Listen to the Chainlink Product Q&A breaking down the Q4 2023 update:
As we reflect on 2023, it is quite remarkable to see the progress that the Chainlink ecosystem has made.
We started the year by stating our three priorities:
- Launching CCIP, our cross-chain interoperability protocol, enabling highly secure cross-chain transactions and activity.
- Launching Data Streams, our low-latency data solution aimed at unlocking the onchain derivatives market by providing data to dApps at speed.
- Launching Functions, empowering developers to explore any use case they can think of by enabling them to fetch data from any API or tap into their own Web2 infrastructure.
Thanks to our incredible partners, our vibrant community, and our hard-working teams, we were able to reach these three ambitious goals. We saw the culmination of these efforts in October at SmartCon 2023 in Barcelona. The momentum these launches give the Chainlink Network is phenomenal.
2023 was the year of completing the shape of the Chainlink platform. Chainlink now offers all the key services that developers need to create advanced and powerful dApps, and because it’s a platform, using one of these services makes it much easier to use the other services. For example, if a developer already uses Data Feeds, then using CCIP is a clear choice because it doesn’t require them to make any additional trust assumptions.
As we look to 2024, we aim to accelerate the pace of development to build on this progress in order to meet the demands of our users in these new markets.
We will heavily prioritize CCIP to meet the demand fueled by the massive trend of capital markets moving onchain and transitioning from proof of concept to production. This is fueled by tokenized real-world assets (RWAs), which are set to exponentially grow the value of onchain economies. And of course, we are working to enable every token, dApp, and external system to be able to seamlessly and securely move messages and assets cross-chain.
While DeFi was the initial product-market fit for blockchain-based applications, onchain versions of traditional capital markets represent a new type of blockchain adoption, one centered on creating faster, more cost-efficient, more transparent, and more liquid financial products and services across sectors such as payments, clearing and settlement, lending, and asset management. Chainlink is core infrastructure for making this new system of onchain finance a reality, specifically by allowing real-world, tokenized assets (also referred to as RWAS) to be settled on any public or private blockchain, enabling programmable transfers where value and messages travel together, and synchronizing onchain and offchain legacy infrastructure.
Tokenized assets can not only bring trillions of dollars in asset value into the onchain format, but they also represent an area of mutual interest and convergence for traditional capital markets and DeFi. Chainlink plays a key role in providing the data and interoperability needed to move tokenized assets across any chain and to keep information regarding the assets updated no matter what blockchain they reside on.
We will continue our work on Data Streams to power the next stage of DeFi’s growth, which requires developers to build faster and more secure applications while retaining credibly neutral infrastructure.
There is a resurgence in focus on ensuring DeFi is a viable financial ecosystem that can compete with traditional finance and support mainstream adoption. In order for this to be the case, DeFi must maintain its unique value proposition of being highly secure and reliable while also remaining credibly neutral across all of its infrastructure. This is why Chainlink continues to build services that are decentralized, transparent, and without conflicts of interest, enabling developers to give users verifiable proof that the data, computation, and interoperability facilitating key parts of their protocol are secure and fair.
Finally, we continue to build the Chainlink Platform for the next 1M developers by investing in Functions and Automation and by continuing to grow the Chainlink community so developers can build the verifiable web.
The inherent value of cryptographic truth is becoming increasingly clear to society. This unique value proposition of blockchain and oracle technologies is that they allow users to verify how digital systems and applications work, which enables them to make more informed decisions about how to navigate their digital lives through everything from verifying ownership and the authenticity of images and videos to checking the code of algorithms and the methodologies used to calculate social consensus. In a world where trust is diminishing due to broken promises, the proliferation of AI-generated content, and systemic financial collapses, it’s more important than ever for developers to build a verification layer for the Internet. User demand for a verifiable web will only grow, and Chainlink offers developers the services they need to provide their users with accurate data, verifiably fair applications, and high-integrity markets.
The following product update will look at the progress made across Chainlink services in Q4 2023 and provide insight into future developments. We’ll also be hosting a Q&A related to this product update on the @Chainlink X Spaces on January 11 at 11AM ET. Please use this form to submit a question. We’ll be collecting questions until 11AM ET on January 4.
Please note that all future-facing comments are subject to change based on user feedback, shifts in consumer demand, strategic determination, and various other unforeseen challenges and opportunities. The goal of this product update is to provide insight into previous releases and current thinking based on ongoing research and development, but it is not a definitive product roadmap; it’s an attempt to balance transparency with the need to remain agile in this dynamic industry, which moves fast and is constantly evolving.
Chainlink Cross-Chain Interoperability Protocol (CCIP) is the global standard for cross-chain communication. It establishes a universal connection between public and private blockchains so that arbitrary data, tokens, or messages alongside tokens can be sent between chains (i.e., programmable token transfers).
With financial institutions adopting a wide variety of blockchain and DLT solutions, which are often walled gardens that don’t communicate, the goal of CCIP is to create seamless interoperability across all onchain ecosystems and to connect Web2 to Web3 through a single abstraction layer, ultimately enabling a global Internet of contracts and the world’s largest liquidity layer for tokenized assets. This will empower financial institutions to create their own ecosystem for tokenized assets while also enabling those tokenized assets to increasingly make their way into DeFi.
Given the high number of historical bridge exploits, making sure CCIP is the most secure and reliable cross-chain solution is critical to the success of cross-chain use cases and the industry as a whole. Taking a security-first approach, we are diligently working to scale CCIP support for more chains and asset types, as well as increase the number of developers that can build with CCIP across DeFi and the traditional financial industry. To learn more about CCIP’s industry-standard security, check out Chainlink Labs’ Head of R&D Lorenz Breidenbach’s presentation at SmartCon 2023 on CCIP’s defense-in-depth approach and the Risk Management Network.
- Demonstrated a proof of concept with Vodafone’s Digital Asset Broker (DAB), Sumitomo Corporation, and InnoWave to address longstanding challenges in the $32 trillion global trade ecosystem, particularly by showcasing the seamless exchange of crucial trade documents across diverse platforms and blockchains via CCIP.
- Avara (Aave Companies) Founder Stani Kulechov and VP of Engineering, Emilio Frangella shared plans for Aave’s cross-chain stablecoin GHO to be powered by CCIP at Devconnect Istanbul.
- Added LINK as a bridgeable token between Ethereum mainnet and Coinbase’s layer-2 Base network. This deployment enables users to pay for Chainlink services on Base using LINK.
- Onboarded additional projects to CCIP mainnet to support their cross-chain use cases, including Beefy Finance, Klaster, NUON, DFX, and others.
- Continue to iterate on the blockchain abstraction layer based on user feedback. The blockchain abstraction layer is a capability of CCIP that enables traditional enterprise systems to relay messages to and from public and private blockchains after a single integration with CCIP.
- Continue to work with financial institutions on transitioning their POCs into production and opening up new use cases that enable them to unlock other streams of value through blockchains and tokenized assets.
- Expand access to CCIP by transitioning to Mainnet General Availability (GA), making cross-chain messaging and transfers of supported tokens on CCIP permissionlessly available to all developers, which we anticipate will launch early next year, subject to final testing.
- Expand CCIP’s support for more tokens and blockchains, both public and private, based on SCALE and market opportunities, as well as explore new token handling mechanisms when transferring cross-chain. This includes adding CCIP support for capital markets-focused blockchains.
- Add additional lanes for LINK and other assets, such as stablecoins, so they can be securely transferred across blockchains, with prioritization based on user demand and where other Chainlink services are already deployed.
- Research additional security checks monitored by the CCIP’s Risk Management Network, further hardening the security of cross-chain transactions.
Chainlink Data Feeds continues to be the market-leading oracle solution across DeFi. To further expand the footprint of Data Feeds, we are now focused on enhancing their economic sustainability and efficiency while making them the standard in onchain finance by working with asset issuers who need Data Feeds to help increase the use of their tokenized assets.
- Natively integrated Data Feeds on multiple zkEVM blockchains: Linea, Scroll, zkSync, and Polygon zkEVM.
- Deployed an upgraded internal rules engine, significantly scaling real-time risk monitoring for potential deviations on Data Feeds, further increasing their security.
- Launched Staking v0.2, with the community pool filling in under seven hours after the start of Early Access. 40,875,000 staked LINK from community stakers is now helping secure the ETH/USD Price Feed on Ethereum mainnet.
- Implement OCR3—the latest version of Chainlink’s offchain consensus protocol—into Data Feeds to make them more scalable and gas-efficient, as well as develop a user interface that supports batching multiple requests into a single onchain call. For a deeper dive, check out the video below, where Chainlink Labs researcher Chrysa Stathakopoulou discusses OCR3 in more detail.
- Expand Data Feeds to more chains, such as zero-knowledge rollup-based layer 2s and unique layer 1 chains, and across more real-world assets, with prioritization based on participation in the SCALE program and market demand.
- Introduce multivariable Data Feeds that deliver additional metadata beyond just price, such as market liquidity information.
- Research and develop an oracle solution to improve support for long-tail assets that are primarily traded on DEXs.
Chainlink Data Streams is a pull-based, low-latency oracle solution that delivers high-frequency market data offchain that can be retrieved at any time and verified onchain.
Chainlink Data Streams is already gaining significant traction for latency-sensitive and high throughput use cases, with Data Streams already live in production with GMX V2 on Arbitrum Mainnet, and other top protocols committed to moving to mainnet. These protocols’ collective adoption of Data Streams should account for 90+% of high-throughput DeFi on Arbitrum at current volume.
Chainlink Data Streams is being selected by users not only for its high performance but also for its credibly neutral execution infrastructure and conflict-of-interest-free data providers. This design protects users against malicious activities like frontrunning and adverse selection, both of which are possible in more opaque and/or in-house solutions. Learn more about the innovation behind Data Streams by viewing Chainlink Labs Product Manager Clement Sutjiatma’s SmartCon 2023 presentation below.
- Launched Data Streams for forex majors such as USD, GBP, EUR, and JPY and precious metals such as gold and silver, furthering our support of tokenized RWAs.
- Complete the final stages of an upgrade that enables basic and premium data schemas as well as introduces onchain billing availability for new users on Arbitrum mainnet.
- Continue to migrate Early Access users from testnet to mainnet and then transition Data Streams from Mainnet Early Access to General Availability for all developers.
- Expand to new chains based on SCALE and market demand to further serve the growing number of low-latency use cases, with an initial focus on supporting onchain perpetual futures protocols.
- Expand Data Streams’ support for more crypto assets, forex, and commodities.
Proof of Reserve
Chainlink Proof of Reserve (PoR) provides autonomous, reliable, and timely verification of cross-chain and offchain reserves that back tokenized assets and wrapped assets.
Based on market demand and user feedback, we believe Chainlink Proof of Reserve will play an essential role in the evolution of tokenized assets by providing granular data about the specific makeup of the collateral backing RWAs. In particular, banks and monetary authorities can adopt Chainlink Proof of Reserve to access flexible, scalable, and proven infrastructure for monitoring stablecoin risk. This is made possible through three distinct components of Chainlink Proof of Reserve:
- Secure data aggregation of a stablecoin issuer’s offchain reserve assets for trusted reserve attestations and valuations.
- A blockchain-agnostic design for managing onchain liability balances across public and private blockchains.
- Synchronization of offchain assets and onchain liabilities for robust risk management and reporting.
Learn more by checking out this recent blog post by Chainlink Labs Solutions Architect Ryan Lovell: How Chainlink Proof of Reserve Accelerates Stablecoin Adoption in Capital Markets. Beyond stablecoins, we are also collaborating with a wide range of industry groups to set standards for tokenized assets and working with asset issuers for liquid staking tokens, tokenized T-bills, and more on how Chainlink PoR can support their tokenized RWAs.
- Integrated Chainlink Proof of Reserve into the display of bC3M Reserves—Backed GOVIES with 0-6 months Euro investment grade—giving bC3m token holders more transparency on reserves and continuing our integration with Backed products.
- Collaborated with Moore Johannesburg’s Digital Asset Division, which will provide third-party attestations for Chainlink Proof of Reserve, furthering opening up onchain finance to the worldwide market.
- Established a strategic collaboration with Stablecoin Standard—an industry body for stablecoin issuers—to advance best practices for stablecoin issuers via the use of Chainlink services.
- Continue ongoing work with asset issuers, custodians, and auditors to build Proof of Reserve products that help unlock greater transparency into the valuation and important characteristics of the underlying assets and collateral baskets backing tokenized RWAs.
Chainlink Automation is the industry standard for developers who need highly reliable, gas-efficient, decentralized, and performant smart contract automation to build next-generation dApps.
Chainlink Automation is becoming an increasingly important part of the Chainlink platform as a way to connect and enhance other Chainlink services. Our focus is now on furthering the modularity of Automation, opening up advanced use cases such as an enhanced cross-chain-enabled version of a LINK balance monitor and automated trade settlement (via a combination with Data Streams). Dive deeper into the enhancements made in Chainlink Automation v2 by watching Chainlink Labs Product Manager De Clercq Wentzel’s SmartCon 2023 presentation below.
- Launched StreamsLookup, making it possible for developers to get seamless and automated onchain access to Chainlink Data Streams.
- Adopted by users like Thena and Sommelier, who are using Automation’s verifiable compute to save their users up to 90% in gas costs.
- Added a Dedicated Forwarder to give users the ability to fully lock down their upkeep, enabling them to ensure that all transactions come from a specific address which only nodes on the network can interact with.
- Integrated Chainlink Automation with Arbitrum Sepolia testnet.
- Continue expanding Chainlink Automation across blockchains, with zk-rollups as a current focus and participation in the SCALE program.
- Research CCIP receipts, a way to listen for CCIP messages on a destination chain and then send messages on a source chain confirming receipt of the message.
- Make log triggers generally available to all developers on chains supported by Chainlink Automation.
- Further extend the Chainlink platform’s capabilities by increasing the modularity of Chainlink Automation and its composability with other Chainlink services.
Chainlink Functions is a Web3 serverless developer platform that enables developers to connect their smart contracts to any external data source and run custom computations in minutes.
Chainlink is not only focused on being the industry standard for data but also for any form of trust-minimized compute that can’t be performed on a blockchain. Functions was created to enable any type of custom connectivity between and among blockchains and Web2, as well as perform custom computations that enhance those connections such as by filtering data, creating application efficiency, or simply opening up entirely new features. As Chainlink Labs Product Manager Bryan Jowers noted in his SmartCon 2023 presentation below, Chainlink Functions is Web3’s serverless moment.
Functions is not only critical to smart contract development in Web3 sectors such as DeFi, onchain gaming, decentralized insurance, and more, it also provides an easy and secure way for financial institutions to bridge data onchain to keep tokenized assets up-to-date and to send data offchain to backend systems in order to keep them in sync with onchain networks.
- Created external module support on testnet—one of the most requested and essential developer features because it allows developers to use libraries they’re already familiar with and opens the door for new use cases across AI/ML, identity, advanced computation, and more.
- Deployed Functions on Arbitrum Sepolia testnet
- Extend the compute vision of Functions by progressively enabling more direct customizability for the user, adding more developer frameworks (e.g. Foundry), and adding external libraries and Quickstarts.
- Further improve UX through billing enhancements and limit improvements to enable more computing time, more memory, and increased callback gas.
- Continue to expand integrations across more blockchains, with an immediate focus on EVM-based layer 2s.
Chainlink Verifiable Random Function (VRF) is the industry standard source of provably fair and tamper-proof randomness.
As the most widely used source of verifiable randomness in the blockchain industry, the focus for VRF is not only maintaining its position as the industry standard but also expanding its integration into Web2 and high-profile Web3 gaming projects built on app-specific chains/rollups. Chainlink Labs Product Manager Todor Karaivanov goes into more detail about VRF in his SmartCon 2023 presentation.
- Integrated VRF on Arbitrum Sepolia testnet, which was adopted by users such as Metaboards, insrt.finance, and OKX.
- Launch VRF v2.5, and deploy it on all chains currently supporting v2, such as Ethereum, BNB Chain, Polygon, Avalanche, and Arbitrum.
Scaling the Chainlink Platform
As seen with some of our releases at SmartCon, we are evolving and transitioning from a collection of products to an integrated platform that embodies the principles of composability, simplification, and unification.
- Composability—We aim to give users of the Chainlink platform the ability to harmoniously combine Chainlink services, with one triggering another to tackle complex challenges and open up advanced use cases. As an example, we are able to empower users such as GMX to deliver high-frequency price data and trade execution for their users, thanks to the combination of Chainlink Automation and Data Streams, highlighting the power of composability, where Automation can quickly fetch price data from Data Streams.
- Simplification—We aspire to make our products universally accessible and Web3 easier for everyone through toolings like SDKs, APIs, and a plethora of interactive and educational content. The vision is that a developer can write a simple high-level program for what they want to happen in just a few clicks, and the Chainlink platform takes care of the backend complexity (e.g., orchestrating a DON with just a few lines of code). A great example is the Functions playground, which has enabled more than 4,500 users to date to quickly test a Chainlink Function without ever leaving their browser. A variety of steps, such as wallets and IDEs, are abstracted away for the user, creating a simple developer experience. Another example is the Blockchain Abstraction Layer, a component of CCIP we are developing with capital market players.
- Unification—The vision is to allow you to go to a single place to find your code, billing, monitoring and management capabilities, etc. Our recently launched Developer Hub provides more unified experiences across our platform, bringing together thousands of learning resources, demos, quickstarts, webinars, and tutorials into a single, searchable repository. But this is only the beginning, as we extend this unification across all facets of our product ecosystem, from feature changelogs to consoles, unified billing mechanisms, and beyond.
We also continue to research and develop new products, such as DECO and FSS, to further grow the set of services available on the Chainlink Platform. This also includes upgrades to the underlying infrastructure powering the Chainlink Platform, which can already be seen by the introduction of OCR3 and work on modularizing the Chainlink protocol to accelerate our ability to scale services across chains. At SmartCon 2023, Chainlink Labs VP of Engineering Ben Chan talked about the need for Chainlink to scale while maintaining a good balance between security, scalability, and decentralization in the design.
The transformation of Chainlink into a composable, easy-to-use, and unified platform will not be a sprint but a calculated journey spanning the next several years. Our goal is that in the future the boundaries between our products will dissolve, paving the way for a seamless, integrated platform that empowers our users to achieve more than ever before.
This quarter, we’ve seen significant progress in our developer community, highlighted by Akersh Srivastava joining Chainlink Labs. Akersh brings a wealth of experience in new technologies, community building, and developer ecosystems from his work at Meta, Amazon, and Accenture. His insights are already influencing our approach to engaging, strengthening, and empowering our developer community.
The BUILD program has also expanded to include over 16 new projects, including Arden, Game Verse, and Postmint, further contributing to a culture of creativity and technological advancement. The QuickStart landing page also attracted over 137,000 views, reflecting our community’s active engagement. Additionally, we’ve made Chainlink Docs available in five languages to enhance our global community’s access to resources.
Looking forward, our primary goal is to expand our community. We plan to welcome developers from Web2, guiding them to discover the distinct advantages of Chainlink services. Moreover, we’re committed to offering an exceptional onboarding experience and advanced tooling. This approach is designed to ensure that these developers can seamlessly apply their existing skills to Chainlink services.
We also recognize the immense potential for growth in the APAC and LATAM regions. A key part of our strategy will involve doubling down our efforts in these regions, fostering local innovation, and connecting a global network of developers passionate about Chainlink. We remain committed to empowering a thriving developer community as we continue to grow. The initiatives we have set in motion this quarter lay the groundwork for future expansion and innovation.
2023 has been an incredible year for the Chainlink platform, and we are very thankful to our partners and our community for their amazing support. We believe that the mass adoption of blockchain technology is inevitable once any developer can integrate these technologies into their existing stack, and we are looking forward to accelerating this trend in 2024.
If you want to track our progress throughout 2023, refer to the Q1 2023 update blog, the Q2 2023 update blog, and the Q3 2023 update blog for further recaps. To learn more about Chainlink, visit chain.link, subscribe to the Chainlink newsletter, and follow Chainlink on Twitter, YouTube, and Reddit.