With
#Chainlink
recently passing over 1000 announced integrations, I think it’s important to look a bit deeper at why having so many integrations is important to its success.
Here is a (1/20) thread offering perspective on 7 major benefits of this growth strategy for Chainlink:
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1) Paying Users: The first and most obvious reason that Chainlink pursues integrations is to get users onto the network, which then pay for CL oracle services in $LINK. Without paying users, there is no financial incentive for nodes to provide oracle services over the long run.
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2) Sustainable Economics: By onboarding paying users through subsidy support, Chainlink is building a sustainable economic model where user fees are aggregated from numerous projects to fund shared oracle services. This leads to high-quality, cost-efficient oracle solutions.
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We see this economic development model in every decentralized network. They all subsidize early growth to onboard users (e.g. block reward, liquidity mining, oracle subsidy), with the end goal of those user fees becoming large enough to self-sustain the network without subsidies.
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Nearly every decentralized network is in the early days of building out its long-term economics. Most dApps still have issues with how their tokens are used, and even Bitcoin has long-term questions around how to generate enough revenue to fund miners as block rewards decrease.
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3) Service Quality: On top of viable economics, more user fee aggregation can increase oracle network security (e.g. better nodes/data), lower per user costs & improve performance (e.g. speed). This isn't possible if user adoption fractionalizes across different oracle protocols.
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4) Wide Net: The other reason for onboarding literally any project needing oracles is to cast a wide net. It’s similar to VC investing, where even if most investments fail, the winning projects will outweigh the costs of the losing projects due to their rapid growth and success.
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The reality is that there is no way for Chainlink to know which chains, use cases, and projects will win out in the long run. Instead of trying to pick winners/losers—which Chainlink doesn’t want to do anyway as a neutral protocol—it can just cast a wide net by helping everyone.
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Through this approach, there will be a certain number of highly successful projects which go on to become blue chip dApps that define the smart contract economy. With that comes larger project budgets that can then contribute to supporting the long-term cost of oracle networks.
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.
@AaveAave
is a great example here in which Chainlink supported them way back in the day when they were still named ETHLend. No one thought much about Aave at the time and they had virtually no TVL, but now they are one of the clear industry leaders in DeFi lending and TVL.
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The same will be true for other DeFi projects, as well as play-to-earn games, insurtech, and NFTs. Chainlink is in the optimal position where it can literally help everyone in the space by allowing dApps on any chain to access high-quality oracle services at an affordable price.
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5) Momentum: The wide net of user adoption for Chainlink services signals to the rest of the market clear momentum. The momentum is its own form of self-marketing of Chainlink and drives a network effect where more users want to join due to the superior tech & marketing benefits.
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6) Upsale: The combination of a wide net, momentum, and high quality services leads to Chainlinked projects expanding upon their existing integrations. Projects do this by either increasing the quality/scope of their current service or adopting another separate Chainlink service.
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For example, there are already many projects using some combination of Chainlink Price Feeds, VRF, and Keepers. Combining CL services is only going to increase too as new solutions come online such as CCIP (cross-chain), FSS (fair transaction ordering), L2 validators, DECO, etc.
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As long as Chainlink maintains quality services—which it's known for today—it’s easy to see why projects would feel comfortable trusting CL to secure other functions of their dApp. It’s less surface area to worry about since the project isn't introducing an entirely new protocol.
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Furthermore, each CL service is powered by a separate oracle network. This means that a CL oracle service doesn't have any dependencies on another CL oracle service or blockchain, minimizing any type of systemic risk and allowing for any type of customization that users require.
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7) Industry Standard: This all drives a network effect, which leads to Chainlink becoming the industry standard on nearly every blockchain and across many types of oracle services. When people think of anything oracle or smart contract related, they start to think of Chainlink.
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Not only do all new startup projects want to join the industry standard because it has large social proof by other projects, but it sets the standard framework that larger enterprise developers are likely to adopt as they begin to move deeper into the space.
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Enterprises are not usually early innovators given the large capital they are responsible for. They wait to see new technology mature, before then building upon the most time-tested base layer framework. This will undoubtedly involve Chainlink for anything smart contract related.
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To sum up, Chainlink integrations pull in a wide net of users that in turn support strong security & sustainable economics. The process snowballs upon itself via momentum & deeper relationships w/ existing users, ultimately cementing Chainlink as the industry standard for oracles
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@Crypto___Oracle
>reality is that there is no way for Chainlink to know which chains, use cases, and projects will win out in the long run. Instead of trying to pick winners/losers—which Chainlink doesn’t want to do anyway as a neutral protocol
OK;LG CO
#CCIP
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$LINK
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#AI
"
"there's going to be the next Cisco, Google, Facebook"
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@SquawkCNBC
just now
God christ we're advised anon
Chainlink $LINK
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