What is The Endgame for Chainlink & $LINK? 🧵
1/ Since its launch, Chainlink has become a fundamental building block for DeFi. Their price feeds are still the most trusted today, and many DeFi protocols rely on Chainlink price oracles to provide accurate pricing data.
2/ At this point, $LINK is dominating the oracle space, and I don’t see this changing in the near future.
3/ The main catalysts that $LINK has going for it in the near future are the launch of staking and CCIP. Let’s take a look at each of these use cases going forward.
4/ LINK Staking Since inception, one of the major criticisms of $LINK was that token holders did not receive any share of protocol revenue. This aims to change with $LINK staking.
5/ With the launch of staking v0.1, $LINK stakers will earn around 4-5% APR in $LINK rewards depending on which nodes they stake to. The staking pool for v0.1 will be capped at 25M $LINK in the beginning and aims to scale to 75M Link in the months after.
6/ This will change once v1 comes around where rewards will be distributed based on user fees and how long you choose to lock your $LINK. The cap will be unlocked, and subsidies will be replaced with user fees.
7/ The interesting aspect of $LINK’s staking mechanics is that nodes that have more $LINK staked will receive higher value jobs compared to nodes that have less $LINK backing, which could generate more revenue for the node operator.
8/ In that case, we could see a situation where operators buy more $LINK to out stake the competition which could lead to more revenue, or stake their LINK rewards into their own pool. The best paying nodes could then attract more $LINK stakers which could increase the pool.
9/ With #Smartcon, @SergeyNazarov has reportedly stated that $LINK staking will be live this December.
10/ The other big release that Chainlink is looking to offer is CCIP (Cross Chain Interoperable Protocol). In layman’s terms, CCIP is a system that allows developers to create multichain smart contracts.
11/ CCIP is infrastructure that looks to abstract away complexity from chain fragmentation and makes blockchain truly interoperable. That would be big. Development is still underway though so don't think it will be released soon.
12/ Looking at all of the products that Chainlink is developing such as Oracles, VRF, Keepers, DECO, & CCIP highlights the overall vision which is to become the infrastructure layer for all blockchain technology.
13/ In terms of the endgame, Chainlink isn’t just thinking about blockchain in DeFi, but they are betting on traditional systems moving over to blockchain eventually as well and bringing new problems to solve.
14/ We have already seen examples of this such as using Chainlink for weather data and crop insurance coverage.
15/ In short, Chainlink is betting on the continued expansion of blockchain technology and becoming the infrastructure that powers all of the data around that. Think about enterprise solutions using Blockchain to automate traditional areas such as insurance markets.
16/ Revenue & Team Tokens For more information on revenue, last month’s $Link rewards for node operators stood at around 490k Link, which extrapolated yearly would be around $48M revenue at a current price of $8 per token (Potentially including Reward Subsidies).
17/ The tricky part of discussing revenue with Chainlink is that a portion of $LINK rewards are likely sold by node operators for operation costs.
18/ That said, once staking is rolled out, node operators will likely stake a portion of their $LINK rewards to stay competitive against other operators. The other part to note is that the Chainlink team funds operations through LINK tokens that they have kept since launch.
19/ Currently, the team wallets seem to hold around 150M worth of LINK tokens that are used to fund expenses. It doesn’t seem like they have been selling recently, but tracking this would be time consuming since the $LINK funds have been moved to different wallets over time.
20/ Expenses are also something that I have been unable to find. Since the team is using $LINK to fund its allocations, it is best to consider those $LINK as long term emissions to fund development and temporary incentives.
21/ From how I see it, a bet on $LINK is a bet on blockchain technology going mainstream and being directly used in Enterprise solutions. The more protocols that use Chainlink, the more revenue node operators will generate which could lead to more demand for $LINK ownership.
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