At a glance: 

• Chainlink, Kinexys by J.P. Morgan, and Ondo successfully completed a cross-chain Delivery vs Payment (DvP) transaction between Kinexys Digital Payments and Ondo Chain’s testnet, with the Chainlink Runtime Environment (CRE) orchestrating settlement.
• The first-of-its-kind DvP solution was the debut transaction on Ondo Chain’s testnet involving OUSG and highlighted a scalable solution for Kinexys Digital Payment settlement rails to support the tokenized asset market across public blockchains.
• CRE is highly configurable and can be used to settle different types of DvP transactions of varying complexity including single-chain and multi-chain DvP transactions, enabling complex financial activity with reduced counterparty and settlement risk.

The convergence of DeFi and TradFi is accelerating, forming a unified, interoperable Internet of Contracts. With over $22B+ in tokenized real-world assets (RWAs) now on public blockchains—including private credit, U.S. Treasuries, commodities, and equities—the ability to execute Delivery vs. Payment (DvP) transactions across diverse blockchain networks is becoming increasingly critical.

The Chainlink Runtime Environment (CRE)—a secure, offchain compute layer that connects and orchestrates activity across public blockchains, private ledgers, and existing financial systems—provides the foundation for cross-chain DvP. By enabling the atomic exchange of assets and payments across disparate networks, CRE helps reduce counterparty and settlement risk compared to traditional approaches.

Recently, Chainlink collaborated with Kinexys by J.P. Morgan and Ondo Finance to successfully complete a cross-chain test DvP transaction between Kinexys’ permissioned blockchain-based payment network (Kinexys Digital Payments) and Ondo Chain’s testnet, a public RWA blockchain network, with the Chainlink Runtime Environment (CRE) orchestrating the end-to-end settlement. 

In this blog, we explore the advantages of blockchain-enabled DvP, how Chainlink CRE powers complex cross-chain settlement workflows, and the joint use case involving Chainlink, Kinexys by J.P. Morgan, and Ondo Finance.

Why Blockchain Improves DvP Settlement

Delivery vs Payment (DvP) is a core settlement mechanism used in securities trading that ensures that the transfer of securities (e.g., funds, stock, debt) to a buyer only occurs if the corresponding payment (e.g., USD) to the seller is made, and vice versa. This process is designed to reduce settlement risk, avoiding situations where one party delivers securities to their counterparty but does not receive the corresponding payment. 

In the traditional financial system, DvP workflows are hindered by siloed infrastructure and manual processes. These inefficiencies introduce delays, increase counterparty risk, and contribute to settlement failures, which are estimated to have cost market participants over $914B+ in the past decade. Cross-border DvP introduces even more complexity due to jurisdictional, currency, and compliance considerations.

Blockchain networks offer a robust foundation for streamlining DvP settlements. When both the asset and payment legs of a transaction are settled onchain, and orchestrated using Chainlink infrastructure, transactions can be executed atomically across chains. This setup enables:

• Simultaneous cross-chain settlement that reduces counterparty and settlement risk
• Automated, verifiable workflows that enhance operational efficiency
• Near real-time finality, improving liquidity management and capital allocation
• Transparent audit trails recorded immutably onchain providing real-time visibility
• Reduced intermediary costs across both public and permissioned systems

Case Study: Chainlink, Kinexys by J.P. Morgan, and Ondo Finance

In a recent milestone collaboration, Chainlink, Kinexys by J.P. Morgan, and Ondo Finance successfully executed a cross-chain, atomic DvP test transaction involving a public RWA blockchain testnet, a permissioned blockchain-based payment network, and a tokenized fund. The transaction used:

• Kinexys Digital Payments: A permissioned network of blockchain deposit accounts for payment settlement
• Ondo Chain Testnet: Ondo Finance’s upcoming layer 1 blockchain purpose-built for institutional-grade RWAs
• OUSG: Ondo’s flagship and the first tokenized Short-Term U.S. Treasuries Fund, featuring a TVL of $692M+ on mainnet across Solana, Ethereum, Polygon, and XRP Ledger
• Chainlink Runtime Environment (CRE): An offchain compute layer that orchestrates activity across public/private chains and existing financial systems

This first-of-its-kind DvP solution served as the debut transaction on the Ondo Chain testnet and demonstrated a scalable approach to cross-chain, atomic settlement of a tokenized asset. The transaction also marked an expansion of the Kinexys platform’s settlement integrations to date beyond fully private chains.

The test transaction involved the exchange of OUSG as the asset leg with Kinexys Digital Payments serving as the payment leg. The DvP solution that orchestrated the movement of asset and payment was powered end-to-end by CRE, which leveraged an integration with Kinexys Digital Payments’ synchronized settlement workflow. 

The Kinexys Digital Payments synchronized settlement workflow was designed with cross-chain DvP in mind, as well as additional automated pre- and post transaction liquidity management features. The workflow includes pre-execution funds processing and validation to enable funds and assets to move synchronously at execution, and optional programmability features to manage balances in sender and receiver accounts, automatically based on liquidity management preferences and transaction needs. 

CRE facilitated a seamless settlement between Kinexys Digital Payments and Ondo Chain’s testnet environment, while preserving institutional-grade security and scalability standards. 

CRE executed the DvP workflow by performing the following actions:

1. Monitoring the DvP Coordinator smart contract on Ondo Chain for escrow events (e.g., OUSG locked)
2. Reaching offchain consensus on escrow events from Ondo Chain
3. Translating these escrow events into messages for the Kinexys Digital Payments platform, thereby instructing transaction validation 
4. Receiving transaction pre-validation callback responses from the Kinexys Digital Payments platform and initiating corresponding escrow validations 
5. Authenticating with Kinexys Digital Payments via a secure API gateway to initiate payment upon satisfaction of escrow conditions
6. Handling callback notifications from Kinexys Digital Payments confirming payment
7. Triggering the release of OUSG on Ondo Chain from escrow after payment confirmation

Through this workflow, OUSG was transferred from the seller to the buyer on Ondo Chain testnet, while a simultaneous payment from the buyer to the seller occurred on the Kinexys Digital Payments platform. Both the tokenized asset on Ondo Chain and payment on Kinexys Digital Payments remained on their respective blockchain network, with only settlement instruction data passing between chains. 

Configurable DvP Settlement With CRE

Beyond the highlighted case study, CRE is highly configurable and can be used to settle different types of DvP transactions of varying complexity including:

• Single Chain DvP (Onchain Payment): The buyer and seller use a single blockchain network where the tokenized asset and payment asset reside. Chainlink ensures the tokenized asset and payment are exchanged simultaneously.
• Single Chain DvP (Offchain Payment): The seller wants an offchain payment from the buyer for their tokenized asset. Once the asset is locked in escrow onchain, Chainlink initiates and confirms the offchain payment has occurred (e.g., Swift or RTGS payment), and then unlocks the tokenized asset to the buyer’s wallet.
• Multi Chain DvP (Messaging): The buyer and seller are connected to two blockchain networks. The tokenized asset resides on an asset chain and the payment asset resides on a payment chain. Chainlink confirms the tokenized asset is locked in escrow on the asset chain, sends a payment initiation message to the payment chain, and then relays a payment confirmation back to the asset chain to trigger an escrow unlock of the asset to the buyer’s wallet. No assets move cross-chain, only data instructions. This workflow was used in the Chainlink, Kinexys by J.P. Morgan, and Ondo Finance collaboration. 
• Multi Chain DvP (Token Transfer): The buyer and seller are connected to two blockchain networks. The tokenized asset resides on chain A and the payment asset resides on chain B. The tokenized asset and currency asset are locked in escrow on each respective chain, and are simultaneously transferred cross-chain via Chainlink. The tokenized asset lands in the buyer’s wallet on chain B while the payment asset lands in the seller’s wallet on chain A. 

By serving as the foundational infrastructure for various kinds of DvP transactions involving tokenized assets, CRE enables financial institutions to engage in complex financial activity with reduced counterparty and settlement risk. Learn more about how Chainlink unlocks the full capabilities for tokenization for capital markets in the following blog.

How CRE Enhances Developer Flexibility

First introduced at Chainlink’s annual SmartCon conference in 2024, the Chainlink Runtime Environment (CRE) is a new architecture for the Chainlink platform that gives independent developers and organizations substantially more power, freedom, and reach when building blockchain applications by providing a self-serve, scalable, and programmable architecture.

With CRE, the core functionalities of oracle networks become reusable modular capabilities that developers can compose into programmable workflows that enable the seamless orchestration of activity between any blockchain and external system. The result is that developers can build faster and deeply customize how they use oracle networks based on their specific use case requirements. 

The introduction of CRE is critical to expanding the Chainlink platform across a growing number of public/private blockchain networks and meeting the accelerating demand from capital markets and Web3 for oracle services. For more information about the Chainlink Runtime Environment, read the following product announcement blog. 

Bringing Capital Markets Onchain With CRE

The tokenized asset economy is set to experience exponential growth in the coming years, and when combined with the growing number of public and private blockchain networks, the ability to orchestrate complex DvP transactions across various DLT environments will only grow in importance. CRE serves as the foundation for enabling these complex interactions, with the recent collaboration with Kinexys by J.P. Morgan and Ondo Finance representing only the tip of the iceberg.

If you are interested in exploring how the Chainlink platform can benefit your tokenized asset strategy, reach out to one of our experts. 

If you are a developer, established application, or financial institution and want to start building and testing workflows using the Chainlink Runtime Environment, sign up for early access.

—

Disclaimer: This post is for informational purposes only and contains statements about the future, including anticipated product features, development, and timelines for the rollout of these features. These statements are only predictions and reflect current beliefs and expectations with respect to future events; they are based on assumptions and are subject to risk, uncertainties, and changes at any time. There can be no assurance that actual results will not differ materially from those expressed in these statements, although we believe them to be based on reasonable assumptions. All statements are valid only as of the date first posted. These statements may not reflect future developments due to user feedback or later events and we may not update this post in response. Please review the Chainlink Terms of Service, which provides important information and disclosures.