Grayscale is positioning Chainlink as a critical infrastructure for the growth of the tokenized asset market, according to a new research report.
The asset manager’s research arm argues that Chainlink’s suite of services, encompassing real-world data feeds, compliance tools and blockchain interoperability, addresses many of the real-world frictions that have hindered the widespread adoption of blockchain-based finance.
Chainlink is best known for supporting “oracles” that provide off-chain data, such as asset prices, to smart contracts. But the new product goes much further. For example, the Cross-Chain Interoperability Protocol (CCIP) allows tokens and messages to move across chains, which was the focus of JP Morgan’s testing of Kinexys and Ondo Finance.
Grayscale sees Chainlink’s LINK token as providing diversified exposure to the cryptocurrency infrastructure layer, according to the report. “Chainlink is an important connective tissue between cryptocurrencies and traditional finance,” the report said. “It can already be said to be an essential infrastructure in blockchain-based finance.”
The report currently estimates the tokenization market at $35 billion, which is still just a fraction of the global asset base, but notes that Chainlink’s integration with companies like S&P Global and FTSE Russell puts it in a strong position as traditional markets explore on-chain solutions.
Currently, Grayscale added, the total market for tokenized assets is only 0.01% of the total value of global fixed income and equity securities. The company added that the growth of the market for tokenized assets could “imply growth” in demand for Chainlink products.
While still small compared to global capital markets, we expect this number to grow as banks, asset managers and data providers explore blockchain rails. It has already grown from about $5 billion in early 2023 to the current figure.
The report comes as Grayscale filed to convert its $29 million Chainlink Trust into an exchange-traded fund trading under the ticker GLNK on NYSE Arca. If approved, it would be the first Chainlink ETF listed in the U.S. and one of the first ETFs to include a staking component.