Chainlink is looking into rolling out encryption services that will pass through the native CCIP chain for its institutional users. The Oracle chain is mulling over plans to integrate private and public chains while creating its own encryption and decryption package.
Chainlink will provide the clients the opportunity to use its native CCIP chain while enabling confidentiality. The platform has taken the time to test its services with institutions and service providers like Franklin Templeton and UBS.
Auditors can view transaction details
Australia and New Zealand Banking Group (ANZ) will be the first financial bodies to test the technology. The testing will require the application of the technology to real-world asset tokenization. The banking group will get a green light from the Monetary Authority of Singapore (MAS). Similarly, the platform has noted that more institutions will be added to the testing upon their request.
The new Blockchain Privacy Manager will leverage the encryption-decryption channel to enable transactions that are ordinarily hidden from CCIP users. Aside from using it for cross-chain activities, private institutional chains will use the technology for data transfer and record-keeping. The keys to end-to-end encryption will be kept by Chainlink users.
The confidential transactions will provide anonymity, hiding details like the token amount, the sender, the receiver, and other details according to instructions. To comply with encryption rules, Chainlink users will be allowed to share their keys with auditors, financial bodies, and counterparties.
In general, blockchains that provide confidentiality are no longer in demand as regulators are now asking for these details. However, Chainlink will work with approved entities with other reporting tools to ensure that they are compliant with regulations.
Although the transactions are open and can be viewed by any third party, sensitive information will always be hidden. Some hidden data may be used to generate RWA with real reserves that will be off-chain.
One of the main challenges of on-chain space is its reluctance towards cross-chain transfers. Most chains try to protect their liquidity by not opening new channels to other chains. In the case of a private chain, interoperability will be one of its major strengths.
Chainlink is exploring the use of ZK-proofs
Chainlink has yet to earmark CCIP as an L2 chain and has also refused to ride the ZK-proof momentum. However, the platform is looking at zero-knowledge proofs via financial entities. This way, they can post secure transactions without sharing them with third parties.
Chainlink has said the technology will not be released to the public but will instead start with a Sandbox format. The data that will be secured include personal details, registrations, and credit scores. The institutions will secure the details under ZK-proofs before sending it to a verified node. After this, the banks can interact with other platforms without the need to reveal these data every time.
The technology will enable users to verify their account balance and they can also use it for verification purposes. Once they have provided the data, they do not need to provide them again as it will be off-chain entirely.
One of Chainlink’s goals is to enable financial institutions to integrate themselves into a public blockchain. Presently, these entities need to use public chains, opening them up to the risks and limitations of using them. Chainlink will create smart contracts that can help them encrypt their information.
The platform has also encouraged the creation of chains as it presses on in its quest to build a bigger network for trustless verifiable transactions among companies. Chainlink also finalized a successful LLM testing. With this, it will be able to offer a single format of information that can be verified on the chain.
Native token Link reacted to the news trading at $12.19 after months of trading in a close cycle and awaiting a breakout. LINK has been used for utility, providing rewards for stakers. It has also been fully diluted, with its supply capped at one billion.