Chainlink co-founder Sergey Nazarov says traditional finance companies are accelerating their use of blockchain technology and are now motivated by two core forces that guide how and why assets move on chain.
In a new interview, Nazarov says the rise of tokenization does not require every blockchain application to be tied to cryptocurrency or decentralized lending.
He says many institutions are adopting Chainlink (LINK) infrastructure for practical reasons that extend beyond decentralized finance (DeFi), citing recent announcements from firms such as UBS and others using Chainlink’s Chainlink Runtime Environment.
“There are really two driving forces. One force is the market dynamics that generate demand for whatever is tokenized. So what is the demand for a tokenized equity? What is the demand for a tokenized fund? What is the market demand for this thing? If I tokenize something, is there a market? Am I going to be able to sell it? Is is there a reason for me to to engage in this process of gen generating onchain versions of assets?
The second thing is the efficiency benefits. So the efficiency benefits are things like 24/7, 365 markets, 24/7, 365 collateral management. In traditional markets, you know, the weekend is the weekend. There’s no markets. And collateral management isn’t even as good as that….At at the end of the day, the efficiency will be a huge attracting force, but I don’t think you’ll be able to prove the efficiency until there’s enough assets on chain that those assets begin interacting with each other and with stable coins.”
Nazarov says the lack of a sizable market was a barrier for institutions several years ago, but that condition has changed.
He points to new stablecoin legislation and growth in tokenized deposits as developments that expand the pool of on-chain purchasing power.
