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CCIP: Cross-Chain Interoperability Protocol (CCIP)
Chainlink’s new Cross-Chain Interoperability Protocol (CCIP) features a cross-chain message relaying service and a cross-chain token bridge. Other forms of off-chain computation are also in development, such as FSS, DECO, and Town Crier. The advancements of CCIP can create a sort of cross-chain hybrid smart contract that can allow blockchains to communicate with each other.
The token bridge that's part of the CCIP uses hundreds of independent Chainlink nodes to sign and validate cross-chain token transactions, which reduces a single point of failure and enables cross-chain asset transfer. CCIP creates a universal ‘plug and play’ standard for developers working on smart contracts and allows developers to select the best code for the task at hand. Developers using CCIP can take advantage of Ethereum’s security and another chain’s speed and scalability all in one smart contract.
How CCIP’s cross-chain message relaying service works as follows: A smart contract from a source chain can invoke Chainlink’s Messaging Router to leverage the Chainlink DON to securely send messages to the destination chain. After which, another Messaging Router will validate it and send it to the destination smart contract. The use cases this feature enables include cross-chain yield harvesting, cross-chain collateralized loans, low-cost transaction computation, and new categories of DeFi applications over time. The CCIP token bridge is powered by Chainlink’s OCR 2.0, which involves Chainlink’s nodes cryptographically signing and validating all cross-chain token transactions. The token bridge supports minting and burning and locking and unlocking of ERC-20 tokens and is secured with Chainlink’s anti-fraud network. The bridge offers developers a universal interface that can transfer tokens to any Chainlink-integrated blockchain across both EVM and non-EVM chains. This eliminates the need for developers to build separate bridges with complex security vulnerabilities.
The network currently supports Ethereum, Bitcoin, Binance, and Hyperledger with over 200 integrations in the pipeline including 50+ additional blockchains. Some other blockchain projects intending to use Chainlink include Celer, Polkadot, Synthetix, Olympus Labs, Wanchain, Kaleido (ConsenSys), and ZeppelinOS. Chainlink is also crucial to DeFi projects like Kyber Network, AVA, Graph Protocol, Synthetix, and bZx as they rely on Chainlink’s oracles for ETH price feeds.
Partnerships have been a tremendous catalyst for LINK in the past, most notably Google, Intel, and Oracle. Chainlink’s real use case is demonstrated by its long list of partners, as well as SWIFT and Google from the traditional business world. Parent company Smart Contract Limited partnered with SWIFT after completing a proof of concept trial in June 2017. Chainlink’s price feeds are secured by nodes operated by enterprise partners such as Deutsche Telekom’s T-systems, data providers, and professional DevOps firms.
SWIFT's use of Chainlink's Cross-Chain Interoperability Protocol (CCIP) in a proof-of-concept was disclosed in Q4 2022. The plan is to enable SWIFT messages to direct on-chain token transfers across the thousands of financial institutions on the SWIFT network. In addition, Two Sigma Securities, one of the major market makers on traditional financial markets, has joined Chainlink as a data supplier to increase the use cases for on-chain smart contract applications.
