This collaboration aims to enhance accessibility for net asset value (NAV) data in tokenized assets.
In a significant move, Chainlink, the decentralized blockchain oracle network built on Ethereum, has announced a strategic partnership with investment management firm Fidelity International and digital asset bank Sygnum.
This collaboration aims to enhance accessibility for net asset value (NAV) data in tokenized assets. This partnership will include assets from Sygnum, which recently tokenized $50 million of Matter Labs’ reserves, held in the Fidelity Institutional Liquidity Fund.
Real-Time NAV Data: A Game Changer
According to a press release published on July 3, the NAV data initiative will offer significant benefits, including “access to historical data for Sygnum, its clients, and broader market participants.” This data will be securely stored and synchronized on the ZKsync blockchain, ensuring both safety and efficiency.
This initiative will allow the NAV of Fidelity’s $6 billion Institutional Liquidity Fund to be accessible on-chain in real time. Fidelity’s Institutional Liquidity Fund provides a range of sub-funds focused on money markets, specifically tailored for institutional investors.
NAV, a key financial metric that calculates the value of a fund’s assets minus its liabilities divided by the number of outstanding shares, will now be instantly available, representing a breakthrough in fund management. Traditionally, NAV data for mutual funds is updated after each trading day, but this integration will provide continuous real-time updates.
Sergey Nazarov, co-founder of Chainlink, noted that fund tokenization represents a major trend in digital assets today, as shown by the growing participation of global asset management firms in this expanding market. Nazarov predicts that tokenization will eventually become standard practice in the asset management industry.
DTCC’s Smart NAV Pilot: A Prelude to the Future
This collaboration follows the Depository Trust and Clearing Corporation (DTCC) Smart NAV industry pilot in May, which utilized Chainlink’s Cross-Chain Interoperability Protocol (CCIP), the initiative aimed to integrate fund NAV data onto a blockchain. This proof of concept involved collaboration with Chainlink Labs, asset managers, fund administrators, and custodians. Ten major participants, including American Century Investments and JPMorgan, took part in the trial.
Clients were offered three methods to access NAV data: through an API, a single fund consumer smart contract, or a bulk consumer smart contract that updates price and rate data for multiple funds. This setup facilitated real-time data access and automation, leading to significant enhancements in data management and operational efficiency.
The DTCC highlighted potential applications for Smart NAV, such as disseminating key reference data, automating portfolio rebalancing workflows, and conducting further blockchain integration experiments. As tokenization projects expand, the demand for on-chain NAV data is expected to increase, promoting a more transparent and streamlined financial ecosystem.
Industry experts are closely monitoring these developments for their potential benefits and implications on institutional investment strategies.