Chainlink has recently launched an innovative initiative aimed at resolving the pervasive issue of data fragmentation in the financial sector, a problem that has proven to be a significant hurdle for many years. This initiative leverages the power of artificial intelligence, oracles, and blockchain technology, all integrated with the Chainlink Oracle protocol, to deliver real-time, standardized data access and automated validation processes. This innovative solution is designed to enhance efficiency and accuracy for financial institutions and stakeholders.
In the past year, artificial intelligence (AI) has become a focal point for investors and businesses, resulting in a flurry of innovative applications and significant investments. Among these projects is Sentient Labs, an AI startup co-founded by an executive from the Polygon blockchain. The startup has successfully secured $85 million in funding from investors, which includes Peter Thiel’s Founders Fund.
Interestingly, this surge in interest and investment is not limited to tech companies. The decentralized finance (DeFi) sector has also seen an influx of interest, leading to the emergence of a new approach at the intersection of traditional finance and blockchain technology. This fresh direction is being driven by significant players in the financial market infrastructure (FMI) space.
One such player is Chainlink, which recently unveiled an initiative that aims to address the chaos surrounding corporate actions, standardized data, and fragmented markets, such as Europe. This initiative marks a significant step forward in tackling the challenge of data fragmentation.
The financial industry has long struggled with fragmented data related to corporate actions, including mergers, dividends, and stock splits. This fragmentation leads to inefficiencies and inaccuracies, costing institutions between $3 to $5 million annually. Previous attempts to address these issues, such as those by the Depository Trust & Clearing Corporation (DTCC), have been slow, with firms often resorting to manually re-validating custodians and exchanging data, a time-consuming and error-prone process.
Chainlink’s innovative solution aims to address these issues systematically. By integrating AI, oracles, and blockchain technology, Chainlink is poised to revolutionize the way financial data is managed. The company is partnering with major global FMI providers, including Swift, Euroclear, and Franklin Templeton, among others.
The key to this solution lies in Chainlink’s oracle technology. Oracles serve as crucial bridges between real-world data and blockchain systems, providing reliable data feeds that blockchains cannot independently access. Chainlink has already proven its capabilities in this area, having processed over $16 trillion in transactions through its oracles and Cross-Chain Interoperability Protocol (CCIP).
This initiative’s end goal is to create a “Unified Golden Record,” a dependable, durable, and updatable data container that can sync effectively across blockchains, primarily containing financial data. This will act as a single source of truth accessible to all market participants, such as issuers, banks, FMIs, asset managers, and investors.
By validating and cleaning corporate action data directly onto the blockchain, the process becomes more efficient and accurate. This on-chain data can be swiftly moved across both private and public chains, increasing accessibility and trust among stakeholders.
As Stéphanie Lheureux from Euroclear noted in the report, the combination of oracles and AI has the potential to redesign workflows, resulting in greater efficiency, transparency, and value. This quiet revolution within financial institutions showcases that impactful innovations often happen behind the scenes, systematically resolving complex issues in traditional finance.
