DTCC’s pilot project with Chainlink drives blockchain data to expand fund tokenization

DTCC’s pilot project with Chainlink drives blockchain data to expand fund tokenization

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The Depository Trust and Clearing Corporation (DTCC), the world’s largest securities settlement system, has completed a pilot project called Smart NAV in collaboration with blockchain oracle Chainlink (LINK). Major financial institutions from the US also participated in the pilot.

According to a report published by DTCC, the pilot was initiated to establish a standardized process for bringing and disseminating net asset value (NAV) data of funds across multiple blockchains. With the standardization, the tokenization of funds becomes easier and more efficient over time.

The Smart NAV pilot, which included participants such as JPMorgan, Franklin Templeton, BNY Mellon, and State Street, explored a digital extension to DTCC’s Mutual Fund Profile Service (MFPS I) to leverage distributed ledger technology (DLT) for data dissemination and consumption.

By delivering structured data onchain and creating standard roles and processes, the pilot found that foundational data could be embedded into various on-chain use cases, such as tokenized funds and “bulk consumer” smart contracts, which hold data for multiple funds.

The pilot successfully demonstrated the feasibility of integrating structured NAV data onto blockchains, ensuring consistency and accuracy. It also established automated data routing via smart contracts, promoting dynamic data management and preventing fragmentation through Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

Notably, the project had a limited impact on existing market practices by allowing clients to use current channels and providing automated access to historical data without manual record-keeping.

Clients involved in the project gained the ability to consume price and rate data in real-time through new interfaces, including APIs and smart contracts. The new data consumption methods include real-time API services and smart contracts designed for single funds or bulk fund groups, enabling instant updates and facilitating various use cases, such as automated portfolio rebalancing.

Once fully deployed, the Smart NAV would open opportunities for expanding the scope of data dissemination to include key reference data and other blockchain-triggered workflows. Such an infrastructure would provide the foundation for more streamlined and efficient operational processes across the financial industry, as tokenization of real-world assets (RWA) such as bonds, funds, and other traditional investments has become one of the most sought-after use cases for blockchain technology.

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Published at Thu, 16 May 2024 21:05:09 +0200

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