The decentralized oracle Chainlink has quietly made significant achievements in penetrating the traditional finance (TradFi) space, providing critical solutions to many of the pain points faced by traditional finance in entering the web3 space. At the upcoming SmartCon in Hong Kong, we will see the huge tokenization opportunities for TradFi and traditional finance.

Connecting the real world with the web3 track

Mass adoption is the ultimate vision of the web3 industry. To allow the whole world to enjoy the liquidity and reliability of decentralized finance brought by blockchain, many different protocols in the industry are making different efforts. It is worth mentioning that the leading oracle Chainlink is taking on the most difficult direction in mass adoption - guiding large traditional finance capital, as we can see from some of the past collaboration news.

In July this year, Chainlink partnered with digital asset bank Sygnum and Fidelityto bring fund NAV data on-chain. NAV is one of the most important indicators for evaluating corporate and financial risk, demonstrating the possibility of blockchain technology in risk control of tokenized assets.

In September last year, Australia's ANZ Bankachieved cross-chain security in the real world through Chainlink's CCIP functionality.

This year, Chainlink has more and more traditional large-scale business partners, such asthe entertainment and gaming giant SONY, one of the world's largest institutions JPMorgan Chase, Franklin Templeton, and BNY Mellon, all of which participated in the tokenization finance pilot program co-hosted by the Depository Trust & Clearing Corporation (DTCC) and Chainlink.

Just these financial companies that have already reached cooperation agreements have a total asset management scale of over $5 trillion. There are also traditional industry giants like the $24.8 billion market capSpanish telecom Telefonica, and the $112.588 billion market cap SONY Group, whose solutions have even won the favor of non-financial companies.

Why must it be Chainlink

Why are so many large traditional companies willing to cooperate with Chainlink? In fact, the key to tokenized finance is thattraditional financial institutions have extremely high requirements for risk control and security in terms of regulation and industry requirements, and Chainlink's decentralized oracle platform has become an indispensable role.

Generally, banks usually do not trust public chains or any other private chains as the basis for their asset records, and they are more inclined to use their own private chains for technical expansion. However, after testing Chainlink's CCIP, both Australia's ANZ and the international remittance giantSWIFT were satisfied with the security and operability of cross-chain tokens on private chains, because Chainlink's oracle adopts a decentralized pricing mechanism, which can guarantee the synchronization of on-chain and real-world data without being controlled by anyone, and ensure that the cross-chain pricing is highly consistent and low-risk, realizing the equivalence of assets on different chains, which makes institutions willing to believe in assets on other chains, with the same value and operability as their own private chain tokens.

From the perspective of programmability, taking the example of net asset value (NAV), if the on-chain smart contract can introduce NAV as a parameter, then the simple operation of some passive ETFs and funds can even be coded and written into the blockchain, allowing decentralized applications (dapps) to operate directly, further reducing the transaction fees and personnel costs of ETFs and funds.

Through the Chainlink platform, traditional finance can gain the advantages of trust and reduced thresholds, which also makes them more interested in the new opportunities of tokenized finance. This makes the TradFi track extremely forward-looking in the new wave of integration between the real world and web3.

What will happen at the Hong Kong SmartCon?

After all this, what are Chainlink's layout and ambitions? We can see from the description on the website of Chainlink's upcoming SmartCon in Hong Kong:

"Unlocking $867 trillion in tokenization opportunities"

The speakers at the conference, in addition to the partners mentioned above, also include global financial companies and large corporate brands that have set up in Hong Kong, such as Citigroup, HSBC, Japan's SBI, UBS, Ernst & Young, VISA, Moody's, as well as technology companies such as Microsoft, Tencent Cloud, and PCCW.

On the regulatory side, there will be the Deputy Secretary for Financial Services and the Treasury of Hong KongChan Ho-lim, Dr. Wong Huei Ching, Director of the Securities Commission of Malaysia, Hong Kong Legislative Council member Yiu Tak-gen, Chief Development Officer of Hong Kong Cyberport Rosana Chu, and Director-General of Investment Promotion of Hong Kong Invest Hong Kong Leung Hoi-wan;

The crypto industry figures include Coinbase founder Balaaji, Hashkey Capital CEO Deng Chao, Dr. Shao Feng, Aave Lab Engineering VP Emilio Frangella, and 1inch founder Sergej Kunz.

Looking at the list of speakers above, it is not difficult to see that they are trying to create a grand party of industry-academia-government collaboration to open up the large-scale popularization of tradfi tokenization. What is truly frightening is that if the crypto circle looks back at Chainlink's layout, or even takes a closer look at the four main stages and agendas presented at Smartcon, you will find that web3 seems to have already stepped out of the circle and embarked on a new path, becoming a fusion platform and bridge for financial institutions to enter the chain, already leading the traditional financial layout by a considerable distance.

When the true scale of tokenization is opened up, trillions of dollars in liquidity will be directly injected into the chain, at which point all the tokens on the chain may become components of a brand new ETF, meaning that customers may unknowingly invest in certain tokens on the chain.

Regardless of Chainlink's ambitions, the trend and speed of the real world moving towards the chain and tokenization is an ongoing reality that the Block industry and investors cannot afford to ignore.