Chainlink Launches Digital Asset Sandbox For Financial Institutions

Chainlink aims to accelerate mainstream institutions’ ability to launch pilots and proof-of-concepts exploring digital assets.

Chainlink continues to court mainstream financial institutions to enter web3.

On July 18, Chainlink announced the launch of its Digital Assets Sandbox (DAS), a turnkey solution enabling legacy financial firms to explore web3 assets.

Chainlink said its DAS allows users to launch tokenization pilots and collaborative proofs-of-concept in a matter of days, serving as a vehicle to accelerate digital asset innovation for mainstream institutions.

“The Digital Asset Sandbox provides market participants with a safe environment where financial institutions and fintechs alike can experiment and understand how the technology impacts operating and business models,” said Kevin Johnson of Euroclear, a financial market infrastructure provider. “It gives teams the ability to experiment, learn, and ultimately build a strong business case to invest in their digital asset strategies.”

Chainlink said the DAS facilitates a variety of real-world asset tokenization use cases within a sandbox environment, such as bond tokenization, asset collateralization, and trading functions across multiple chains. DAS users will receive support and consultancy services from Chainlink Labs.

“With the DAS, institutions can seamlessly access ready-to-use business workflows for digital assets,” Chainlink said. “This platform also allows for experimentation with other real-world digital asset use cases involving a variety of financial instruments across their entire life cycles.”

Tokenization blooms

The launch of DAS is Chainlink’s latest bid to position itself at the forefront of the growing wave of real-world asset tokenization.

In January 2023, HSBC and Northern Trust published a research paper estimating that between 5% and 10% of global assets will be tokenized by 2030. Last month, McKinsey, a strategy and management consulting firm, predicted tokenized assets will tag a market cap of between $2 trillion and $4 trillion by the end of the decade.

Earlier this month, Goldman Sachs, a top 10 U.S. bank, announced plans to launch three tokenization projects by the end of the year. The market cap of tokenized U.S. treasuries also grew by $1.1 billion or 140% since the start of 2024.

“Through our many conversations with leading market participants, we’ve identified a critical need for secure digital asset environments capable of handling blockchain use cases,” said Angela Walker, the global head of banking and capital markets at Chainlink Labs. “The Chainlink Digital Asset Sandbox addresses this need by enabling institutions to create rapid Proof of Concepts in days.”

In April, Chainlink completed the permissionless rollout for its Cross-Chain Interoperability Protocol (CCIP), which enables asset and message transfers across multiple web3 networks.

During its permissioned launch phase, major firms and institutions experimenting with tokenization frequently leveraged CCIP, including Swift, Vodafone, Australia and New Zealand Bank (ANZ), and the U.S. Depository Trust & Clearing Corporation (DTCC).

The value of assets transferred via CCIP ballooned to $177.8 million from just $5 million in mid-March, according to Dune Analytics.

Chainlink (LINK)’s price is up 7.17% in the past seven days, according to The Defiant’s crypto price feeds.