One year after starting their work, the Chainlink (LINK) oracle network and the SWIFT interbank network have announced initial conclusive results for transfers of tokenised assets between various blockchains. According to them, this is a real leap forward for the tokenisation of real-world assets, a sector that is particularly attractive to players in traditional finance.
SWIFT advances on cross-chain transactions
In September 2022, oracle network Chainlink and interbank payments giant SWIFT announced the launch of a joint experiment. The aim was to use Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to transfer digital assets across multiple blockchains.
Just under a year later, SWIFT published its first report on the success of these experiments. In concrete terms, the current infrastructure of the interbank network can be connected to several blockchains, thanks to Chainlink’s CCIP, to support the transfer of digital assets.
In a new results report, Swift, Chainlink, and more than a dozen of the largest financial institutions and market infrastructure providers successfully demonstrated a secure and scalable way to transfer tokenized assets cross-chain using CCIP.
Key results:
– Connected existing… pic.twitter.com/AfJajWAF8F– Chainlink (@chainlink) August 31, 2023
It is important to understand that compatibility between different blockchains (public or private) is essential, as Sergey Nazarov, co-founder of Chainlink, explains:
“The collaboration between Swift, over ten of the largest financial institutions and Chainlink has also proven that interoperability between chains is essential to enable the next stage of digital asset adoption in the global financial system. “
In effect, this breakthrough removes a major technological hurdle for traditional players, who will not have to establish individual connections between each blockchain themselves.
SWIFT now claims that the trials have demonstrated its ability to become a single point of access for multiple networks, using its existing infrastructure and Chainlink’s CCIP. For information, the trials were conducted on the public Ethereum testnets Sepolia, Avalanche Fuji and the private blockchain Quorum.
SWIFT is the most widely used interbank messaging platform for cross-border payments. It connects more than 11,000 banking institutions across 200 countries and records an average of more than 40 million transactions daily.
Asset tokenisation: the future according to SWIFT
In the report published on 31 August 2023, SWIFT once again emphasised the growing interest of institutional and banking players in digital assets and their underlying technologies:
“It is now clear that the world’s largest banks and market infrastructures believe in the increased adoption of digital assets across the banking industry, and that this adoption will be achieved using several different blockchain technologies at the same time. “
One concrete use case is mentioned in particular: the tokenisation of real-world assets. According to them, “97% of institutional investors believe that it will revolutionise asset management”, in particular because of its potential to reduce costs, increase efficiency but above all accessibility to a larger number of investors.
Indeed, investment bank Citi predicts a flourishing future for the tokenisation market, estimating its potential value at between $4,000 billion and $5,000 billion by the end of the decade. Boston Consulting Group is even more optimistic: $16,000 billion by 2030.
However, one of the major obstacles to the development of the tokenisation sector is that assets are issued on different blockchains, each with its own functionalities. Interoperability between these blockchains is therefore crucial.
The work of SWIFT and Chainlink is therefore very encouraging for the future of asset tokenisation. Already an essential link in today’s financial communications, SWIFT looks set to remain so in the future.
