Chainlink product updates for the fourth quarter of 2023

When looking back on 2023, it is clear that the progress made by the Chainlink ecosystem is remarkable.

We started the year with three priorities:

Launched CCIP (our cross-chain interoperability protocol), making cross-chain transactions and activities more secure.
Launching Data Streams, our low-latency data solution for on-chain derivatives markets, unlocking market potential by quickly providing data to dApps.
Expose Functions, giving developers the ability to explore any use case they can think of, enabling them to get data from any API or plug into their own Web2 infrastructure.

We were able to reach these three ambitious goals thanks to our incredible partners, active community, and hard-working team. The results of these efforts will culminate in October 2023 at the SmartCon conference in Barcelona. The momentum these launches are bringing to the Chainlink network is staggering.

2023 is the year when the Chainlink platform will be completed. Chainlink now offers all the key services developers need to create advanced and powerful dApps, and because it is a platform, using one of the services makes it easier to use the others. For example, if a developer already uses data feeds, then using CCIP is an obvious choice because it does not require them to make any additional trust assumptions.

Looking ahead to 2024, our goal is to accelerate our pace of development and continue to build on this progress to meet the needs of our users in these new markets.

We will prioritize CCIP to meet the needs brought about by the general trend of capital markets moving to on-chain operations and transitioning from proof-of-concept to production. This demand is driven by the tokenization of real-world assets (RWA) , which is expected to exponentially increase the value of the on-chain economy. Of course, we’re also working hard to enable every token, dApp, and external system to seamlessly and securely move messages and assets across chains .

While DeFi was the initial market fit based on blockchain applications, on-chain versions of traditional capital markets represent a new type of blockchain application that creates faster, more cost-effective, more transparent and more liquid Financial products and services are the centerpiece, covering multiple fields such as payment, clearing and settlement, loans and asset management. Chainlink is the core infrastructure that makes this new on-chain financial system a reality, specifically enabling programmable transfers by allowing real-world tokenized assets (also known as RWAS) to be settled on any public or private blockchain , enabling value and messages to be passed together and synchronizing traditional infrastructure on and off the chain.

Tokenized assets can not only bring trillions of dollars in asset value to the chain, but also represent common interests between traditional capital markets and DeFi. Chainlink plays a key role in providing the data and interoperability to move tokenized assets on any chain and keep information about the assets updated regardless of which blockchain they reside on.

Chainlink is a platform that enriches tokenized real-world assets (RWA) with real-time information (e.g., through proof of reserves, price feeds, and identity data), making them liquid through cross-chain interoperability (CCIP), And stay updated as RWA moves across chains to maintain high-quality records.

We will continue to work on the development of Data Streams to drive the next phase of DeFi growth, which requires developers to build faster and more secure applications while maintaining a trustworthy neutral infrastructure.

DeFi is refocusing on ensuring it becomes a viable financial ecosystem that can compete with traditional finance and support mainstream adoption. To achieve this, DeFi must maintain its unique value proposition of being highly secure and reliable while maintaining trustworthy neutrality across all of its infrastructure. That’s why Chainlink continues to build a decentralized, transparent, and conflict-of-interest-free service that enables developers to provide users with verifiable proof that the data, computation, and interoperability that key parts of their protocol rely on are secure and fair. of.

Finally, we continue to build the Chainlink platform for the next 1 million developers by investing in Functions and Automation, and continue to grow the Chainlink community to enable developers to build verifiable networks.

The intrinsic value of trust in cryptography is becoming increasingly apparent. The unique value proposition of blockchain and oracle technologies is that they allow users to verify how digital systems and applications work, allowing them to make more informed decisions about how to navigate their digital lives, whether that is verifying ownership and ownership of images and videos Authenticity, or checking the code of the algorithm and the methodology used to calculate social consensus. In a world driven by a lack of trust caused by broken promises, the proliferation of AI-generated content, and systemic financial collapse, building a verification layer for the internet is more important than ever for developers. User demand for a verifiable network will only grow, and Chainlink provides developers with the services they need to deliver accurate data, provably fair applications, and high-integrity marketplaces to their users.

The next product update will look at the progress of Chainlink services in the fourth quarter of 2023 and provide insights into future developments. We will also be hosting a Q&A session related to this product update on January 11th at 11am ET at @Chainlink X Spaces. Please use this form to submit a question. We'll be collecting questions until January 4 at 11 a.m. ET.

Please note that all future-oriented reviews are subject to change based on user feedback, changing consumer needs, strategic decisions, and a variety of other unforeseen challenges and opportunities. The purpose of this product update is to provide insight into past releases and current thinking based on ongoing research and development, but it is not a definitive product roadmap; it is an attempt at transparency and Strike a balance between staying agile.

Cross-Chain

CCIP

Product Description

Chainlink Cross-Chain Interoperability Protocol (CCIP) is the global standard for cross-chain communication. It establishes a universal connection between public and private blockchains, enabling arbitrary data, tokens, or messages with tokens to be sent between chains (i.e., programmable token transfers).

Current Focus

As financial institutions adopt various blockchain and distributed ledger technology (DLT) solutions, which are often closed campuses that do not communicate with each other, CCIP aims to create a seamless ecosystem across all on-chain interoperability and 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 enable financial institutions to create their own ecosystems for tokenized assets, while bringing these tokenized assets increasingly into the DeFi space.

Given the large number of bridging vulnerabilities historically, ensuring that 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 working to expand CCIP's support for more chains and asset types, as well as increase the number of developers who can use CCIP in DeFi and the traditional financial industry. To learn more about CCIP industry-standard security, check out Chainlink Labs Director of R&D Lorenz Breidenbach’s talk at SmartCon 2023 on CCIP’s defense-in-depth approach and risk management networks .

Recently deployed

Collaborating with Vodafone’s Digital Asset Broker (DAB) , Sumitomo Corporation and InnoWave to demonstrate a proof-of-concept aimed at solving long-standing challenges in the global $32 trillion trade ecosystem, specifically through CCIP Seamlessly exchange critical trade documents between blockchains.
Avara (Aave company) founder Stani Kulechov and VP of Engineering Emilio Frangella shared plans for Aave’s cross-chain stablecoin GHO at Devconnect Istanbul , which will be powered by CCIP.
LINK has been added as a bridgeable token between the Ethereum mainnet and Coinbase's second-layer network Base. This deployment enables users to pay for Chainlink services using LINK on Base.
Introducing additional projects to the CCIP mainnet to support their cross-chain use cases, including Beefy Finance , Klaster , NUON , DFX , etc.

next plan

Continue to iterate on the blockchain abstraction layer based on user feedback. The Blockchain Abstraction Layer is a feature of CCIP that allows legacy enterprise systems to send and receive messages to public and private blockchains when integrated with CCIP.
Continue to work with financial institutions to convert their proof-of-concepts (POCs) into production and pioneer new use cases that enable them to unlock additional value streams through blockchain and tokenized assets.
Expanding access to CCIP by transitioning to Mainnet General Availability (GA), allowing all developers to use tokens supported on CCIP for cross-chain messaging and transfers without permission, expected to be released early next year, subject to final testing smoothly.
Based on SCALE and market opportunities, expand CCIP support to more public and private blockchains, and explore new token handling mechanisms when transferring across chains. This includes adding CCIP support for capital markets-focused blockchains.
Adding more channels for LINK and other assets such as stablecoins, allowing them to be safely transferred across chains, with priority determined by user demand and where other Chainlink services have been deployed.
Research additional security checks for CCIP risk management network monitoring to further enhance the security of cross-chain transactions.

Data

Data Feeds

Product Description

Chainlink price feeds are push-based oracles that provide smart contracts with a reliable source of real information about external events, such as asset price changes or sports event results.

The current focus

, Chainlink price feed, continues to be the leading oracle solution in the DeFi market. To further expand the footprint of price feeds, we are now focused on improving their economic sustainability and efficiency while making them the standard for on-chain finance by partnering with asset issuers who require price feeds to increase the use of their tokenized assets. .

Recent deployment

Price feeds are natively integrated on multiple zkEVM blockchains: Linea , Scroll , zkSync and Polygon zkEVM .
Deployed an upgraded internal rules engine that significantly expanded real-time risk monitoring of potential deviations in price feeds, further improving their security.
Staking v0.2 was launched and the community pool was filled in less than seven hours after early access began. 40,875,000 staked LINK from community stakers are now helping to secure the ETH/USD price feed on the Ethereum mainnet.

next plan

Apply OCR3 - Chainlink's latest off-chain consensus protocol version - to the price feed to make it more scalable and gas efficient, and develop a user interface that supports batching of multiple requests into a single on-chain call. For a deeper dive, watch the video where Chainlink Labs researcher Chrysa Stathakopoulou discusses OCR3 in detail.
Expand the price feed to more chains, such as a 2-layer network based on zero-knowledge Rollup and a unique mainnet, and cover more real-world assets, with priority based on participation in the SCALE program and market demand.
Introducing multivariate data feeds that provide additional metadata beyond prices, such as market liquidity information.
Research and develop oracle solutions to improve support for long-tail assets primarily traded on DEXs.

Data Streams

Product Description

Chainlink Data Flow is a pull-based, low-latency oracle solution that provides high-frequency market data that can be retrieved and verified on-chain at any time.
Current focus

Chainlink dataflow has gained significant traction for latency-sensitive and high-throughput use cases and is currently in production in GMX V2 on the Arbitrum mainnet, with other top protocols committing to move to mainnet. The collective adoption of data streams by these protocols is expected to account for over 90% of high-throughput DeFi currently on Arbitrum.

Users choose Chainlink data streams not only for its high performance, but also for its trusted neutral execution infrastructure and conflict-of-interest-free data providers . This design protects users from malicious activities such as front-running and adverse selection, which are possible in more opaque and/or internal solutions. Learn more about the innovation behind data streaming by watching Clement Sutjiatma, Product Manager at Chainlink Labs, speak at SmartCon 2023.

Recent deployment

Further support for tokenized real world assets (RWA) is being launched with data streams for major FX such as USD, GBP, EUR and JPY, as well as precious metals such as gold and silver.

next plan

Completing the final stages of the upgrade makes it possible to introduce basic and advanced data architecture as well as on-chain billing for new users on the Arbitrum mainnet.
Continue to migrate early access users from testnet to mainnet, and then transition the data flow from mainnet early access to regular 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 on-chain perpetual futures protocols.
Expanded data flow support for more cryptoassets, FX, and commodities.

Proof of Reserve

Product Description

Chainlink Proof of Reserves (PoR) provides autonomous, reliable, and timely verification of cross-chain and off-chain reserves that support tokenized and wrapped assets.

Current Focus

Based on market demand and user feedback, we believe Chainlink Proof of Reserves will play a key role in the development of tokenized assets by providing detailed data on the exact composition of the collateral underlying real world assets (RWA). In particular, banks and monetary authorities can adopt Chainlink Proof of Reserves to access a flexible, scalable, and proven infrastructure for monitoring stablecoin risk. This is made possible by three unique components of Chainlink’s Proof of Reserves:

Secure data aggregation of off-chain reserve assets of stablecoin issuers for trusted reserve claims and valuations.
Blockchain-agnostic design for managing on-chain liability balances on public and private blockchains.
Synchronization of off-chain assets and on-chain liabilities for robust risk management and reporting.

To learn more, check out Chainlink Labs Solutions Architect Ryan Lovell’s recent blog post: How Chainlink Proof of Reserves Accelerates Stablecoin Adoption in Capital Markets . In addition to stablecoins, we are also working with a wide range of industry organizations to set standards for tokenized assets and working with asset issuers to support liquidity pledged tokens, tokenized treasury bonds, etc. to explore how Chainlink PoR can support them Tokenized RWA.

Recent deployment

Integrating Chainlink Proof of Reserves into the display of bC3M reserves – supporting 0-6 month EUR investment grade GOVIES – provides bC3m token holders with more transparency around reserves and continues integration with Backed products .
Partnering with Moore Johannesburg’s digital asset division , which will provide third-party claims for Chainlink Proof of Reserves, further opening up on-chain finance to global markets.
Establish strategic cooperation with Stablecoin Standard (the industry body for stablecoin issuers) to promote best practices for stablecoin issuers through the use of Chainlink services.

Next steps

are to continue working with asset issuers, custodians, and auditors to build proof-of-reserves products that help increase transparency into the valuation and important characteristics of the asset and collateral baskets behind tokenized RWA.

Compute

Automation

Product Description

Chainlink Automation is the industry standard for developers who require highly reliable, energy-efficient, decentralized and high-performance smart contract automation to build the next generation of dApps.

Current Focus

Chainlink Automation is becoming an increasingly important part of the Chainlink platform, used to connect and enhance other Chainlink services. Our focus now is to further improve Automation's modularity and open up advanced use cases, such as an enhanced cross-chain version of the LINK balance monitor and automated transaction settlement (by combining with data streams). Watch Chainlink Labs Product Manager De Clercq Wentzel’s speech at SmartCon 2023 to learn more about the improvements in Chainlink Automation v2.

Recent deployment

Launched StreamsLookup to enable developers to seamlessly and automatically access Chainlink data on-chain data.
Adopted by users like Thena and Sommelier , who use Automation's verifiable calculations to save their users up to 90% in gas costs.
A Dedicated Forwarder has been added , allowing users to completely lock their upkeep, ensuring that all transactions come from a specific address that only nodes on the network can interact with.
Integrate Chainlink Automation with the Arbitrum Sepolia testnet.

next plan

Continue to expand Chainlink Automation on the blockchain, with current focus on zk-rollups and participation in the SCALE program.
Study CCIP receipts, a method of listening for CCIP messages on the destination chain and then sending an acknowledgment of receipt of the message on the source chain.
Make log triggers universally available to all developers on all chains supported by Chainlink Automation.
Further expand the capabilities of the Chainlink platform by increasing the modularity of Chainlink Automation and its composability with other Chainlink services.

Functions

Product Description

Chainlink Functions is a Web3 serverless developer platform that enables developers to connect their smart contracts to any external data source and run custom calculations in minutes.

Current Focus

Chainlink is focused not only on becoming the industry standard for data, but also on any trust-minimized computation that cannot be performed on the blockchain. Functions are designed to enable any kind of custom connections between and within blockchain and Web2, as well as perform custom calculations that enhance those connections, such as by filtering data, creating application efficiencies, or simply opening up entirely new functionality. As Chainlink Labs product manager Bryan Jowers pointed out in his SmartCon 2023 speech , Chainlink Functions are the serverless moment of Web3.

Functions are not only crucial for smart contract development in Web3 fields such as DeFi, on-chain games, and decentralized insurance, but also provide financial institutions with a simple and safe way to bridge data to the chain and maintain the security of tokenized assets. latest status, as well as sending data to backend systems to keep them in sync with the on-chain network.

Recent deployment

Created external module support on testnet - this is one of the most requested and important features by developers as it allows developers to use libraries they are already familiar with and opens up new use cases for AI/ML, identity, advanced computing and more door.
Improved descriptive errors viewable on the front end, allowing developers to quickly identify and resolve issues with their functions, whether they are function (javascript errors) or callback errors, directly in the subscription UI. This greatly improves the developer experience and reduces manual troubleshooting.
Deployed Functions on Arbitrum Sepolia testnet

next plan

Expand the computing horizons of Functions by gradually providing users with more direct customization capabilities, adding more developer frameworks (such as Foundry), adding external libraries and quick start .
Further improve the user experience with billing enhancements and limit increases to allow for more compute time, more memory, and increased callback gas.
Continue to expand integrations on more blockchains, with the current focus on EVM-based second layer.

VRF

Product Description

Chainlink Verifiable Random Functions (VRF) are recognized as the industry standard source of fair and tamper-proof randomness.

Current Focus

As the most widely used source of verifiable randomness in the blockchain industry, VRF is focused not only on maintaining its position as the industry standard, but also on expanding its presence in Web2 and high-profile Web3 gaming projects based on specific application chains/Rollup integration in. Chainlink Labs Product Manager Todor Karaivanov explained VRF in more detail during his SmartCon 2023 presentation .

Recent deployment

VRF is integrated on the Arbitrum Sepolia testnet and is adopted by users such as Metaboards , insrt.finance and OKX .
next plan
Launch VRF v2.5 and deploy it on all chains that currently support v2, such as Ethereum, BNB Chain, Polygon, Avalanche and Arbitrum.

Expanding the Chainlink Platform

As we've seen with some of the SmartCon announcements, we're moving from a collection of products to an integrated platform that embodies the principles of composability, simplicity and unification.

Composability — Our goal is to enable users of the Chainlink platform to harmoniously combine Chainlink services, with one service triggering another to solve complex challenges and unlock advanced use cases. For example, we are able to empower users like GMX to provide high-frequency price data and trade execution to their users through the combination of Chainlink Automation and data streams, highlighting the power of composability, where Automation can quickly obtain price data from data streams.
Simplify — We aspire to make Web3 easier for everyone by making our products universally accessible through tools such as SDKs, APIs, and lots of interactive and educational content. The vision is that developers can write a simple high-level program to achieve what they want with a few clicks, and the Chainlink platform takes care of the backend complexity (e.g. orchestrating a DON with a few lines of code). A great example is the Functions playground, which to date has enabled over 4500 users to quickly test Chainlink Functions without leaving their browser. Many steps for the user, such as the wallet and IDE, are abstracted, creating a simple developer experience. Another example is the blockchain abstraction layer component of CCIP that we are developing with capital market participants.
Unification - The vision is for you to go to one place to find your code, billing, monitoring and management functions, etc. Our recently launched Developer Center provides a more unified platform experience, bringing together thousands of learning resources, demos, quickstarts, webinars, and tutorials into a single, searchable repository. But this is just the beginning, as we expand this unification to all aspects of our product ecosystem, from feature changelogs to consoles, unified billing mechanisms, and more.

We also continue to research and develop new products such as DECO and FSS to further expand the set of services available on the Chainlink platform. This also includes upgrades to the underlying infrastructure supporting the Chainlink platform, which can already be seen with 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 Chainlink’s need to scale while maintaining a good balance of security, scalability, and decentralized design .

Transforming Chainlink into a composable, easy-to-use, unified platform is not a sprint, but a computing journey that will take years to come. Our goal is that in the future, the boundaries between our products will disappear, paving the way for a seamlessly integrated platform that enables our users to achieve more than ever before.

Developer community

During the quarter, we saw significant progress in our developer community, with Akersh Srivastava joining Chainlink Labs a highlight. Akersh has extensive experience in new technologies, community building, and developer ecosystems from working at companies such as Meta, Amazon, and Essentur. His insights are already starting to influence the way we engage, empower, and empower our developer community.

An important achievement was the Constellation Hackathon , which attracted more than 17,000 developers. This event showcased the talent within our community and the capabilities of our platform for development at scale. In addition, the 60 global meetups we hosted in Q4 have built a connected, collaborative community. These meetups, along with our masterclasses on cross-chain staking and JavaScript for Web3, have significantly increased the skill level of our community. Of particular note is the masterclass with Cassidy Williams , which further underscores our commitment to empowering the developer community with the best resources.

The BUILD program has also expanded to include 16 new projects, including Arden, Game Verse and Postmint, further promoting a culture of creativity and technological advancement. The QuickStart landing page also attracted over 137,000 views, reflecting the active engagement of our community. Additionally, we have made Chainlink documentation available in five languages to enhance access to resources for our global community.

Going forward, our main goal is to expand our community. We plan to welcome developers from Web2 and guide them to discover the unique advantages of Chainlink services. Additionally, we're committed to providing a great onboarding experience and advanced tools. This approach is designed to ensure that these developers can successfully apply their existing skills to Chainlink services.

We also recognize that there is tremendous growth potential in Asia Pacific and Latin America. A key part of our strategy will include doubling down on our efforts in these regions, promoting local innovation and connecting a global network of developers who are passionate about Chainlink. We remain committed to empowering a thriving developer community while continuing to grow. The initiatives we launched this quarter lay the foundation for future expansion and innovation.

2023 has been an incredible year for the Chainlink platform, and we are so grateful for the amazing support from our partners and community. We believe that once any developer can integrate these technologies into their existing technology stack, mass adoption of blockchain technology will be inevitable, and we look forward to accelerating this trend in 2024.

If you would like to track our progress throughout 2023, please see the 2023 Q1 Update Blog , 2023 Q2 Update Blog , and 2023 Q3 Update Blog for more information. To learn more about Chainlink, visit chain.link , subscribe to the Chainlink newsletter , and follow Chainlink on Twitter , YouTube , and Reddit .