Chronicle tapped as oracle provider for winners of the $1 billion SparkDAO Tokenization Grand Prix

Chronicle has been tapped as the backing oracle provider for all the winners of SparkDAO's $1 billion Tokenization Grand Prix, according to an announcement on Friday. This includes funds backed by leading asset managers, including BlackRock and Janus Henderson.

Last month, Sky announced that the winning funds include BlackRock and Securitize’s BUIDL fund, which will receive a $500 million allocation, Superstate’s tokenized U.S. Treasury fund USTB and Centrifuge’s short-duration U.S. Treasury fund JTRSY, which has brought on Janus Henderson as a sub-advisor.

These funds will be tokenized to the Sky Ecosystem (formerly MakerDAO) via the Spark Liquidity Layer in a bid to expand its exposure to more resilient "real-world assets."

"The Grand Prix, from a holistic perspective, is really DeFi evolving into a hybrid model where we're taking the best of traditional finance and decentralized finance and merging them," Chronicle founder Niklas Kunkel told The Block. "But logistically, from an operational perspective, that's easier said than done."

Chronicle, the first live oracle project in crypto that recently raised a $12 million seed round after over seven years in operation, takes a unique approach to bringing off-chain data onchain. In short, it’s one of the only oracles that provides "custodian level privileged access," allowing it to give greater insight into the actual reserves being held for tokenized funds.

The team has had to write custom plugins for each of the Grand Prix winners, which all use bespoke custodial solutions, Kunkel said, noting that he thinks there will be "standardization" over time. "When you're integrating with these traditional financial systems, it sometimes feels like you're going from a computer to back to the post office," he said.

"Without Chronicle, Sky wouldn't have the confidence to commit billions in credit to off-chain opportunities that the protocol really has no innate visibility over, right? Chronicle fills that gap and allows the protocol to have eyes like in the off-chain domain, so it can appropriately manage its credit risk," Kunkel said.

To some extent, Chronicle is the obvious choice to manage the Grand Prix winning funds. The startup was spun out from what was then called MakerDAO, and has existing working relationships with Centrafuge and SuperState. It also works with RWA projects M^0 and Midas.

The Spark DAO Tokenization Grand Prix, launched by Spark DAO earlier this year, was a competitive initiative designed to accelerate the adoption of tokenized real-world assets for the Spark Liquidity Layer.

At an event in March, Janus Henderson Investors' Head of Exchange Traded Products Nick Cherney said the firm is taking a cautious approach to tokenization. "We’re looking to add products where we see tangible benefits for users that want products onchain. We’re not taking traditional funds and tokenizing to see what happens," he said. 

Asked about what innovations are likely coming for tokenized funds, Kunkel noted that the next obvious jump beyond U.S. Treasurys is to other sovereign or municipal bonds and corporate bonds.

"I do believe that there are more interesting novel products that can be created, but what's going to actually scale is primarily going to be the fixed income side in the short term," he said.