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Chainlink CCIP: Cross Chain Interoperability Protocol


In this article, we will explore Chainlink CCIP and why we consider that this protocol will be fundamental for the blockchain ecosystem. Cross-Chain Interoperability Protocol (CCIP) provides a universal open standard for developers to build secure services and applications that can send messages, transfer tokens, as well as initiate actions across multiple blockchains.

Understanding the Cross Chain problem

Recently, we saw several vulnerabilities and exploits over different token bridges, with billions in losses. A blockchain bridge is a tool that lets you port assets from one blockchain to another, solving one of the main pain points within blockchains – a lack of interoperability. The problem is that, commonly, we try to move assets from L1 blockchains that don’t have a common protocol to communicate with each other.

We can understand this problem like that of two people who do not share the same language. To establish communication, these people will need a translator, a third party. The translator can lie, and you will not realize as you do not know the other language. The translator in this case is a single point of failure and can mislead all the communication.

Something pretty similar to this occurs in the blockchain bridges. There is no common communication protocol between L1 blockchains. There is no way to transfer value without an off-chain mechanism, out of the network consensus.

Chainlink CCIP

Chainlink and Cross-Chain Interoperability Protocol (CCIP)

Chainlink is a decentralized blockchain oracle network. Its purpose is to facilitate the transfer of tamper-proof data from off-chain sources to on-chain smart contracts. It can be used to verify whether the parameters of a smart contract are met in a manner independent from any of the contract’s stakeholders by connecting the contract directly to real-world data, events, payments, and other inputs.

Chainlink CCIP

Coming back to the human translator example, you can imagine the Chainlink consensus mechanism as a simultaneous request to several translators. You can discover if someone is not translating correctly by checking the difference between the translations. The correct translation will emerge as the most frequent answer. The good translators will be rewarded for doing the work correctly, and the bad ones are penalized.

This capacity to facilitate trustless off-chain processes is the one that allows the creation of cross-chain interoperability mechanisms. The network consensus mechanism can be used to act as a mediator between the two or more blockchains that want to establish a communication, in a similar way to our translator example.

Chainlink CCIP

In this way, Chainlink ensures a decentralized way of communication between different chains. This will allow the development of cross-chain smart contracts that can have different parts in different blockchains, establishing communication through CCIP.

Some use cases

CCIP for Bridges

Transfer assets from Blockchain A to Blockchain B implies an off-chain activity. At some point, we need to leave one blockchain and move to the other, moving out of the network’s consensus. This situation creates a single point of failure over the bridge process. To bypass this, we need to use a decentralized mechanism for the bridge too. Chainlink with CCIP is a possible solution, as a universal interface and provides a decentralized network.

On one side, this eliminates the need for developers to build separate bridges for inter-connectivity between individual chains. On the other side, Chainlink nodes can cryptographically sign and validate all cross-chain token transactions, mitigating any single point of failure.

Cross-chain smart contracts

Cross-chain smart contracts are decentralized applications that are composed of multiple different smart contracts deployed across multiple different blockchain networks which interoperate to create a single unified application. This new design paradigm is a key step in the evolution of the multi-chain ecosystem and has the potential to create entirely new categories of smart contract use cases that leverage the unique benefits of different blockchains, sidechains, and layer-2 networks.