Chainlink's new cross-chain protocol to marry TradFi and crypto

Chainlink's latest CCIP aims to bridge the gap between traditional finance and digital assets.

digital blocks that contain many numbers and symbols are connected by neon strings, art generated by Midjourney

In a groundbreaking move that could revolutionize the world of finance, Chainlink, a dominant data oracle company, has recently unveiled its Cross-Chain Interoperability Protocol (CCIP) on its mainnet. This protocol, which has already gained traction from major players in both the decentralized finance (DeFi) space and traditional finance sector, aims to become the "TCP/IP of finance," linking various blockchain networks and unlocking the potential for seamless communication and collaboration between them.

CCIP's Early Access Phase

The early access phase of CCIP supports prominent blockchain networks, including Avalanche (AVAX), Ethereum (ETH), Optimism (OP), and Polygon (MATIC). In addition to this, the protocol has been adopted by prominent DeFi lending platforms Aave (AAVE) and Synthetix (SNX) as well.

The underlying security model of CCIP, the same as that powering Chainlink's price oracles, ensures resistance to flash-loan attacks and other known threats. This ensures a robust foundation for secure cross-chain communication.

The Vision for Chainlink CCIP

Sergey Nazarov, co-founder of Chainlink, envisions CCIP as a standard communication system that will bridge the gap between different blockchain networks. By facilitating interoperability in the public blockchain sphere, the protocol will enable DeFi applications to connect with multiple chains, extending the benefits of an extensive security system through an active management network.

Read also: Sergey Nazarov Net Worth: How Rich Is Chainlink Founder?

Beyond Cryptocurrency: Unlocking Traditional Finance

CCIP's ambitions go beyond the realm of cryptocurrency. Nazarov believes that the protocol will create a symbiotic relationship between traditional finance and digital assets, enabling seamless access for trillions of dollars to enter the cryptocurrency space. By creating a private-public dynamic, CCIP will enable banks and financial institutions to access real-world asset tokens and engage with blockchain technology in various ways.

Chainlink Key Partnerships and Collaborations

Chainlink has already made significant strides in collaborating with major players in the traditional finance sector. Partnerships with global financial institutions like Swift, BNY Mellon, Citigroup, and BNP Parabens have laid the groundwork for banks to explore blockchain's potential. This time, however, it's not just about token prices; it's about meeting the demands of their clients who are eager to venture into the world of cryptocurrencies.

Game-Changer for Global Finance

According to Nazarov, this development is a game-changer for the global financial system. Similar to how the TCP/IP protocol united a fragmented internet, CCIP is poised to bridge gaps in the financial landscape, paving the way for a more connected and efficient financial ecosystem. By facilitating secure communication between different chains, CCIP can potentially unlock a plethora of possibilities for businesses, investors, and users in both the digital and traditional financial realms.

Chainlink Performance Overview

The blockchain intelligence firm Santiment revealed in a tweet published earlier today that LINK is the third most trending topic in the cryptocurrency space. The post attributed LINK being a hot topic to the fact that the altcoin’s price gained more than 20% over the past 48 hours.

This surge in the cryptocurrency’s price resulted in it reaching a 3-month high of $8.34. Furthermore, LINK’s trading volume also skyrocketed over the past 48 hours. Santiment noted that LINK had approximately $347.72 million worth of daily trading volume in the last couple of days. Notably, this was the altcoin’s highest amount of trading volume for 2023 so far.

The intelligence firm predicted that LINK’s price may climb to as high as $10 over the course of the next few weeks as a result of the positive sentiment surrounding the project. At press time, however, LINK’s price stood at $8.15, according to CoinMarketCap. Despite being slightly down from the recently-achieved 3-month high of $8.34, the altcoin was still up more than 19% over the past 24 hours of trading.

In addition to outshining the Dollar, LINK had also gained against the two market leaders, Bitcoin (BTC) and ETH. At press time, the altcoin was up 19.98% against BTC and had outperformed ETH by 20.39%. This meant that 1 LINK was worth approximately 0.0002736 BTC and 0.004315 ETH.

LINK’s trading volume had also continued to spike and had increased 308.49% over the past 24 hours. This elevated the cryptocurrency’s total trading volume to $1,149,325,049.

Price Performance of Support Chains and Their Currencies

ETH was unable to replicate the performance of LINK over the past 24 hours, and had slipped just over 1% during this period. This slight 24-hour loss resulted in the leading altcoin trading at $1,889.48 at press time.

ETH has been in a consolidation phase over the past few weeks around $1,895. This prompted Santiment to share their latest insights report for the altcoin in a second tweet created today.

In its report, the firm predicted that ETH may climb back above the psychological resistance level at $2K before the end of August this year. This bullish outlook for ETH was based on several fundamental metrics covered in the insights report.

Firstly, Santiment noted that the percentage of discussions relating to ETH has declined to around the same level as the leading altcoin’s 2023 low. Although this can be seen as an indication of bearish sentiment, the intelligence firm believes that this is no cause for concern.

Santiment then mentioned that one key sign of a potential upcoming bottom would be when traders begin making a higher level of transactions while at a loss. At the time that the report was released, the firm revealed that traders were still transacting mainly in the profit, but not by much.

The report also showed that short-term ETH addresses who have been active in the last 30 days have achieved an average return of -0.35%. On the other hand, for addresses that have been active over the past 365 days, the longer-term average return is a positive +14.9%.

In order for these percentages to indicate a good buy opportunity for ETH, they will both need to be well into the negatives, according to Santiment. Nevertheless, the firm stated that purchasing ETH now is far from a bad idea, given the fact that both of these percentages are fairly close to neutral.

Lastly, the report revealed that an overwhelming amount of ETH coins were being held in self-custody. According to Santiment, only 7% of ETH’s supply is being housed on exchange platforms. As a result of this, the intelligence firm speculated that the likelihood of huge selloffs occurring remains fairly low.

Meanwhile, another one of the cryptocurrencies included in Chainlink’s latest protocol, AVAX, was trading at $13.97. This was after the altcoin experienced a 0.06% increase in its price over the past day of trading. Similar to LINK, AVAX had also outperformed the two market leaders BTC and ETH by 0.35% and 0.84% respectively.

OP and MATIC also benefited from the recent LINK development, as CoinMarketCap showed that the cryptocurrencies had printed 24-hour gains of 1.56% and 3.63%. The increases in their respective prices meant that OP was trading at $1.53, while MATIC’s price stood at $0.7705 at press time.

AAVE’s price rose 2.97% - boosting it to $74.06. The DeFi token was able to reach a daily high of $75.17, but had retraced since reaching the mark. Nevertheless, the altcoin was still trading closer to its 24-hour high than its daily low of $71.61.

The cryptocurrency other than LINK that benefited from the announcement of Chainlink’s new protocol was SNX, as it was able to climb more than 10% over the past 24 hours. This impressive performance elevated SNX’s price to $3.06. It also displayed the same strength against BTC and ETH, as it was able to outperform the two cryptocurrencies by more than 10% as well.