DTCC: “Smart NAV” DLT pilot with 10 banks and Chainlink can boost mutual fund tokenization

DTCC announced the results of a new pilot, Smart NAV, which used DTCC’s digital asset capabilities along with Chainlink, a technology platform for cross-chain interoperability and blockchain abstraction.

In recognition of increased industry attention on mutual fund tokenization, DTCC identified an opportunity for on-chain price and rate data that can serve as a key enabler for new initiatives. Taking a “chain-agnostic” would be key to enabling other use cases to build atop Smart NAV’s foundations for the ability to disseminate the NAV data across virtually any blockchain.

The Smart NAV pilot was designed to explore an extension of a DTCC service, Mutual Fund Profile Service I (MFPS I), the industry standard for transmitting “‘Price and Rate” data (referred to as NAV data). DTCC, along with 10 of the world’s largest financing institutions — including BNY Mellon, Franklin Templeton and J.P. Morgan, State Street — and Chainlink, worked together to evaluate the feasibility and industry value of delivering a DLT-based price and rate dissemination solution that can enable new benefits and support experimentation in the asset management space.

Source: DTCC

The pilot found that by delivering structured data on-chain and creating standard roles and processes, foundational data could be embedded into a multitude of on-chain use cases, such as tokenized funds and “bulk consumer” smart contracts, which are contracts that hold data for multiple funds. This capability can support future industry exploration and can power numerous downstream use cases as well, such as brokerage portfolio applications. Additional benefits include real-time, more automated data dissemination and built-in access to historical data.

Path forward

In its simplest form, Smart NAV centers around providing the capability to make trusted, verifiable data available on (virtually any) blockchain network(s) to support the use of that data in business workflows. DTCC served as the provider, or sourcer, of that data, as well as the governor of the on-chain solution that stores that data, while Chainlink’s cross-chain interoperability protocol (CCIP) served as the interoperability layer. The core capability explored is applicable across endless use cases that could ultimately power more streamlined and efficient operational processes.

Based on these findings, DTCC sees an opportunity to potentially expand the scope of the pilot to explore how the technical capability leveraged in the pilot could power a broader range of use cases beyond the dissemination of price and rate data and across a greater number of blockchains.

Read the full report

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