Real-world asset tokenization is said to be the next major breakthrough for the blockchain industry, and Chainlink is at the forefront of expanding its global partnerships to focus on this area. The world’s largest blockchain oracle network recently announced an extended partnership with Arta TechFin, a Hong Kong-based asset manager and financial services company, with the aim of bringing real-world assets onto the blockchain.
Eddie Lau, CEO of Arta TechFin, stated that the partnership is aiming to address the market’s need for a comprehensive solution that tackles the challenges of off-chain primary origination and secondary trading, while also enhancing product integrity. Chainlink estimates that real-world assets have a global value of $867 trillion. Tokenization would significantly increase the liquidity of assets that were previously illiquid, such as collectibles and real estate, by making them electronically tradable.
Real estate, in particular, is known for its lack of liquidity and the complexities involved in transactions. In the absence of a cash buyer, a typical real estate transaction in the U.S. can take anywhere from 30 to 60 days to close. Furthermore, reselling a home or accessing equity can involve lengthy and convoluted processes.
At the core of bringing real-world assets onto the blockchain are Chainlink’s real-time price feeds and the CCIP interoperability protocol, which enable the oracle network to interact with other blockchains and transfer assets between chains.
In 2023, SWIFT, the interbank messaging protocol, announced its collaboration with Chainlink to test the transfer of value between blockchain protocols. Chainlink has also recently conducted a pilot program with the Depository Trust & Clearing Corporation (DTCC) and major banks like BNY Mellon, JP Morgan, and Edward Jones. The goal of this program was to bring fund data from these banks onto the blockchain.
However, Chainlink is not the only player in the industry focused on tokenizing real-world assets. Companies like Ripple Labs have also been signing partnership deals with the aim of tokenizing assets such as real estate, stocks, mortgages, and bonds. Ripple has formed partnerships with JPMorgan, Santander, and IBM, with asset tokenization being a primary objective for the company, according to CEO Brad Garlinghouse.