On Chain Finance Report

WHY ON-CHAIN
FINANCE IS INEVITABLE
An industry brief on the next generation of
capital markets infrastructure
Ready to move on-chain?

Connect with our experts: chn.lk/reach-out
THE FUTURE OF
FINANCE IS ON
The world’s largest financial institutions are quickly
realizing the opportunity for blockchain technology to
redefine capital markets. Forward-thinking banks and
financial services companies are already moving
operations on-chain to unlock deep liquidity for
previously illiquid assets, reduce costs via automated
workflows, and develop higher-integrity markets.
This industry brief provides an overview of the

opportunities driving these institutions on-chain, along
with key technical considerations to successfully
capitalize on this massive economic shift.
1 Why On-Chain Finance Is Inevitable

TOKENIZED
ASSETS
A multi-hundred-trillion dollar
opportunity for early adopters
$867T 97% 80x

Size of traditional markets Of institutional investors agree Expected growth rate of
poised for disruption by that “tokenization will tokenization in private
tokenization revolutionize asset markets by 2030
management”
World Economic Forum (2021) BNY Mellon and Celent (2022) Citi (2023)
“The tokenization of asset classes offers
the prospect of driving efficiencies in
capital markets, shortening value chains,
and improving cost and access for
investors.”
Bl ackRock (2023)
2 W h y O n - C h a i n F i n a n c e I s I n e v i ta b l e
WHY TOKENIZATION?
1 Integrity 2 Utility
Verifiable on-chain transactions Reduced costs via automated
reduce counterparty risk workflows and shared databases
3 Liquidity 4 Transparency
Near-instant asset movement across Increased auditability around
interoperable trading environments previously opaque processes
Tokenization of Illiquid Assets To Be 10% Of Global GDP by 2030

% of GDP
10
7.5
2.0
0
2023 2024 2025 2026 2027 2028 2029 2030
Other Financial Assets
18.7%
16x
Growth from today’s levels
Bonds
70x
4.9%
Home Equity
19.9%
Investment Funds
2.4%
Growth from today's levels if

tokenization reaches the more
aggressive estimate of 42% of
global GDP by 2030
Other Real-World
Equities
Assets
24.3% 29.9%
BCG (2022)

SMART CONTRACTS,
SMARTER MARKETS
Automate financial market workflows
24/7/365 83% t+0

Payment windows to move Of senior decision-makers are Securities settlement time
cash and securities looking to accelerate turnaround achievable with blockchain
times for processes by adopting technology
digital assets
BNY Mellon and Celent (2022) Infosys (2023) DTCC (2022)
“The holy grail would be to achieve full

automation throughout the stack with
tokenization using blockchain technology.”
Accenture (2021)
Streamline Industry Processes
Operational
Process
Distributing fund Syncing multiple Capturing
Dividend
performance data ledgers of record proxy votes distribution
Organizational
Outcome
Enhanced speed, reliability, Immutable, golden record Increased resiliency and Improved capital
and transparency across multi-party network accessibility efficiency
4 W h y O n - C h a i n F i n a n c e I s I n e v i ta b l e
Seamless
Interoperability for
Global Liquidity
Cross-chain communication powering
a broader financial ecosystem
12+
Global financial institutions are
72%
Of global institutional investors
100+
The number of blockchains
77%
Of institutional investors want
experimenting with using Swift and indicated a preference for working that have been built, with access to staking pools for
CCIP to seamlessly interoperate with an integrated provider for all varying technical attributes to enhanced yield on crypto
with any blockchain network digital asset needs support specific uses assets
Swift
SWIFT (2023) J.P. Morgan and Celent (2022) Goldman Sachs (2021) BNY Mellon and Celent (2022)
“The industry needs standards and interoperability.

Different financial market infrastructures (FMIs) and
consortiums are working on the same problem in parallel,
but with no clear interoperability or standardization.
This leads to silos in initiatives today. As DLT adoption gains

critical mass, there will be more drive to standardization
and interoperability.”
Citi (2023)

Who’s adopting on-chain finance?
The world’s largest banks and financial institutions are exploring blockchain technology
for creating more efficient, reliable, and accessible markets. Additionally, there are
7,200+ decentralized finance (DeFi) applications across hundreds of blockchains.
How can we unlock siloed liquidity?

On-chain markets are inherently isolated, meaning that hundreds of trillions of dollars
worth of tokenized assets are fragmented across disconnected digital islands. To
unlock a broader financial ecosystem, the industry needs an interoperability solution
that enables liquidity to seamlessly and securely flow across on-chain markets.
What’s the standard?

The Cross-Chain Interoperability Protocol (CCIP) establishes a standard that allows for
universal connection between any public and private blockchain network. CCIP, which
is underpinned by Chainlink, can be configured to seamlessly connect existing backend
systems to any blockchain to help institutions securely interact with on-chain markets.
Why Chainlink?
Chainlink is the industry-standard Web3 services platform and has enabled trillions of
dollars in transaction value. CCIP is powered by Chainlink’s market-leading oracle
infrastructure and uses a state-of-the-art and defense-in-depth architecture to
provide institutions and their clients with end-to-end security.
Ready to move on-chain?

Connect with our experts: chn.lk/reach-out

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WHY ON-CHAIN

Ready to move on-chain?

This industry brief provides an overview of the

1 Why On-Chain Finance Is Inevitable

opportunity for early adopters

$867T 97% 80x

poised for disruption by that “tokenization will tokenization in private

tokenization revolutionize asset markets by 2030

“The tokenization of asset classes offers

the prospect of driving efficiencies in

capital markets, shortening value chains,

and improving cost and access for

Tokenization of Illiquid Assets To Be 10% Of Global GDP by 2030

Other Financial Assets

Growth from today's levels if

3 Why On-Chain Finance Is Inevitable

24/7/365 83% t+0

cash and securities looking to accelerate turnaround achievable with blockchain

times for processes by adopting technology

BNY Mellon and Celent (2022) Infosys (2023) DTCC (2022)

“The holy grail would be to achieve full

Streamline Industry Processes

performance data ledgers of record proxy votes distribution

“The industry needs standards and interoperability.

This leads to silos in initiatives today. As DLT adoption gains

5 Why On-Chain Finance Is Inevitable

How can we unlock siloed liquidity?

What’s the standard?

Ready to move on-chain?

6 Why On-Chain Finance Is Inevitable

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