@chainlink is one of the most important, yet least understood, pillars of the #crypto ecosystem
It currently serves a vital role for DeFi, NFTs and L1s/L2s, and may ultimately be the unifying layer of #Web3
Here’s why $LINK token has the potential to 50x to 100x
👇
🧵
It currently serves a vital role for DeFi, NFTs and L1s/L2s, and may ultimately be the unifying layer of #Web3
Here’s why $LINK token has the potential to 50x to 100x
👇
🧵
2/
Chainlink is a “decentralized oracle network” that allows blockchains to connect to real-world data (we’ll explain this in a second)
It has a market cap of $3.6B, FDV of $7.2B and its $LINK token trades at $7.15
During the last #crypto bull market, the price exceeded $50
Chainlink is a “decentralized oracle network” that allows blockchains to connect to real-world data (we’ll explain this in a second)
It has a market cap of $3.6B, FDV of $7.2B and its $LINK token trades at $7.15
During the last #crypto bull market, the price exceeded $50
3/
This thread will cover the following:
• What is an oracle?
• What problem does Chainlink solve?
• How does it work?
• What is Chainlink 2.0?
• Who are the key players in the ecosystem?
• What are its #tokenomics?
• What’s the potential value of #LINK?
This thread will cover the following:
• What is an oracle?
• What problem does Chainlink solve?
• How does it work?
• What is Chainlink 2.0?
• Who are the key players in the ecosystem?
• What are its #tokenomics?
• What’s the potential value of #LINK?
4/
🔶 What is an Oracle?
#Blockchains have one major limitation – they are unable to access data from external systems
This is by design, like a computer without an internet connection, they maintain their isolation to guarantee security and streamline efficiency
🔶 What is an Oracle?
#Blockchains have one major limitation – they are unable to access data from external systems
This is by design, like a computer without an internet connection, they maintain their isolation to guarantee security and streamline efficiency
5/
Unfortunately, the vast majority of potential use cases for #Web3 require a connection to the outside world
Exchanges need accurate price information, insurance needs data to make decisions on policy payouts and many apps require market information to determine settlements
Unfortunately, the vast majority of potential use cases for #Web3 require a connection to the outside world
Exchanges need accurate price information, insurance needs data to make decisions on policy payouts and many apps require market information to determine settlements
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The solution to this problem is known as an #oracle, a separate piece of infrastructure that bridges a #blockchain to real-world data
Oracles can source a variety of information including prices, weather, sports scores, election results, geodata, random numbers, etc…
The solution to this problem is known as an #oracle, a separate piece of infrastructure that bridges a #blockchain to real-world data
Oracles can source a variety of information including prices, weather, sports scores, election results, geodata, random numbers, etc…
7/
🔶 Problem
While oracles solve one problem, they introduce another (centralization)
Oracles are vulnerable to hacking, denial of service attacks, insider manipulation & abuse – if one node is compromised, the entire system is ruined
This is known as the “Oracle Problem”
🔶 Problem
While oracles solve one problem, they introduce another (centralization)
Oracles are vulnerable to hacking, denial of service attacks, insider manipulation & abuse – if one node is compromised, the entire system is ruined
This is known as the “Oracle Problem”
8/
🔶 Solution
The solution to this problem is to rely on multiple oracles that independently gather data & cross-check their results
This structure is known as a “decentralized oracle network” (“DON”)
In a #DON, a single oracle can be compromised without harming the system
🔶 Solution
The solution to this problem is to rely on multiple oracles that independently gather data & cross-check their results
This structure is known as a “decentralized oracle network” (“DON”)
In a #DON, a single oracle can be compromised without harming the system
9/
🔶 Protocol Overview
#Chainlink is the largest decentralized oracle network, offering solutions to a variety of industries including:
• DeFi
• Enterprise
• NFTs and Gaming
• Social Impact
• Climate Markets
Let's take a look at each
🔶 Protocol Overview
#Chainlink is the largest decentralized oracle network, offering solutions to a variety of industries including:
• DeFi
• Enterprise
• NFTs and Gaming
• Social Impact
• Climate Markets
Let's take a look at each
10/
🔹 DeFi
Chainlink provides real-time prices for a variety #DeFi uses including:
• #DEXs
• #Stablecoins
• #Derivatives
• #Insurance
• #Yieldfarming
Notable partners include @synthetix_io, @AaveAave, @traderjoe_xyz, @LidoFinance, @BreederDodo and @LiquityProtocol
🔹 DeFi
Chainlink provides real-time prices for a variety #DeFi uses including:
• #DEXs
• #Stablecoins
• #Derivatives
• #Insurance
• #Yieldfarming
Notable partners include @synthetix_io, @AaveAave, @traderjoe_xyz, @LidoFinance, @BreederDodo and @LiquityProtocol
11/
🔹 Enterprise
The protocol provides enterprise-grade infrastructure to allow large corporations to access the #Web3 ecosystem.
Notable enterprise partners include T-Systems, LexisNexis, Swisscom and Accuweather
🔹 Enterprise
The protocol provides enterprise-grade infrastructure to allow large corporations to access the #Web3 ecosystem.
Notable enterprise partners include T-Systems, LexisNexis, Swisscom and Accuweather
12/
🔹 NFTs & Gaming
Chainlink provides services for several players in the #NFT & #P2E gaming space including @AxieInfinity, @BoredApeYC & @illuviumio
Notaby, it provides a random number generator (#VRF) that assists with NFT creation, unpredictable gameplay & fair rewards
🔹 NFTs & Gaming
Chainlink provides services for several players in the #NFT & #P2E gaming space including @AxieInfinity, @BoredApeYC & @illuviumio
Notaby, it provides a random number generator (#VRF) that assists with NFT creation, unpredictable gameplay & fair rewards
13/
🔹 Social Impact
The protocol partners with several nonprofits, NGOs and other institutions to assist with sustainability, financial inclusion and public goods projects.
Notable partners include Technalia, Lemonade and Arbol
🔹 Social Impact
The protocol partners with several nonprofits, NGOs and other institutions to assist with sustainability, financial inclusion and public goods projects.
Notable partners include Technalia, Lemonade and Arbol
14/
🔹 Climate Markets
Chainlink provides enterprise-grade middleware that help power climate markets
Notable partners include Hyphen, Floodlight and Correst
🔹 Climate Markets
Chainlink provides enterprise-grade middleware that help power climate markets
Notable partners include Hyphen, Floodlight and Correst
15/
🔶 How it works
The ecosystem is powered by the $LINK token, which has three purposes. It’s:
• Used by clients to pay for services
• Received by oracles as compensation for work performed
• Serves as collateral to ensure that oracles behave properly
Let’s explore:
🔶 How it works
The ecosystem is powered by the $LINK token, which has three purposes. It’s:
• Used by clients to pay for services
• Received by oracles as compensation for work performed
• Serves as collateral to ensure that oracles behave properly
Let’s explore:
17/
3. Chainlink selects the best oracles based on 1) their reputation and 2) their ability to find the necessary data
4. Oracles will find the requested data and send it back to Chainlink. Oracles must stake $LINK tokens as collateral to ensure proper behavior
3. Chainlink selects the best oracles based on 1) their reputation and 2) their ability to find the necessary data
4. Oracles will find the requested data and send it back to Chainlink. Oracles must stake $LINK tokens as collateral to ensure proper behavior
18/
5. Chainlink aggregates the results, chooses the most accurate answers and discards outliers. Oracles that are deemed to be negligent and / or malicious may face penalties and lose some or all of their collateral
6. The information is routed through Chainlink to the DEX
5. Chainlink aggregates the results, chooses the most accurate answers and discards outliers. Oracles that are deemed to be negligent and / or malicious may face penalties and lose some or all of their collateral
6. The information is routed through Chainlink to the DEX
19/
🔶 Chainlink 2.0
#Chainlink occupies a unique position as the dominant “middleware” layer transferring data between blockchains and the real world
Since it’s already transferring data, it’s not a huge leap to perform computations on that data, store or even transmit it
🔶 Chainlink 2.0
#Chainlink occupies a unique position as the dominant “middleware” layer transferring data between blockchains and the real world
Since it’s already transferring data, it’s not a huge leap to perform computations on that data, store or even transmit it
20/
This is exactly what the protocol plans to do with the release of Chainlink 2.0
It’s utilizing “hybrid smart contracts” – computer programs that that combine ON-chain data with OFF-chain data – to create a new layer that can perform computations off-chain
This is exactly what the protocol plans to do with the release of Chainlink 2.0
It’s utilizing “hybrid smart contracts” – computer programs that that combine ON-chain data with OFF-chain data – to create a new layer that can perform computations off-chain
21/
If executed correctly, this hybrid smart contract layer could create a lot of benefits, such as:
1. Scalability
2. Privacy
3. Interoperability
Let’s dig into each
If executed correctly, this hybrid smart contract layer could create a lot of benefits, such as:
1. Scalability
2. Privacy
3. Interoperability
Let’s dig into each
22/
🔹 Scalability
#Chainlink 2.0 could serve as a de facto “Layer 2” network
Like traditional #L2 solutions like roll-ups, it is designed to perform calculations off-chain and plug the results back into the native chain
This should ↑ throughput, ↓ latency and reduce fees
🔹 Scalability
#Chainlink 2.0 could serve as a de facto “Layer 2” network
Like traditional #L2 solutions like roll-ups, it is designed to perform calculations off-chain and plug the results back into the native chain
This should ↑ throughput, ↓ latency and reduce fees
23/
🔹 Privacy
As an independent bridge between blockchains and real-world data, Chainlink 2.0 is in a unique position to provide privacy solutions
For instance, #DONs can encrypt off-chain computations and conceal them from their relaying blockchains
🔹 Privacy
As an independent bridge between blockchains and real-world data, Chainlink 2.0 is in a unique position to provide privacy solutions
For instance, #DONs can encrypt off-chain computations and conceal them from their relaying blockchains
24/
🔹 Interoperability
Chainlink 2.0 would theoretically be able to use its system of hybrid smart contracts to connect different blockchains
Its network of oracles could securely route messages between one another and transfer tokens between chains
🔹 Interoperability
Chainlink 2.0 would theoretically be able to use its system of hybrid smart contracts to connect different blockchains
Its network of oracles could securely route messages between one another and transfer tokens between chains
25/
In a way, #Chainlink could function as an “upside down” Cosmos or Polkadot
Instead of connecting multiple #L1s at a base, or “#L0” layer, it could connect them at the #L2 layer
If successful, this could be huge, as it could replace traditional interoperability solutions
In a way, #Chainlink could function as an “upside down” Cosmos or Polkadot
Instead of connecting multiple #L1s at a base, or “#L0” layer, it could connect them at the #L2 layer
If successful, this could be huge, as it could replace traditional interoperability solutions
26/
While it’s too early to tell whether Chainlink 2.0 will succeed, if it does it could represent a major paradigm shift in Web3 - a unified “middleware” layer that provides the functionality of a:
• Privacy tool
• Layer 2
• Bridge
While it’s too early to tell whether Chainlink 2.0 will succeed, if it does it could represent a major paradigm shift in Web3 - a unified “middleware” layer that provides the functionality of a:
• Privacy tool
• Layer 2
• Bridge
27/
🔶 Market Overview
While there are dozens of oracles serving the #crypto market, Chainlink is by far the most popular with nearly 1,500 connections
Other notable players include Berry and Band Protocol
🔶 Market Overview
While there are dozens of oracles serving the #crypto market, Chainlink is by far the most popular with nearly 1,500 connections
Other notable players include Berry and Band Protocol
28/
🔶 Traction
#Chainlink has achieved significant traction to date, it:
• Has enabled over $6 trillion in transaction volume
• Delivered 5 billion data points on-chain
• Supports 14+ #blockchains and L2s
🔶 Traction
#Chainlink has achieved significant traction to date, it:
• Has enabled over $6 trillion in transaction volume
• Delivered 5 billion data points on-chain
• Supports 14+ #blockchains and L2s
29/
The protocol has also partnered with a variety of players in Web 2.0, such as Google Cloud and Oracle and dozens of projects across the #Web3 ecosystem
The protocol has also partnered with a variety of players in Web 2.0, such as Google Cloud and Oracle and dozens of projects across the #Web3 ecosystem
30/
#Chainlink also boasts a very strong community, often called the #linkmarines with 79K reddit subs, 900K Twitter followers and 114K Discord members
#Chainlink also boasts a very strong community, often called the #linkmarines with 79K reddit subs, 900K Twitter followers and 114K Discord members
31/
🔶 Team
Chainlink was created in 2017 by @SergeyNazarov and Steve Ellis
It has over 400 employees listed on LinkedIn including Chief Ecosystem Officer @adelynzhou, COO @mikedfresh and CPO @kelmoujahid
🔶 Team
Chainlink was created in 2017 by @SergeyNazarov and Steve Ellis
It has over 400 employees listed on LinkedIn including Chief Ecosystem Officer @adelynzhou, COO @mikedfresh and CPO @kelmoujahid
32/
🔶 Advisors
The protocol has a strong advisory board including @AriJuels, @ericschmidt (ex-CEO of Google), @danboneh, @socrates1024, @ccatalini, @jeffweiner, @tgonser, @balajis (ex-CTO of Coinbase) and @lyndakatesmith (ex-CMO of Twilio)
🔶 Advisors
The protocol has a strong advisory board including @AriJuels, @ericschmidt (ex-CEO of Google), @danboneh, @socrates1024, @ccatalini, @jeffweiner, @tgonser, @balajis (ex-CTO of Coinbase) and @lyndakatesmith (ex-CMO of Twilio)
33/
🔶 Tokenomics
$LINK has a capped token supply of 1 billion tokens
At launch, 35% of these were allocated to the public, 35% to the ecosystem and 30% to the company
There are currently 508M tokens circulating
🔶 Tokenomics
$LINK has a capped token supply of 1 billion tokens
At launch, 35% of these were allocated to the public, 35% to the ecosystem and 30% to the company
There are currently 508M tokens circulating
34/
While 30% to the company may seem high, it’s important to note that these funds aren’t simply going into the founder’s pockets
As @DeFiMinty points out, Chainlink is using this capital to fund development in lieu of VCs (notice there is no “private investor” allocation)
While 30% to the company may seem high, it’s important to note that these funds aren’t simply going into the founder’s pockets
As @DeFiMinty points out, Chainlink is using this capital to fund development in lieu of VCs (notice there is no “private investor” allocation)
35/
🔶 Valuation
It’s difficult to value Chainlink because there is no real-world analog to an oracle network
While oracles are important, they are a unique phenomenon to #Web3
But that’s not too concerning, as I’m not sure that $LINK should be valued as an oracle anyway…
🔶 Valuation
It’s difficult to value Chainlink because there is no real-world analog to an oracle network
While oracles are important, they are a unique phenomenon to #Web3
But that’s not too concerning, as I’m not sure that $LINK should be valued as an oracle anyway…
36/
Given the plans for Chainlink 2.0, I don’t think it’s unrealistic to value #Chainlink as a Layer 1
In a sense, it could achieve what Cosmos and Polkadot are hoping to do and provide a unified layer for:
• Privacy
• Scalability
• Interoperability
Given the plans for Chainlink 2.0, I don’t think it’s unrealistic to value #Chainlink as a Layer 1
In a sense, it could achieve what Cosmos and Polkadot are hoping to do and provide a unified layer for:
• Privacy
• Scalability
• Interoperability
38/
At 1B total tokens, this would imply a price of $500 to $1K per token, a 75x to 150x return over today and 10x to 20x over its ATH
At 1B total tokens, this would imply a price of $500 to $1K per token, a 75x to 150x return over today and 10x to 20x over its ATH
40/
If you want to learn more about @chainlink, check out these accounts:
@ChainLinkGod
@ChainlinkIntern
@ChainlinkLinkie
@ChainlinkP
@CryptoDragonite
@DAdvisoor
@DefiDrew
@defi_naly
@DeFiMinty
@DrakeLinked
@LINKNewsOracle
@LifeisMalleable
@NickDrakon
@rektdiomedes
@uCeLiNk
If you want to learn more about @chainlink, check out these accounts:
@ChainLinkGod
@ChainlinkIntern
@ChainlinkLinkie
@ChainlinkP
@CryptoDragonite
@DAdvisoor
@DefiDrew
@defi_naly
@DeFiMinty
@DrakeLinked
@LINKNewsOracle
@LifeisMalleable
@NickDrakon
@rektdiomedes
@uCeLiNk
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