Speaker 1: Hey, folks, we are the Injective Policy Summit powered by
Speaker 1: the Blockchain Association. And joining me is Charlie Durkin, who
Speaker 1: is the principal solutions lead at chain Link. Charlie, great
Speaker 1: to have.
Speaker 2: You, Yeah, thanks for having me. Happy to be.
Speaker 1: Here, Yeah, Charlie, lots to talk about. There's lots happening
Speaker 1: in the chain Link ecosystem. Oh love to start with
Speaker 1: your background. Tell us about your time in tradfy and
Speaker 1: how do you.
Speaker 2: Make a way to crypto Yeah, absolutely so. Prior to
Speaker 2: joining Chainlink about a year ago, I spent a decaded
Speaker 2: city group. I started my career in investment banking and
Speaker 2: deck capital markets, so had a front row seat to
Speaker 2: how issuers think about raising capital, specifically with investment grade bonds,
Speaker 2: and also with that front row seat came a look
Speaker 2: into the underlying machinery and how antiquated, I guess, for
Speaker 2: lack of a better word, it can be. So moved
Speaker 2: over after five years into the product management team on
Speaker 2: capital markets, so transitioned from leveraging the plumbing to actually
Speaker 2: building it and gave me great insight into how large
Speaker 2: financial institutions think about building and adopting new technology. But
Speaker 2: also why a rip and replace concept wouldn't work. And
Speaker 2: so a year ago moved over to chain Link as
Speaker 2: a principal solutions lead and it's really the synthesis of
Speaker 2: those past two chapters. I sit in front of banks,
Speaker 2: asset managers, market infrastructure providers, helped them adopt blockchain solutions
Speaker 2: that are reliable, scalable and secure.
Speaker 1: And you know, with that backdrop, what made you think
Speaker 1: of crypto and it maybe seeing the transition to blockchain
Speaker 1: technology and rails.
Speaker 2: So I was first introduced back in twenty seventeen when
Speaker 2: a client of mine announced a blockchain deal and it
Speaker 2: was eye opening of what is this? And you know
Speaker 2: what is a blockchain bond? Very early days, right, it
Speaker 2: was a poc. As we know, the industry has been
Speaker 2: working through a lot over the last couple of years
Speaker 2: to prove that the rails work. But introduce me to
Speaker 2: digital assets, the team at City that's working on building
Speaker 2: this infrastructure and really open my eyes to the efficiencies
Speaker 2: that can be gained by leveraging this technology from anything
Speaker 2: from payments to securities issuance in a robust, scalable manner.
Speaker 1: And we're seeing a lot of institutions that are moving
Speaker 1: towards tokenization. Many of them are leveraging chain links technology.
Speaker 1: Are they all in they realize that we need to
Speaker 1: have a digital asset strategy and are now building.
Speaker 2: I would say yes, we are past the point of
Speaker 2: is this a viable economic use case. Everyone is on
Speaker 2: board that instantaneous settlement in twenty four to seven markets
Speaker 2: makes sense, and so now it's a question of how
Speaker 2: do we do that? And the missing piece that is
Speaker 2: powering tokenization now moving from pilot to production is really orchestration.
Speaker 2: You blockchains are great at a lot of things, but
Speaker 2: not great at communicating with systems outside of that blockchain,
Speaker 2: and so the missing piece has been orchestrating existing systems
Speaker 2: communicating with with blockchains. Tokenization isn't just a It doesn't
Speaker 2: exist just solely on a blockchain. It needs to communicate
Speaker 2: with data, compliance rules, workflows that all live in legacy systems.
Speaker 2: And so leveraging a lot of the chain link infrastructure
Speaker 2: with chain link run time environment, we're seeing institutions move
Speaker 2: from pilot to production.
Speaker 1: Now. Yeah, it's fascinating because I see chaining popping up everywhere,
Speaker 1: even with native crypto firms, not just Tradify and other
Speaker 1: blockchains leveraging chain links technology, which in one way they're competitors,
Speaker 1: but chain links technology is so great that it's being
Speaker 1: adopted by its competitors in a way.
Speaker 2: Yeah, absolutely, it's so if I can talk about some
Speaker 2: of the things going on a chain link right in general,
Speaker 2: we're seeing recent announcements the DTCC with their collateral app
Speaker 2: Chain is leveraging chain link orchestration and data standards to
Speaker 2: power twenty four to seven collateral mobility with near real
Speaker 2: term pricing, leveraging chain link technology. And again this is
Speaker 2: as of yesterday, no longer pilot, this is production. We
Speaker 2: saw JP Morgan in production leverage token I shares to
Speaker 2: post as collateral with the CME. From a payments perspective,
Speaker 2: we're working on Project Panagaea, which is fifty plus banks
Speaker 2: working to take FX settlement from T plus two to
Speaker 2: T plus zero. And then to your point, Robin Hood's
Speaker 2: chain is leveraging chain link oracles and CCIP. So I
Speaker 2: think the through line is whether you are a market
Speaker 2: infrastructure provider, a bank, or a leading fintech or Web
Speaker 2: three native, you are looking to chain link for the
Speaker 2: security and reliability that come with our standards.
Speaker 1: Absolutely, and that's an incredible adoption. Robinhood DTCC do stuff,
Speaker 1: and there's also CCIP. I'm seeing a lot around that
Speaker 1: chain links g CCIP with Swift and other banks and
Speaker 1: things like that.
Speaker 2: Yeah, certainly so CCIP. When we think about the evolution
Speaker 2: of the market from a Web three perspective, chain link
Speaker 2: obviously's bread and butter is data oracles. So we help
Speaker 2: power DeFi summer that connected data securely and reliably into blockchain.
Speaker 2: The next piece of that was connecting these disparate systems,
Speaker 2: and so CCIP is that standard that everyone is trusting
Speaker 2: to do that again securely, reliably and scalably across the
Speaker 2: entire industry. And so it allows you to maintain neutrality
Speaker 2: and not have to lock into a specific chain, which
Speaker 2: is chain links motto here right, is to maintain neutrality
Speaker 2: and you don't have to get locked into any one
Speaker 2: standard and you can pick and choose.
Speaker 1: That's really great. Are you guys building any technology around
Speaker 1: AI agents, existing services and solutions, the ability for AI
Speaker 1: agents to use those things.
Speaker 2: Yeah, So chain link has been actually at the forefront
Speaker 2: of this convergence of AI and blockchain for a little while.
Speaker 2: I'll take a step back and mention that with AI
Speaker 2: coming into blockchain, the largest friction point or I don't
Speaker 2: want to say issue, but what people are struggling with
Speaker 2: is there's no undo button on blockchains. So if you
Speaker 2: have an agent that goes and you know, is allowed
Speaker 2: to send real world values to some other wilet address
Speaker 2: and make a mistake, you're not getting that back. And
Speaker 2: so how do you do this in a framework that
Speaker 2: maintains guardrails and is leveraging secure data And so that's
Speaker 2: where chain link sits. It provides the data you can trust.
Speaker 2: Our compliance solutions allow you to establish frameworks and ensure
Speaker 2: that agents don't act outside of the bounds of those
Speaker 2: those frameworks, and then everything is verifiable and you have
Speaker 2: a record on chain We have experience with this. We
Speaker 2: did Project Calm, which was our corporate actions use case
Speaker 2: with Swift and Euroclear, where you take one of the
Speaker 2: messiest parts of traditional finance. So a corporate action could be,
Speaker 2: you know, dividend payment. These things come out in a
Speaker 2: press release that's just a PDF, and the entire market
Speaker 2: has to figure out what that means for who owns
Speaker 2: these assets. And so what this project was was we
Speaker 2: took the raw PDF and leveraging the chain link decentralized
Speaker 2: oracle network, ran it through three different lms, they reached
Speaker 2: consensus on it, and then put that into a standard
Speaker 2: on chain that anybody could then use for an on
Speaker 2: chain action item. So we've been across this now for
Speaker 2: a little while, and it's really exciting to see the
Speaker 2: market progressing towards AI and blockchain adoption.
Speaker 1: Yeah, it's so funny. These two technologies are running in parallel.
Speaker 1: AI blockchain look and robotics as well. It's a brave
Speaker 1: new world and we have the technology like chain link
Speaker 1: in the blockchain reels to help manage and control if
Speaker 1: you want to say that it's fascinating.
Speaker 2: Yeah. Absolutely.
Speaker 1: Now let's talk a bit about what institutions are looking
Speaker 1: to do. We touch a bit on tokenization. Is that
Speaker 1: their number one priority right now is also stable coins
Speaker 1: are already looking to do other things like DeFi as well.
Speaker 2: Yeah, there's two threads. I would say, there's tokenization of
Speaker 2: real world assets and then there's figuring out the payment infrastructure.
Speaker 2: And so we hear a lot of stable coins tokenized
Speaker 2: deposits and which one is going to win. I'm of
Speaker 2: the camp that I don't think there will be a winner.
Speaker 2: What will need to happen for the end user is
Speaker 2: that it's all abstracted away in the back end, because
Speaker 2: someone shouldn't have to choose to use a stable coin
Speaker 2: or tokenized deposit. They just want to tap their phone
Speaker 2: and pay and have it right right, and at the
Speaker 2: end of the day, a dollar needs to be a dollar,
Speaker 2: so you need to maintain the singleness of money, and
Speaker 2: all of this everyone agrees with. It's just working on
Speaker 2: the incredibly complex legacy infrastructure that powers existing payment rails,
Speaker 2: and so a lot of my conversations with banks and
Speaker 2: asset managers these days is figuring out how to leverage
Speaker 2: both tokenized deposits and stable coins, two different issuers products
Speaker 2: that have different risk profiles and requirements under regulation. But
Speaker 2: how do you make this work for whether I'm a
Speaker 2: retail user or a corporate treasurer that I just am
Speaker 2: able to send this twenty four to seven three sixty
Speaker 2: five and have it instantaneously settle and I don't need
Speaker 2: to worry about whether this is a coin or deposit.
Speaker 2: And so all that being said is in order for
Speaker 2: tokenization to really take off, you need the liquidity on
Speaker 2: chain to power that and so it's it's not quite
Speaker 2: as sexy as some of the other headlines right that
Speaker 2: you'll see, you know, vaults, perps, prediction markets, all great products, right,
Speaker 2: but in the background, everyone is hyper focused on how
Speaker 2: do we figure out payments natively settling on chain.
Speaker 1: That absolutely makes sense because whether it's retail or corporate,
Speaker 1: you need to figure out how we can move the
Speaker 1: value efficiently, seamlessly and less friction. So to tokenize deposits,
Speaker 1: to your point, like, I don't see it that competed
Speaker 1: with stable coins because it's more on the corporate side
Speaker 1: or wholesale side.
Speaker 2: Yeah, absolutely, and it is. It gets even more complex
Speaker 2: because when a stable coin is sent, you just have
Speaker 2: the underlying asset, but when tokenized deposits are sent from
Speaker 2: bank A to bank B, that's a balance sheet liability
Speaker 2: that needs to be transferred over. And how do you
Speaker 2: connect into the RTGs systems that power those rails. How
Speaker 2: do you ensure that this is again just a seamless,
Speaker 2: instantaneous transfer when there's underlying fiat that doesn't necessarily move
Speaker 2: at that same speed, whereas counterparty risk happen. All of
Speaker 2: this though, with these banks that we're having conversations with
Speaker 2: This is where the chain liingk frontime environment is able
Speaker 2: to allow them to have a single integration point into
Speaker 2: their legacy systems and then power an on chain action
Speaker 2: with compliance embedded.
Speaker 1: Now, chain Link has a lot of solutions and services,
Speaker 1: and I'm curious what else are you guys working on
Speaker 1: that you can share that might be on your road map.
Speaker 2: So that I can share, I'll say that we're enhancing
Speaker 2: and continuing to build out the robustness of both the
Speaker 2: orchestration technology CRE as well as our compliance solutions ACE.
Speaker 2: And this is another critical piece because when you think
Speaker 2: about on chain finance, you need to ensure that obviously
Speaker 2: it was born in a permissionless environment, but if I'm
Speaker 2: a bank and I have a tokenized deposit, I need
Speaker 2: to make sure that doesn't end up in an o
Speaker 2: FAC sanctioned wilet address. And so what our compliance solution
Speaker 2: allows you to do is maintain policies off chain so
Speaker 2: you can update them as needed based off of regulatory
Speaker 2: updates without needing to redeploy a contract. And I like
Speaker 2: to say that it doesn't it doesn't allow for compliance
Speaker 2: to be possible. It makes non compliance impossible on chain
Speaker 2: because you now have a smart contract executing code that
Speaker 2: says absolutely this while it cannot own this asset.
Speaker 1: Right. That's really great because in order to have the
Speaker 1: adoption from these large institutions at a full scale, you
Speaker 1: need the compliance. You got to be in line with
Speaker 1: the regulations and much more.
Speaker 2: Yeah, and it's it's fun having these conversations too, especially
Speaker 2: with you know, work with front office, work with technology teams,
Speaker 2: but chainlink also talks a lot to internal risk and
Speaker 2: compliance teams. And there's been plenty of negative headlines over
Speaker 2: different cycles within the web three and so there can
Speaker 2: still be a negative perception of what it means to
Speaker 2: be using blockchain. But it's exciting having these conversations because
Speaker 2: it we're able to show actually, what you're doing is
Speaker 2: reducing risk your code of filed this and ensuring that
Speaker 2: a mistake can't happen because you have smart contracts executing
Speaker 2: this instead of manual workflows as it does today.
Speaker 1: And I'm assuming with the programmability, regardless of if you're
Speaker 1: in the US, the EU, or the UK, it can
Speaker 1: automatically comply to the respective regulations of the region or jurisdiction.
Speaker 2: Yeah, that's absolutely right. You're doing my job for me. Actually,
Speaker 2: this compliance follows the asset around to whatever jurisdiction and
Speaker 2: can adopt that compliance regulatory requirement as needed.
Speaker 1: And over time, I think I read an article just
Speaker 1: the other day to the US and the UK, or
Speaker 1: was it the EU they're working on finalizing some rules
Speaker 1: about tokenized assets, so aligning over time. As they these
Speaker 1: governments all align, it will be much easier to do
Speaker 1: that programmability right.
Speaker 2: It certainly will, And I know there's a lot of
Speaker 2: talk around regulation right whether laws will pass here in
Speaker 2: the US that will provide further clarity U pun intended
Speaker 2: very much needed and will allow for far more robust adoption.
Speaker 2: But I will say from my seat, it's not the
Speaker 2: lack of it right now isn't preventing any of these
Speaker 2: institutions from doing the legwork right. These financial firms think
Speaker 2: about a tech roadmap in the span of years, right,
Speaker 2: and so we're all fully aware that we'll have the
Speaker 2: regulatory clarity eventually, but there's a lot of work to
Speaker 2: do to get the internal infrastructure compatible and linked up
Speaker 2: to the blockchain ecosystem. And so you know, when October
Speaker 2: happened last year, I think that one of the most
Speaker 2: surprising things about my job is that my conversations didn't
Speaker 2: change at all. It's like markets go up, markets go down.
Speaker 2: This is a infrastructure for efficiency and speed play, and
Speaker 2: we're going to continue marching on.
Speaker 1: So, Charlie, it's twenty thirty six. All the institutions right
Speaker 1: now are all setting up the blockchain reils. Are we
Speaker 1: seeing one market with assets on chain, movement of money
Speaker 1: behind the scenes, with stable coins and tokenized deposits, and
Speaker 1: it's all one market?
Speaker 2: I think so. And I think that when I say
Speaker 2: one market, I want to say that for the end user,
Speaker 2: if I want to buy an asset or make a payment,
Speaker 2: that very well could be multiple chains, different standards across
Speaker 2: each chain. But the connectivity that chain Link is working
Speaker 2: on with partners to make this one ecosystem will make
Speaker 2: that feel like one market, and everything will just be
Speaker 2: seamless and abstracted away from the end user, and all
Speaker 2: that complexity will be erased, at least for the eyes
Speaker 2: of whoever is purchasing the asset.
Speaker 1: It's so fascinat because it's going to be a multichain world,
Speaker 1: and chain Link is like the conductor and the symphony
Speaker 1: is all these different blockchains of playing different instruments, right.
Speaker 2: Yeah, that is a that's a great analogy. I like
Speaker 2: that you can have it.
Speaker 1: No, yeah, Charlie, great stuff. I'm looking forward to the
Speaker 1: future updates 'I Ron Schanlink and love to have you
Speaker 1: back on. But thank you so much for taking the
Speaker 1: time to do this.
Speaker 2: Yeah, absolutely, thank you for having me. This was fantastic.
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