Chainlink co-founder Sergey Nazarov says the company’s CCIP Protocol can potentially attract trillions of dollars from banks into the crypto industry. Speaking during an an interview at ethCC, he said the protocol is designed to do more than just connect public blockchains.
Nazarov says he expects banks and financial institutions to eventually develop their own blockchains, which they may also want to link to public blockchains such as Ethereum as time passes and as regulators eventually permit such connections.
At that point, he anticipates that Chainlink’s CCIP protocol will become a go-to solution for such banks. If this happens, a huge amount of value can be attracted to crypto.
“You have this public blockchain and internet of contracts primarily defined by DeFi, and you have this bank-chain world, which I think will be primarily defined by real-world asset tokens. The next stage will be getting these two worlds to overlap,” Nazarov siad during the interview.
“And when that happens, beyond the efficiencies and the gains for each of these groups, then you will see the blockchain industry as a whole, I think grow very, very rapidly by trillions of dollars,” he added.
The CCIP protocol is a protocol that facilitates transfer of tokens from one chain to another. The protocol uses the Chainlink network to facilitates the exchange of information between blockchains, steering the movement of assets in a secure manner. The protocol is still in testing mode, with projects like Synthetix and Aave involved.
Top financial institutions considering CCIP
CCIP seems to be gaining a lot of traction with mainstream financial institutions following its testing traditional finance. Already, SWIFT and other leading financial institutions are already exploring the use of of CCIP for token transfers across public and private chains through the existing Swift messaging infrastructure.
“So I’ve been selling these banks blockchain stuff for about six, seven years. And the historical pattern has been that when there is a downturn in crypto prices, the banks lose interest. But this time is the first time after the four cycles that I’ve been through that this hasn’t happened. And I think the reason it hasn’t happened is because their clients want blockchain stuff,” Nazarov said.
Nazarov maintains that there are three stages of bank adoption, the first being focused on custody, the second being tokenization of real-world assets and the third being the stage where banks develop financial protocols that resemble DeFi. He says it is at the third stage that CCIP will become relevant to them.
Where CCIP comes in
Nazarov says after banks develop their own private blockchains, complete with their own stablecoins and DeFi protocols, they will eventually wish to merge with the existing decentralized public blockchain ecosystem when regulations have grown to accommodate such merger.
“So what we’re doing is we’re setting up the technical foundation for them to do it technically, and then doing it legally is something they’re going to work through and figure out within the next three to five years,” he said.
The reason banks will want to connect according to Nazarov is so that they can widen the reach of their financial products.
This promises a huge reward of growth for the crypto industry which although is currently facing regulatory challenges, seems determined to outgrow those challenges in the near future.
Chainlink is currently experimenting with proof of concept and will move to the pilot stage, which Nazarov says could be the beginning of great things for the company.
