While crypto communities often rally around their own tokens, blockchains don't always operate in silos.
In fact, many can't work together thanks to a concept called cross-chain interoperability.
Now the diversity of blockchain tech means different networks tackle different challenges from slow transactions and high gas fees to what's known as the Oracle problem.
And as blockchain adoption picks up.
Speed institutions are expected to test different chains, especially for use cases like stablecoins, tokenization, and more.
While joining me live here at the New York Stock Exchange this morning is Sergei Nazarov, co-founder of Chain Link.
Sergei, thank you so much for joining me.
Pleasure to be here.
Well, first and foremost, for viewers out there who may not be as familiar, where are we when it comes to blockchain and institutional adoption?
I think we're in a very accelerated state thanks to government regulatory clarity, starting with stablecoins moving on to tokenized funds, equities, and commodities.
So I would say we're in a place now where the largest US institutions are all rapidly accelerating tokenization.
The term they use is tokenization now more than any other term.
They used to use the term digital assets, but Tokenization is the key idea now, and then the question becomes what can you tokenize, and the answer is really everything.
All the equities, all the funds, all the commodities, and I think that the big hurdle they had because of the regulatory oversight that controls what they do and don't do so much was the government's perspective, but it's become very clear that the government's perspective is that they are only they're not only going to allow this, but they're going to encourage it.
And so there's there's massive rapid adoption now.
Yeah, and Sergey, here you are joining me at the New York Stock Exchange.
And when we think back to some of the IPOs we saw this year, Circle, which is reporting earnings today, they came out with their results, but that brought to light what stablecoins do here in the US as well as overseas.
So when it comes to the concept of interoperability, explain this for the layperson out there.
Sure, so you have all these different tokens. stablecoins are tokenized cash.
Then you have tokenized funds, tokenized equities, tokenized commodities, but these tokens don't all exist on one chain.
They exist on many chains, and as they exist on these different chains.
The chains are not connected.
It's like having two different databases and you need something to connect the databases.
That's what cross-chain interoperability is about and that's what Chain Link is a very large and leading provider of in the capital markets.
It's the ability to connect.
A chain with a stablecoin with another chain that might have a tokenized equity or tokenized fund and then allowed the execution of what's called delivery versus payment.
So allow the stablecoin to be exchanged for the other tokenized asset, whether it's a fund, equity, or commodity.
And so without this interoperability you have these kind of liquidity islands where you know you have stablecoins in this chain but not in that chain, so then they can't buy the asset.
But once you connect all the chains, you get this highly connected global network of chains which is really one of the main things that Chain Link is now implementing for the institutional world.
Yeah, and the concept of the blockchain hype cycle, where are we right now?
And given the fact that you've been entrenched in this space, give us a sneak peek into what's ahead.
So in the blockchain hype cycle, I think we're in a place where the scalability of blockchains is a narrative that's already played out.
Salon has done a good job and a few other chains have become successful off of scalability of chains.
I think privacy is going to become a very big trend.
Privacy is still an unsolved problem at the blockchain level, so I think privacy is very valuable.
I also think that Oracle oracle networks are going to be very important because they inherently are necessary for these advanced use cases.
So without data connectivity, without cross chain connectivity, without compliance, without identity, you really can't do these more advanced next generation institutional transactions.
And so the institutional trend.
And the Oracle trend are going to kind of go hand in hand because Oracle infrastructure enables the ability for the institutional transactions and that next generation tokenization.
So you need data oracles, cross-chain interoperability oracles, identity oracles, compliance oracles, all of that are critical pieces of infrastructure.
Beyond privacy, institutional adoption, and oracles as infrastructure solving for both privacy and institutional adoption.
I think that the Bitcoin safe haven narrative is going to continue and that is going to be one of the main macro factors that floats our entire industry into into kind of its final stage of global adoption.
Yeah, and speaking of which, earlier you mentioned the regulatory landscape here in the US and that's something that we have been keeping our eyes on heading into 2025 and here we are already in the second half of 2025.
So big picture question for you, Sergei, what does the future of finance look like and what trends are you watching right now?
I think there's a real opportunity for different kinds of regulatory arbitrage now where once you have regulatory clarity from the US government on forms of tokenization other than stablecoins being legitimized, then a lot of the platforms and the trends that are related to that tokenization are going to do very well, so the real world asset trend. is another form of saying tokenization.
Institutional adoption is another form of saying tokenization, tokenization is tokenization.
I, I think fundamentally the transition of the global financial system.
Into the blockchain ledger format is going is going to leave some of these other words behind like smart contracts or digital assets or web 3 and everyone is just going to focus on the value proposition of, you know, what is tokenization, what does a token do for me, how do I transfer tokens between chains, how do I successfully process these tokens in a way that's compliant with identity and other requirements.
And so that that is really going to be the trend that pushes the global financial system into the blockchain infrastructure world and into the Oracle infrastructure world.
That's what I see happening and the very, very big shift is that the regulatory environment is not resisting that, it's accelerating it.
OK, Sergei, well, we will have to leave it there, but thank you so much for joining me today and thank you so much for sharing your insights.
My pleasure.
Thank you.
