Avalanche and Chainlink Leveraged in Tokenized Asset Settlement Project

With financial services leaders increasingly viewing blockchain, smart contracts, and tokenization as a way of improving legacy capital markets infrastructure and institutional workflows, a recent SWIFT report indicated that 97% of institutional investors believe tokenization has the power to revolutionize the asset management industry. 

Recently, Australia and New Zealand Banking Group (ANZ) and Chainlink Labs unveiled the results of a close collaboration connecting blockchains – notably, Avalanche and Ethereum – for the global movement and settlement of tokenized assets. 

ANZ provides banking products and services to over 8.5 million retail and institutional customers across almost 30 markets. Exploring the possibilities of on-chain digital assets, ANZ leveraged Chainlink’s blockchain interoperability solution, Cross-Chain Interoperability Protocol (CCIP), to demonstrate how clients could access, trade, and seamlessly settle tokenized assets across networks in different currencies in a process called Delivery vs. Payment (DvP).

DvP is a common form of settlement and risk-management standard for securities that requires payment before or at the same time as their delivery. Blockchains and custom smart contract logic provide an opportunity to modernize legacy DvP processes with assets and payments tokenized on the same infrastructure, enabling atomic, non-intermediated DvP settlement.

"Chainlink CCIP played a key role in abstracting away the blockchain complexity of moving tokenized assets across different chains and ensuring atomic cross-chain DvP,” said Lee Ross, Technology Domain Lead, ANZ

Within this initiative, ANZ simulated the purchase of tokenized assets on Ethereum at a price denominated in one stablecoin, with transaction initiation and settlement occurring on Avalanche in another stablecoin. Specifically, the workflow for this simulated transaction entailed an ANZ customer using the bank’s Digital Asset Services (DAS) portal to purchase tokenized ANZ-issued New Zealand dollar stablecoins (NZ$DC) on Avalanche, and then purchasing tokenized Australian nature-based assets issued as NFTs and denominated in tokenized ANZ-issued Australian dollar stablecoins (A$DC) on Ethereum. ANZ also facilitated the FX conversion between the two currencies. CCIP provided backend infrastructure for ANZ to send data and transfer tokens between Ethereum and Avalanche. ANZ then connected its services to CCIP to abstract away complex backend systems, making for a seamless frontend user experience in interacting with tokenized assets.

For this project, ANZ leveraged its own Avalanche Evergreen Subnet for its EVM compatibility, permissioning, and customized gas token, among other features.

“Avalanche's Evergreen Subnets have allowed ANZ to join the list of institutions exploring new use cases and business models while leveraging customizable networks like Avalanche” said Anurag Soin, Product Lead Digital Added Services at ANZ. “We look forward to continuing to test how blockchain, smart contracts, and tokenization can improve the rails of the global financial system."
Source: An Industry Case Study: Cross-Chain Settlement of Tokenized Assets Using Chainlink CCIP

Through Avalanche’s Evergreen Subnets, institutions have been pursuing their blockchain and digital asset strategies in customized blockchain environments with approved counterparties, while simultaneously benefiting from public blockchain development, innovation, developer communities, and intranetwork interoperability via Avalanche Warp Messaging (AWM).

The ANZ initiative speaks to the growing tokenization and On-Chain Finance (OnFi) ecosystem on Avalanche, a movement operating at the intersection of traditional finance (TradFi) and decentralized finance (DeFi). WisdomTree and many other Wall Street firms are already participating in Spruce, a separate Evergreen Subnet allowing institutions to test the merits of OnFi. Additionally, Citi and J.P. Morgan have both powered blockchain initiatives leveraging Evergreen Subnets under Project Guardian, a collaborative initiative by the Monetary Authority of Singapore.

“This ANZ project illustrates how innovative traditional financial service providers are preparing for a new version of capital markets enhanced by blockchain,” said John Wu, President of Ava Labs. “In these tests, ANZ is pioneering on-chain value transfer, while the infrastructure created by Chainlink and Avalanche offer interoperability and customizability amid the growing ecosystem of tokenized assets for institutional clients. This initiative is helping drive forward an exciting future of finance.”

Early results of these test transactions have been promising and could significantly alter how tokenized assets evolve and scale within the financial services industry. Next: deploying the solution on blockchain mainnets and expanding workflows to include communication between blockchain networks for different use cases.

For more on this project, please see the case study published here. For more on Avalanche Evergreen Subnets, please visit its website and FAQs.

Provided for informational purposes only, without representation, warranty or guarantee of any kind. None of this is as an endorsement by Ava Labs, Inc., the Avalanche Foundation Limited or any of their respective subsidiaries or affiliates, nor is any of this investment or financial advice. Please review this Notice and conduct your own research to properly evaluate the risks and benefits of any project.

About Chainlink

Chainlink is the industry-standard decentralized computing platform powering the verifiable web. Chainlink has enabled over $9 trillion in transaction value by providing financial institutions, startups, and developers worldwide with access to real-world data, offchain computation, and secure cross-chain interoperability across any blockchain. Chainlink powers verifiable applications and high-integrity markets for banking, DeFi, global trade, gaming, and other major sectors. 

Learn more about Chainlink by visiting chain.link or reading the developer documentation at docs.chain.link.

About Avalanche

Avalanche is a smart contracts platform that scales infinitely and regularly finalizes transactions in less than one second. Its novel consensus protocol, Subnet infrastructure, and HyperSDK toolkit enable Web3 developers to easily launch powerful, custom blockchain solutions. Build anything you want, any way you want, on the eco-friendly blockchain designed for Web3 devs.

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