16 Aug 2023

Chainlink's missing link

Chainlink is THE source for pricing data in DeFi. That should bode well for the LINK token, right? On closer inspection, the seemingly reasonable tokenomics break.
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The principle tokenomics of Chainlink sounds reasonable. Data subscribers pay data providers in LINK to enter off-chain data into the Chainlink Network. At the same time, data providers must lock LINK on the network, which they will lose if they provide poor data.The oracle data provided is not advanced and easy to produce. In other words, the marginal cost of delivering oracle services is low. We believe this will show itself in the market over time, and since simple oracle services are easily substitutable, LINK cannot be worth that much.At the same time, and the reason for the exclusion, there is no direct relationship between the users of price feeds and paying for these price feeds. In simple terms, this means that Chainlink price feeds are paid for pro bono. There are certainly profit actors interested in maintaining a high-quality Chainlink service, but the uncertainty surrounding the value proposition of LINK is too significant for us to include the token in the index.
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