Real-world assets (RWAs) are currently one of the hottest sectors in crypto. And for good reasons. For example, BlackRock, the world’s biggest investment firm, invests in RWAs.
Now, tokenized assets need a Unified Golden Record. And, no, this has nothing to do with the record industry’s golden record standards. We’re talking crypto and oracles here. That’s where Chainlink enters the scene. Unified golden records are important in the tokenization process. Let’s find out what they are and how they work.
What Are Unified Golden Records?
In a nutshell, unified golden records are data containers. The data in these containers allow you to manage risk and know the most critical things about the asset. So, now we know what it is, but that doesn’t really help us know, does it? So, let’s look at what they to do and why RWAs need them.
For starters, the RWA market is serious business. Especially if the likes of Larry Fink, BlackRock’s CEO, get involved. He stated that RWAs are “the next generation for markets”. Or how about the Boston Consulting Group predicting a $16 trillion market by 2030. As a result, many RWA assets recently saw boosts in their price action. So, do I have your attention now?
Nonetheless, there are plenty of challenges in the tokenization of real-world assets. For example, it’s a multichain sector. All the involved players are active on various private and public chains. It’s a real fragmented landscape.
However, that’s not all. You can split RWAs up between various use cases, businesses, or distinct geographies. So, the fragmentation continues. This causes a few problems that need solving. For example,
- RWA transfers need to be cross-chain.
- The required data to enable transactions need to be constantly on-chain. Data as you can find in net asset value (NAV), proof reserves, pricing information, or identity data. The NAV is a company’s total value, minus its liabilities.
So, currently, Chainlink sees that there is only an ‘asset receipt’ available on-chain. However, other data, related to these assets, aren’t. So, their goal was to bring them together on-chain. The result is the unified golden record. See the picture below.
Source: Chainlink blog
Current Tokenization Problems
Tokenizing assets is easier said than done. The easy part is the tokenization itself. But the tokenized asset needs to always have all relevant information on every chain. So, let’s first take a look at how this works in traditional finance. Since that’s where this caused various issues.
TradFi uses different systems that transfer data and value. This causes plenty of market information asymmetries. For example, ownership history, reference data, or identity checks. However, data can be either mismatched or is missing. Over the years, this resulted in plenty of failed trades.
So, blockchains solved lots of these problems. Nonetheless, they also had a challenge. They only solved these problems on their own networks. For instance, tracking asset ownership. Eventually, there will be thousands of different chains. They will all update tokenized asset data in different off-chain databases and systems. So, how to keep them in sync with on-chain networks?
That’s where unified golden records come into play. They can deal with the current TradFi synchronization issues. Furthermore, they’re cross-chain and sync all data in real-time with off-chain infrastructure.
This sums up Part 1 of a two-part series.
The current $LINK price is $13.41. It has an $8.15 billion market cap. Out of 1 billion max and total $LINK supply, 608 million already circulate. This is the second part of the article.
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