Kinexys by J.P. Morgan, Ondo Finance and Chainlink have successfully transferred real-world assets (RWA) across blockchains while simultaneously making payments.
In what’s known as a Delivery vs. Payment (DvP) transaction, Ondo sent Short-Term U.S. Treasuries from its OUSG fund to Kinexys via the Chainlink Runtime Environment (CRE) for an atomic, or simultaneous, transaction.
J.P. Morgan rebranded its Onyx private blockchain Kinexys by J.P. Morgan in November.
DvP transactions are a traditional finance (TradFi) method of payment, designed to ensure that payment is made either before or simultaneously with the delivery of an asset.
While DvP is intended to reduce settlement risk, in practice, “workflows are hindered by siloed infrastructure and manual processes,” Chainlink said in a blog post. This introduces delays, increases counterparty risk and causes settlement failures that are estimated to have cost market participants more than $914 billion over the past decade.
Blockchain technology offers an opportunity to streamline this process, allowing transactions to be settled atomically, according to Chainlink. The benefits include simultaneous cross-chain settlement, automated and verifiable workflows, near real-time finality, transparent audit trails and reduced intermediary costs.
The transaction between the Ondo testnet and Kinexys Digital Payments (KDP), a permissioned network of blockchain deposit accounts for payment settlement, occurred in the Chainlink Runtime Environment (CRE), an off-chain layer that orchestrates activity between public or private blockchains and existing TradFi systems. It was the first use of Kinexys on a public blockchain.
“CRE is highly configurable and can be used to settle different types of DvP transactions of varying complexity, including single-chain and multi-chain DvP transactions,” Chainlink said.
CRE executed the transaction by watching the OUSG Treasuries locked into a smart contract on Ondo Chain and then reaching an offchain consensus that they were, in fact, in escrow. It then told Kinexys, which authenticated the message and initiated payment. That satisfied the escrow requirements and released the OUSG.
