Chainlink: The Unseen Leader in Real World Assets Tokenization

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Chainlink: The Unseen Leader in Real World Assets Tokenization

BlackRock (NYSE:) CEO Larry Fink predicts that the market for Real World Assets will grow to $10 trillion over the coming years. Chainlink is at the forefront of this hype, yet it flies under the RWA radar.

The tokenization of securities, funds, and even shares in real estate and precious metals has become a major trend in the crypto sector. New projects are emerging rapidly, and the label Real World Assets (RWA) is becoming increasingly popular. While influencers are praising one new RWA altcoin after another, the market leader in this sector, Chainlink, has been receiving comparably little attention. As one of the most established altcoins with multiple applications on and beyond the blockchain, Chainlink ******** under the radar in the RWA space. Yet, tokenization of assets is only made possible through oracle networks like Chainlink. Its first-mover advantage, high-profile partnerships with leading financial and banking institutions, and exceptional developer activity make Chainlink the undisputed leader in RWAs. This status was recently reinforced when the world’s largest securities settlement system launched a pilot project with Chainlink, involving financial giants from the ******* States, such as Franklin Templeton, BNY Mellon (NYSE:), and JPMorgan.

RWA Hype: Hedera Hashgraph Surges, Chainlink Innovates

“If we wish to have exposure to the RWA narrative and avoid being sidelined when it takes off, LINK is the safest bet”, an analyst from K33 Research stated in October last year. At that time, LINK was priced around $7, having risen more than 30% from its bear market low. In the first rally of 2024, following the approval of ETFs, LINK approached the $20 mark, driven by the growing excitement around RWAs. In mid-January, Larry Fink commented on the new Bitcoin funds, saying, “ETFs are step one in the technological revolution in the financial markets. Step two is going to be the tokenization of every financial asset.” Fink also highlighted specific advantages of tokenized assets: “We have the technology to tokenize today. If you have a tokenized security, the moment you buy or sell an instrument, it’s known on a general ledger (…). This eliminates all ***********, having a tokenized system.“ From the perspective of crypto advocates, Wall Street appears to have finally embraced the blockchain’s technical advantages, such as transparency and comprehensive traceability of all transactions. Fink confirmed these assumptions, saying, “We are focused on developing solutions in the digital assets space that help solve real problems for our clients.”

Speculation and Innovation in the RWA Space

As speculation grew about which crypto project would be chosen for large-scale tokenization by major asset managers, numerous small altcoins with ambitious RWA applications saw their prices soar. Even large projects were not immune to this RWA hype: Hedera Hashgraph (HBAR) hinted at a collaboration with BlackRock in late April, doubling its price within minutes before the news was debunked. Amidst this chaos, Chainlink steadily worked on its technical foundation. From early April to early May, Chainlink recorded more than twice the developer activity of Synthetix, the second most active RWA project. Chainlink’s development far outpaced the rest of the top ten RWA projects combined, including well-known names like Centrifuge, Dusk, and Oraichain. Ryan Lovell, Director of Capital Markets at Chainlink, stated, “We’re actively working on several exciting initiatives at the moment to enable institutions to go beyond mere token issuance, manage tokenized assets throughout their entire lifecycle, and transact across the cross-chain economy.” And Chainlink’s persistent research and development in RWA tokenization has not gone unnoticed in traditional markets either.

Collaborations with Financial Titans

Chainlink recently announced its biggest milestone yet: a pilot project with the New York-based Depository Trust & Clearing Corporation (DTCC), the world’s largest securities settlement system. The project, named Smart NAV, uses Chainlink’s interoperability protocol to represent the value of tokenized funds across various blockchains, leveraging its strength as a blockchain oracle that transfers real-world data onto the blockchain. This oracle technology is indispensable when it comes to trading tokenized funds, stocks or shares in real estate and transmitting their prices to the blockchain in real-time. Alongside major banks like BNY Mellon and JPMorgan, asset managers such as Franklin Templeton, State Street (NYSE:), and Invesco are participating in this project. Smart NAV aims to digitally represent the net asset value (NAV) of various funds or assets on different blockchains, enabling not only the oversight of analog transactions but also the trading of securities using crypto and NFT technology.

The Path to Widespread Tokenization

The partnership with DTCC has made significant waves in the crypto market and beyond. The monthly volume of government bonds processed through DTCC’s systems alone amounts to around $150 trillion, not including other securities. With DTCC’s engagement, along with major asset managers and billion-dollar banks, the path toward tokenization seems clear. Following Larry Fink’s calls for the digitization of the entire financial market, RWAs have become a dominant crypto narrative. Chainlink, the most crucial and largest oracle network, is the most active blockchain in the RWA and tokenization space. If even a fraction of the vast transaction volumes from traditional channels like DTCC are shifted onto the blockchain, the potential for success in this sector is immense. Chainlink has positioned itself at the forefront of this movement, a status it is unlikely to relinquish soon. This is why we regularly analyze Chainlink’s price, providing signals for lucrative entries and trading opportunities.

How Will Chainlink Perform in this Bull Market?

Driven by positive news about high-profile partnerships and through an increase in development activity as well as the evolution of the blockchain’s RWA profile, Chainlink’s native token LINK has experienced steady rises in price during the last few weeks. From the local low on April 13, LINK’s price increased by more than 60 percent until the end of May. This powerful recovery came after a strong correction that had pulled LINK down by almost 50 percent from its multi-month high at around $23 on March 11 and lasted until mid-April. We had already prepared our (now grayed-out) Target Zone beforehand to help our readers profit from this temporary correction. With its latest rises, LINK managed to advance toward the resistance at $20.85. Now, it should only be a matter of time for the turquoise impulse wave 3 to break through this level. Alternatively, the current upward movement could be delayed by a new low of wave alt.2 below the next support level at $11.96 (33% likely). This alternative scenario could offer new entry opportunities before the superordinate bull market impulse gains traction. 

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