Chainlink has introduced CustodySync, a system that lets institutions borrow from DeFi lending markets while their assets stay with a qualified custodian. Anchorage Digital Bank is the launch partner and keeps control of margin and liquidation.
Chainlink introduced CustodySync on Oct. 26, naming Anchorage Digital Bank as launch partner. The system targets institutions that want to borrow from DeFi lending markets against assets that remain in qualified custody.
The announcement does not identify participating borrowers, live lending protocols or supported chains, and it cautions that not all features may be available at Anchorage.
A receipt token stands in for custodied collateral
The change is how collateral reaches a lending market: a restricted receipt token represents the assets onchain, while the underlying holdings stay with the custodian. Chainlink says this addresses institutions whose custody arrangements and risk policies prevent them from transferring collateral directly into DeFi protocols.
Under the design, the custodian's collateral management system remains the source of truth for balances. Chainlink Proof of Reserve publishes those balances onchain, and a transfer-restricted receipt token is posted to the lending market.
Shared price data targets valuation mismatches
Chainlink Data Feeds supply the lending market's collateral prices, while Data Streams deliver identical values to the custodian. Both sides can therefore calculate loan-to-value from the same price inputs.
The Defiant reports that this targets a specific risk: different prices or balances can cause custody and lending systems to disagree about whether a loan needs liquidation. Coinpedia adds that inconsistent loan valuations could trigger premature or delayed liquidations.
The design still relies on a collateral agent to sell assets. If a loan breaches its liquidation threshold, the agent handles the sale through its own process, and CustodySync records committed proceeds onchain while settlement is pending.
Anchorage manages margin and liquidation
Anchorage's Atlas Collateral Management product supports the arrangement. According to CEO and co-founder Nathan McCauley, Anchorage would "monitor loan health and manage margin and liquidation across the full lifecycle of the loan".
Coinpedia puts the market gap in numbers: DeFi lending markets hold more than $80 billion, while approximately $700 billion in digital assets sits under custody.
A September proposal from Aave Labs sketches one possible implementation, an isolated Aave V4 lending hub that would initially accept a receipt token for bitcoin pledged at Anchorage. The Defiant notes it is a proposed market design, not a named live venue in Chainlink's launch announcement.
Sources: The Defiant, Coinpedia Fintech News
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