The Australia and New Zealand Banking Group (ANZ) and Chainlink Labs have recently showcased the fruits of their collaborative efforts. The initiative has successfully bridged the gap between major blockchain networks, namely Avalanche and Ethereum, facilitating the global movement and settlement of tokenized assets.
The leap forward is particularly timely, given a recent SWIFT report highlighting that a staggering 97% of institutional investors see tokenization as a game-changer for the asset management industry.
Cross-chain settlements by ANZ and Chainlink
At the heart of the collaboration is the Cross-Chain Interoperability Protocol (CCIP) developed by Chainlink, which has been instrumental in demonstrating how clients can engage in the trading and settlement of tokenized assets across different networks and currencies. The process, known as Delivery vs. Payment (DvP), is a critical risk management standard in securities settlement that ensures payment is made concurrently with the delivery of securities. By leveraging blockchain technology and smart contracts, ANZ and Chainlink have modernized the DvP process, enabling atomic, non-intermediated settlements with assets and payments tokenized on the same infrastructure.
Lee Ross, Technology Domain Lead at ANZ, emphasized the significance of Chainlink’s CCIP in simplifying the complexities associated with transferring tokenized assets across various blockchains. The initiative saw ANZ simulate the purchase of tokenized assets on Ethereum, priced in one stablecoin, with the initiation and settlement of transactions occurring on Avalanche in a different stablecoin. The innovative workflow involved ANZ customers using the bank’s Digital Asset Services portal to buy tokenized New Zealand dollar stablecoins on Avalanche, followed by the purchase of tokenized Australian nature-based assets denominated in tokenized Australian dollar stablecoins on Ethereum. ANZ also facilitated the necessary foreign exchange conversion, with CCIP providing the backend infrastructure for seamless data and token transfers between Ethereum and Avalanche.
Leveraging Avalanche’s evergreen subnets for enhanced financial services
Avalanche’s Evergreen Subnets have played a pivotal role in the project, offering EVM compatibility, permissioning, and customized gas tokens among other features. These subnets allow institutions like ANZ to explore new use cases and business models by leveraging customizable networks. Anurag Soin, Product Lead Digital Added Services at ANZ, highlighted the potential of Avalanche’s Evergreen Subnets in redefining the global financial system’s infrastructure through blockchain, smart contracts, and tokenization.
The initiative is a testament to the burgeoning ecosystem of tokenization and On-Chain Finance (OnFi) on Avalanche, which sits at the crossroads of traditional finance (TradFi) and decentralized finance (DeFi). Institutions such as WisdomTree and Wall Street firms are already exploring the benefits of OnFi through Spruce, a separate Evergreen Subnet. Moreover, major banks like Citi and J.P. Morgan have embarked on blockchain initiatives under Project Guardian, leveraging Evergreen Subnets to test blockchain’s potential in enhancing financial services.
Charting the future of finance with blockchain
John Wu, President of Ava Labs, lauded the ANZ project as a prime example of how traditional financial service providers are gearing up for a new era of capital markets enriched by blockchain technology. The collaboration between ANZ, Chainlink, and Avalanche has laid the groundwork for interoperability and customization in the rapidly expanding tokenized asset ecosystem for institutional clients. The initiative not only showcases the innovative spirit of traditional finance but also marks a significant step towards realizing a more efficient, transparent, and accessible future of finance.
The early results from these test transactions are promising, indicating a potential paradigm shift in how tokenized assets are managed and scaled within the financial services industry. The next steps involve deploying the solution on blockchain mainnets and expanding workflows to facilitate communication between different blockchain networks for various use cases.
Conclusion
The collaborative project between ANZ, Chainlink Labs, and Avalanche represents a significant milestone in the financial industry’s journey towards embracing blockchain technology and tokenization. By successfully demonstrating the seamless movement and settlement of tokenized assets across major blockchain networks, the initiative offers a glimpse into a future where financial transactions are more efficient, secure, and inclusive. The use of Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and Avalanche’s Evergreen Subnets not only showcases the technical feasibility of such endeavors but also highlights the growing consensus among financial institutions about the transformative potential of blockchain.
