They are data containers that manage asset risk and carry critical data. Here’s a link to Part 1.
So, let’s take a closer look at these unified golden records by Chainlink.
How Chainlink Solves 3 Requirements of RWAs
RWAs have three requirements before they can realize their full benefit. Chainlink has the answer to this. That’s why many financial institutions already work together with Chainlink. For example, Swift, BNP Paribas, DTCC, or ANZ. They want a more efficient, verifiable, and accessible way to operate worldwide finance. Blockchain offers this.
So, let’s take a look at these three requirements.
- RWAs need real-time information — RWAs need to be trustworthy and accessible. That’s why a unified golden record carries specific information and logic. For example, compliance checks, market pricing, or proof of reserves.
- Cross-chain interoperability — The number of blockchains will only increase. RWAs will transfer between these chains. So, you can attach a unified golden record to an RWA. This way, it carries all relevant data with it, on any chain. It will also adjust to every chain’s specific demands. Chainlink’s CCIP plays a vital role in this. See the next requirement.
- Keep RWAs updated during cross-chain movements — It’s important to maintain golden records. At all times, we need updated assets when they move across different chains. Not having that information available, was at the core of the 2008 financial crisis. So, this requires a secure blockchain interoperability standard. See the picture below.
Source: Chainlink blog
Chainlink’s Unified Golden Record
Let’s take a closer look at Unified Golden Records by Chainlink. RWAs need to be decentralized, accurate, and tamper-proof. This benefits transparency, automation, and programmability of RWAs. Financial institutions rely on this. Here’s how Chainlink manages to achieve this.
1. High-quality data enriches unified golden records.
If you put in high-quality data, the output will also have high-quality data. Entering substandard or inaccurate data into the system results in a similar output. Once verified and recorded on-chain, blockchain data is tamper-free. As a result, everyone using these data can trust it.
2. Data and assets flow seamlessly across blockchain networks.
Chainlink managed to make the unified golden records interoperable between chains. So far, it’s the only platform to realize this. This is a more practicable solution than agreeing on one single distributed ledger. That would not be practical and inefficient. Chainlink’s CCIP solution solves interoperability issues. See the picture below. It shows how the unified golden records work, with CCIP in the center of it.
Source: Chainlink blog
Conclusion
Tokenized real-world assets or RWAs will become an important player in financial markets. However, tokenizing assets brings a few challenges to the table. So, Chainlink came up with a solution by offering interoperable unified golden records. These are data containers that carry all relevant information about an asset. Thus, they enable managing risks for that asset.
In this two-part series, we covered what unified golden records are, how they work, and why we need them. This is Part 2.
The current $LINK price is $13.41 with an $8.15 billion market cap. So, out of 1 billion max and total $LINK supply, 608 million already circulate.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.
We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.
Copyright Altcoin Buzz Pte Ltd.