporations, such as American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JPMorgan, MFS Investment Management, Mid Atlantic Trust, State Street, and U.S. Bank, were part of the pilot. The native token of Chainlink, Chainlink (LINK), showed a significant increase of 12.5% following the release of the DTCC report and it has witnessed an overall gain of over 130% in the past year. This rise aligns with a broader crypto market surge.
Major traditional financial institutions have demonstrated high levels of interest in tokenizing real-world assets as evinced in the DTCC report. For instance, BlackRock launched a tokenized MMF named BUIDL on the Ethereum network on March 19. This fund provides U.S. dollar yields and enables investors to purchase tokens that represent shares in the fund which are invested in assets like U.S. Treasury bills. The fund, often referred to as the "digital liquidity fund", exists as an ERC-20 token named BUIDL and is digitized on the Ethereum blockchain.
Published At
5/17/2024 4:13:18 AM
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