Chainlink Launches CustodySync for Institutional DeFi Lending
Written with artificial intelligence.
Chainlink has introduced CustodySync, enabling qualified custodial institutions to allow their clients to participate in DeFi lending while retaining asset custody. Anchorage Digital is the first official partner for this initiative.
Overview of CustodySync
On October 27, Chainlink announced the launch of CustodySync, a new solution designed for qualified custodial institutions. This initiative allows institutional clients to engage in decentralized finance (DeFi) lending without relinquishing control over their assets.
Mechanism of CustodySync
The CustodySync solution utilizes Chainlink's Proof of Reserve to publish custodial balances on-chain. It issues tokenized certificates that represent the custodial assets as collateral in the lending market, with transfer restrictions in place. Furthermore, the custodians and lending protocols will compute the Loan-to-Value (LTV) based on the same price data from Chainlink Data Feeds and Data Streams. In case of liquidation, the sale of specified collateral will be executed by designated agents.
Market Context
According to Chainlink, the current market for digital asset custody is approximately $700 billion, while the DeFi lending market boasts over $80 billion in deposits and more than $30 billion in active loans. This initiative aims to bridge traditional finance with the growing DeFi landscape, potentially attracting more institutional participation.