Research Summary
The report provides an in-depth analysis of Chainlink, a decentralized oracle network that connects smart contracts to real-world data. It covers various aspects including its use cases, adoption, revenue, tokenomics, governance, team, competitors, risks, and audits. The report also highlights Chainlink’s market dominance, its innovative CCIP feature, and its potential for future growth.
Key Takeaways
Chainlink’s Broad Use Case and Adoption
- Wide-ranging Applications: Chainlink is utilized across various industries such as financial services, DeFi, gaming, NFT collectibles, climate markets, enterprise, and insurance. It provides services like price feeds, data feeds, proof of reserves, smart contract automation, and verifiable on-chain randomness.
- Adoption of CCIP: The launch of CCIP has been a game-changer for Chainlink, enabling seamless transfer of data and value between existing systems and both public and private blockchains. The adoption of CCIP continues to surge with entities like ANZ/SWIFT, Vodafone, and DTCC.
Chainlink’s Market Dominance
- Market Share: Chainlink is the most widely used oracle, capturing over 46% of the market share. The Total Value Secured (TVS) using Chainlink oracles stands at $11.3 billion across 348 protocols.
- Revenue Generation: In the past 30 days, Chainlink has generated $180k in fees and $111k in revenue, placing it at the top among other oracles and 71st overall according to DeFiLlama.
Tokenomics and Governance
- Token Usage: The $LINK token is used within the network for node operator fees, implicit staking, and explicit staking. The circulating supply is 556.8 million with a maximum supply of 1 billion. The market cap is $6.1 billion.
- Governance: Governance in Chainlink is facilitated through validation, which monitors on-chain Oracle behavior and helps users choose oracles. Chainlink products are also widely used by other DeFi projects to assist in their own decentralized governance.
Team and Investors
- Founding Team: Chainlink was founded in 2014 by Sergey Nazarov and Steve Ellis. Chainlink Labs has since expanded to employ over 400 individuals.
- Funding: To date, the project has successfully raised $32M in funding through four rounds.
Risks and Audits
- Audits: The codebase and smart contracts of Chainlink have undergone multiple audits throughout the years. As per the CRC, Chainlink has been assigned a 2/5 rating in its securities framework.
- Risks: A score of 1/5 indicates that it is least likely to be considered a security under the Howey test, suggesting some level of risk associated with Chainlink.
Actionable Insights
- Investigate the Potential of CCIP: The launch of CCIP has been a game-changer for Chainlink, enabling seamless transfer of data and value between existing systems and both public and private blockchains. This could be a key area for further exploration and understanding.
- Consider Chainlink’s Market Dominance: With Chainlink capturing over 46% of the oracle market share, it’s worth examining the factors contributing to its dominance and how it maintains its leading position.
- Examine Chainlink’s Governance Model: Chainlink’s governance model, which involves validation and monitoring of on-chain Oracle behavior, could provide insights into effective decentralized governance.
