Chainlink Founder: The industry has not yet experienced a major systemic risk, and the scale of RWA will surpass the total value of cryptocurrencies.

Chainlink Co-Founder Sergey Nazarov Publishes an In-Depth Article Highlighting Two Major Positive Signals in the Current Crypto Market Cycle—Significant Improvement in Industry Risk Management and the Accelerated, Price-Independent Growth of RWA Tokenization—and Boldly Predicts: The Total Value of On-Chain Real-World Assets (RWA) Will Ultimately Surpass Cryptocurrencies, Leading to a Fundamental Transformation of the Industry.

(Background Recap: SmartCon2024 — Chainlink Founder Sergey Nazarov’s Full Speech: Traditional Finance Efficiently Moving into Web3) (Additional Context: RWA Whitepaper: The First Wave of Tokenization Has Arrived)

Table of Contents

• The Current Cycle’s Test: Industry Resilience Significantly Improved
• RWA Growth Decoupled from Crypto Prices; On-Chain Perpetual Contracts Challenge Traditional Finance
• Three Major Trends Converge to Drive Industry Toward Mainstream Adoption
• Chainlink’s Three Pillars: Data, Connectivity, Orchestration
• Outlook: RWA Will Ultimately Surpass Cryptocurrencies

On February 10, Chainlink Co-Founder Sergey Nazarov published a lengthy article on X (formerly Twitter), providing an in-depth analysis of this crypto market cycle. He stated that market cycles are a normal part of the crypto industry, and what truly matters is the level of industry progress revealed in each cycle and which trends will define the next phase.

The Current Cycle’s Test: Industry Resilience Significantly Improved

Nazarov pointed out that this cycle reveals two key signals. First, there has been no large-scale risk management failure or systemic crisis. He recalled that in the previous cycle, the FTX collapse and liquidations of multiple lending platforms during sharp price declines occurred, but “fortunately, these situations did not happen this time, at least not on a systemic scale.”

He believes that if the crypto industry and its systems can successfully withstand significant retracements and liquidity tests, both retail and institutional capital will be more confident in allocating resources to this space.

The risk management this time is much better than last time.

RWA Growth Decoupled from Crypto Prices; On-Chain Perpetual Contracts Challenge Traditional Finance

The second key signal is that the migration of real-world assets (RWA) onto the blockchain continues to accelerate and is unaffected by Bitcoin or other crypto prices. Nazarov emphasized that this indicates on-chain RWAs are not tightly linked to crypto market prices but instead offer unique, independent value that can grow autonomously outside of market pricing.

He specifically mentioned that the on-chain perpetual contracts market is now competing with traditional financial markets in sectors like silver and other commodities. “Especially when trading in traditional markets with permits becomes more difficult or riskier, permissionless on-chain markets show clear advantages.” As more RWA data is brought on-chain to support various asset perpetual contracts, he expects this trend to only accelerate.

Three Major Trends Converge to Drive Industry Toward Mainstream Adoption

Nazarov further elaborated on three key trends he believes will reshape the industry in the next phase:

First, on-chain perpetual contracts and RWA tokenization possess enduring long-term value—including 24/7/365 markets, on-chain collateral management, and on-chain data—that is unaffected by other dynamic factors and is growing independently.

Second, institutional adoption will be driven by the fundamental and technological value provided by the crypto industry, accelerated by DeFi’s permissionless, around-the-clock markets.

Third, the infrastructure enabling RWA operations will face increasing demand—as more real-world assets are tokenized or brought on-chain via perpetual contracts, and as these RWAs become more complex in their on-chain operations, more systems and blockchains will need to interconnect.

The first two trends are unstoppable market forces, now accelerating regardless of crypto prices—this is the real insight I see from this cycle.

Chainlink’s Three Pillars: Data, Connectivity, Orchestration

Regarding Chainlink’s role in this industry transformation, Nazarov summarized its role into three pillars.

In Data, Chainlink is the leading on-chain data provider, with over 70% market share serving most data needs of the DeFi ecosystem. Whether it’s market data for perpetual contracts, proof of reserves for stablecoins, or net asset value (NAV) for tokenized funds, data is the foundation for most on-chain RWAs. He also mentioned collaborations with leading institutions like S&P and ICE, positioning Chainlink as a leader in the growing institutional RWA space.

In Connectivity, cross-chain interoperability and integration with existing backend systems are key to expanding liquidity. Chainlink has been chosen by top Web3 security teams as the official cross-chain bridge provider and is the only system successfully integrating traditional finance payments into multi-chain trading, unifying liquidity sources.

In Orchestration, Nazarov pointed out that Chainlink’s Runtime Environment (CRE) appears to be the only environment capable of coordinating multiple blockchains, off-chain systems, data sources, and even AI into a single application. Enterprises are already using and deeply integrating it with key systems. He also previewed upcoming privacy solutions, stating, “Practical privacy features as part of CRE orchestration are on the horizon—stay tuned.”

Outlook: RWA Will Ultimately Surpass Cryptocurrencies

Nazarov made a bold prediction: if these trends continue, the total on-chain value of RWAs will surpass that of cryptocurrencies. “The fundamental nature of our industry will undergo a profound transformation.” This shift will also feed back into the growth of crypto assets—more capital on-chain will create a positive cycle—but RWAs are the core driver pushing everything toward mainstream adoption.

I’ve never been more excited about the potential for our industry to become a better version of the global financial system.