The Depository Trust and Clearing Corporation (DTCC), recognized as the world’s premier settlement system, has completed a pilot project on Chainlink.
It succeeded in collaboration with blockchain oracle Chainlink and several major U.S. banking institutions. This pilot program mainly focused on advancing the tokenization of traditional finance funds.
Blockchain Pilot Project In Collaboration With Chainlink
Referred to as the Smart NAV Pilot, this initiative aimed to establish a standardized method of offering tokenized funds’ net asset value (NAV) data across blockchains. This initiative will employ Chainlink’s Cross-Chain Interoperability Protocol (CCIP) as its core infrastructure.
The May 16 report from DTCC revealed that the pilot sought to embed structured data on-chain. The aim is to create standard processes and roles that could be applied to a wide range of on-chain use cases.
The pilot program also demonstrated that fundamental data could be integrated into various on-chain applications by delivering structured data on-chain and implementing standardized processes.
These applications include bulk consumer smart contracts and tokenized funds designed to manage data for multiple funds.
This integration will facilitate industry-wide advancements and support numerous downstream use cases. They include more automated data dissemination, brokerage applications, and simplified access to past information for funds.
The pilot established enhanced automated data management. It also reduced the impact on conventional market practices for TradFi institutions and enabled clients to retrieve historical data without manual record-keeping.
The pilot also introduced a more extensive application programming interface (API) solution for on-chain price data. This is intended to improve data management’s overall functionality and efficiency in the financial sector.
A significant number of prominent U.S. banks participated in the Smart NAV Pilot, including BNY Mellon, American Century Investments, Franklin Templeton, Edward Jones, Invesco, etc.
State Street, JPMorgan, Mid Atlantic Trust, MFS Investment Management, and U.S. Bank are others. Their involvement was crucial in testing and validating the pilot’s objectives and outcomes.
Interestingly, the positive results from the DTCC’s report immediately impacted the market. Data from CoinGecko showed that Chainlink’s token LINK recorded a 12.5% increase in value in response to the development.
Meanwhile, beyond the day’s surge in value, Chainlink (LINK) has recorded significant growth of over 130% in the past year. This price increase reflects the positive trend in the broader digital currency market.
Tokenizing Traditional Financial Funds
This recent development aligns with growing enthusiasm among traditional financial institutions for tokenizing real-world assets. In a related development, BlackRock, one of the world’s largest asset management firms, launched a tokenized money market fund on the Ethereum network on March 19.
This fund, BUIDL, offers native U.S. dollar yields and allows investors to purchase tokens representing shares in the fund. It invests in traditional assets such as U.S. Treasury bills.
BUIDL operates as a digital liquidity fund entirely digitized on the Ethereum blockchain. It uses the ERC-20 token standard, ensuring compatibility with various dApps and services within the Ethereum ecosystem.
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