The Depository Trust and Clearing Corporation (DTCC), the world’s largest securities settlement system, has recently completed a pilot program in collaboration with blockchain oracle Chainlink and several major U.S. financial institutions.
The pilot, dubbed Smart NAV, aimed to establish a standardized process for bringing and disseminating net asset value (NAV) data of funds across various blockchain platforms, leveraging Chainlink’s Cross-Chain Interoperability Protocol (CCIP).
TLDR
- The Depository Trust and Clearing Corporation (DTCC) and Chainlink completed a pilot program called Smart NAV, aimed at establishing a standardized process to bring and disseminate net asset value (NAV) data of funds across various blockchains using Chainlink’s Cross-Chain Interoperability Protocol (CCIP).
- Major U.S. financial institutions, including JPMorgan, BNY Mellon, Franklin Templeton, and State Street, participated in the pilot program.
- The pilot demonstrated the potential for tokenized funds and smart contracts holding data for multiple funds, enabling various use cases like brokerage applications, automated data dissemination, and easier access to historical fund data.
- The pilot program revealed capabilities that could support further industry exploration and downstream applications in the field of asset tokenization.
- Chainlink’s native token LINK experienced a significant price surge of around 15% following the announcement of the DTCC partnership, outperforming the broader crypto market.
The participants in the pilot program included prominent names from the traditional finance sector, 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.
The involvement of these institutions underscores the growing interest and adoption of blockchain technology within the financial industry.
According to the DTCC’s report, the pilot found that by delivering structured data on-chain and creating standard roles and processes, foundational data could be embedded into various on-chain use cases, such as tokenized funds and “bulk consumer” smart contracts, which are contracts that hold data for multiple funds.
This capability could potentially support future industry exploration and enable numerous downstream applications.
One of the key benefits highlighted by the pilot was the ability to power brokerage applications, enabling more automated data dissemination and easier access to historical data for funds.
Additionally, the pilot helped establish better-automated data management, minimized the impact on existing market practices for traditional financial institutions, and provided broader application programming interface (API) solutions for price data.
The successful completion of the Smart NAV pilot is a significant step forward in the tokenization of real-world assets (RWA), such as bonds, funds, and other traditional investments.
Asset tokenization has emerged as one of the hottest use cases for blockchain technology, as it offers potential benefits like operational efficiencies, speedier settlements, and increased transparency compared to traditional financial infrastructure.
Major financial heavyweights, including BlackRock, Citi, and HSBC, have already thrown their hats into the ring, pursuing the advantages of asset tokenization.
For instance, in March 2024, BlackRock launched a tokenized money market fund called BUIDL on the Ethereum network, offering native U.S. dollar yields and allowing investors to purchase tokens representing shares in the fund.
The news of the DTCC-Chainlink partnership and the successful pilot program had a positive impact on the price of Chainlink’s native token, LINK.
Following the announcement, LINK experienced a significant surge of around 15%, outperforming the broader crypto market benchmark CoinDesk 20 Index (CD20).
This price movement highlights the market’s enthusiasm for developments in the field of asset tokenization and the potential role Chainlink could play in facilitating such initiatives.
It’s worth noting that the pilot program also revealed strong whale activity for LINK, with the number of addresses holding 100,000 LINK or more increasing by 4.6% in just five weeks.
This surge in whale activity, coupled with the positive news from the DTCC partnership, provided additional fuel for the LINK price rally.
