Sergey Nazarov - Enabling DeFi - TOKEN2049 Singapore 2024

so generally speaking uh chain link came out of the defi boom and it helped grow defi from a sub $100 million industry to over $200 billion by providing the critical data and other resources needed so chaining kind of grew out of various mistrust issues by society and the need for oracles and smart contracts to come together and solve those trust issues in the form of defi this has led to chain link enabling over 15 trillion Us in transaction value which makes it one of the most value processing systems in the entire blockchain industry now there's a new component to what chain link does which is basically the ability for real world assets and Next Generation defi applications to reinvent the Global Financial system which is really crypto and blockchain and smart contracts reaching their full potential so now what chain link has become is the intersection of these uh three Trends various societal mistrust issues the use of oracles and smart contracts to solve those issues and the application of that to the Global Financial system allowing blockchain smart contracts and Oracle networks to realize their full value this is actually what chain link and the community behind Chen link has been talking about and working on from the beginning this is for example a diagram that has been floating around the community for years where you gradually see the boxes within cryptocurrency and Defi and tokenized rwa growing but now what you've seen is tokenized rwa become larger than Defi and the world we're really going towards is that it's not about 1 two or 2 and a half or four or 5 trillion it's about hundreds of trillions and the question is what is the infrastructure and what are the systems that are allow that to happen so the way that this has been getting solved so far by chain link is the solving of certain key problems the first key problem was the need to process data in a consensus driven highly reliable way because if you don't process data in a consensus driven way you get unreliable applications that can't be verified that can't be relied on and this is what was keeping defi from from growing then you had the problem of connecting those same defi protocols to various important offchain systems for automation various computations that blockchains can't do and then you have the problem of cross chain connectivity so today chain link has become a system and an entire platform and a set of protocols to solve all three of these problems for Defi and web 3 public chain smart contracts so now chain link is not just about data and it's not just about Automation and it's not just about about identity and it's not just about cross chain it's about how to combine all of these external systems around making a reliable smart contract in the form of a in the form of GMX in the form of these more advanced smart contracts that are still in my opinion at the early stages of their development this gives rise essentially to the chain link platform and set of protocols which goes very far beyond data and allows Next Generation applications to come into existence that's kind kind of the the beginning of the process the next stage of the process is really how do you get the trafi ecosystem to properly utilize all of this infrastructure data computation connectivity in a way that allows the value from their systems to flow onto various blockchains and eventually into defi protocols and systems their first problem is very similar to the defi data problem that was solved initially for defi by chain link and so it's just the inclusion of more types of data defi primarily relied on market prices trafi needs much more data market prices reference data various valuation calculations AUM all kinds of different data that allow those trafi smart contracts to function properly the next thing that trafi needs is cross chain but but before cross chain can even happen what you really need is to feed data in this is where chain link is now excelling as the most widely used provider of nav data various traditional Market data going on production so live on production for real value this is an example of how tokenized funds from Fidelity are being secured and enabled by nav data which is the net asset value data of those funds this is an example of a dashboard live on production showing the proof of reserves of one of the many ETF funds that use chain link to prove things about them and this is an example of a diagram about how you have critical data that can come from widely used systems like the dtcc into various networks that require that data to make more advanced trafi applications the next problem is actually cross chain connectivity so it's not only about getting the data into the blockchain and into the smart contracts it's getting the data to move across the different blockchains by connecting the token from one chain to another chain this is actually the next big problem in trafi and it's already a problem being solved by chain link and web 3 it's the ability to get the liquidity and the value from various chains into the chain where the asset is but you need to solve this problem in a way where data consistently flows into the blockchain smart contracts so this problem is also actively being solved by chain link and ccip right now by doing pocc pilot and soon production transactions that enable the movement of value both in the form of payment as stable coin and in the form of assets in this case a carbon credit for a trillion asset under management Bank this is a a great example of of what you're going to see more and more in the trafi world it's going to be the movement of stable coins in a delivery versus payment transaction in return for some asset on another chain and this is the other thing that ccip and chain link has enable it two of the key features that enable this are really the ability to tightly couple data and token value in a single transaction creating something called programmable token transfers where you can actually wrap a token in instructions so that when it reaches its destination it ends up triggering the event that it's intended for this means that people that want to use that chain don't even need to integrate with it they can simply use the chain through ccip another key feature especially for trafi is the ability to manage r risk of transactions and this is where ccip excels with a distinct Network that manages various risks risks around identity risks around reliability risks around any number of policies that you want to encode in that Network the fundamental goal of all this is to get as much value from the trafi community which has hundreds of trillions of dollars in value into the blockchain ecosystem on a single set of standards that can allow them to interact with each other but can also allow them to interact with a defi community and therefore grow it to an entirely different stage of growth that's really what our industry needs and is about at this point the final piece of getting the trafi community properly integrated with the blockchain and therefore getting their value to flow onto the blockchain is synchronizing all the blockchain activity with their systems because unlike web 3 startups they have Decades of systems that need to be in sync with a blockchain that they're not going to replace and they're not going to get rid of this is where the chick ecosystems work with existing standards like Swift is particularly useful it provides the ability for all of the existing systems on that standard to eventually interact with blockchains in an efficient way which accelerates the rate at which they get their value to go onchain this once again contributes to the to the new direction of our industry which is not just about more cryptocurrencies more meme coins more artificial yield you know cycling and recycling all of these things it's actually about net new value coming in from the traditional market and coming in not in the hundreds of billions but in the trillions that's the next kind of stage of our industry as a whole and personally I believe that the real world asset Trend and the real world asset category will relatively soon in the next few years overcome the total value of cryptocurrencies and then our industry by definition by the numbers will not be about cryptocurrencies it'll be about blockchain technology enabling things like real world assets and that's what the blockchain industry will be so this is kind of the world that I think we should all be preparing for and that the chain link ecosystem is building tets by both enabling defi to grow and be secure and reach the kind of level of reliability and guarantees that the defi Community needs and that the trii community needs and enabling the trafi community's value to flow onto blockchains and into the defi ecosystem eventually what this will result in if it works as intended is ccip becoming one of the key Protocols of the internet what we call the internet of contracts and the internet of value because ccip is fundamentally the data and value transport mechanism by which that data and value flows into and across all of those chains practically what this should do is connect all the Central Bank digital currency chains all of the various asset chains all of the Consortium chains all of the public chains into this single internet of contracts where those transactions are relying on data identity and various other pieces of information to function and they're able to function successfully across chains right now we're still in a world where the web 3 world and the trafi world is divided by a legal barrier but that legal barrier is getting reduced and right now we're in a world where chain link already Powers the majority of Defi and has processed trillions of dollars in transaction value enabling that to happen we're also in a world where chain link I think is in the lead at becoming the standard on these dimensions of data identity connectivity for the trafi market and so once this legal barrier goes down as it has started to go down in places like Singapore where we are cross Asia the Middle East and other places I think we'll be in an interconnected world of defy and trafi doing transactions between each other and trafi will be the largest customer of defy and defi will be defined and diversified by its ability to create yield and reliable markets for real world assets and that's the kind of world that that I think we're going towards we have a conference coming up smartcon in Hong Kong in a in a month and a half where we'll be discussing all of these topics with many of the people from the Defi trafi and other blockchain communities and would be excited to have you folks there other than that wanted to thank everybody for their attention and just to say it's been great uh chatting with you and that I'm excited to see many of you during the conference so thank you very much and have a great conference