Chainlink and mis/disinformation: A primer.

I wanted to take some time to explain a bit about Chainlink and debunk some myths that I often see shared on this sub, as I think the lack of awareness is doing the sub a general disservice.

Full disclosure: I am obviously invested in Chainlink, and so you can certainly claim there’s bias here, but what I am attempting to offer is not investment advice or convince anyone to also invest in Chainlink. I merely want the community to be aware of truths about critical blockchain infrastructure because in order for you to understand where blockchain is going, and what kind of value is accruing in this industry, you need to understand Chainlink.

In no particular order, some information I think you will all find helpful:

On mis and disinformation here around LINK:

1. Most of the misinformation that exists here stems from the early days of Chainlink investing. Chainlink’s importance was first discussed pre-ICO on 4chan’s /biz/, where at the time in an attempt to fud “Redditors” out of capitalizing on buying Chainlink at sub $1 levels there was a thorough disinformation attack performed here to persuade people not to buy, call Chainlink a scam, etc.
2. To this day, there is often intentional disinformation attacks here which now also exist on 4chan and anywhere LINK discussion occurs. There are a lot of theories about where this comes from, some of which have been partially validated. In some cases, there are financial interests at play who are using money for paid fud to try to suppress price. In others, it’s merely bored and psychologically damaged LINK holders who still think it’s fun to fud their largest holding. It doesn’t really matter the reason. The point is, LINK is unique in the cryptosphere because it constantly has a force at play which is trying to keep people from understanding its importance.

On what Chainlink is:

1. I very commonly see “Chainlink is just an oracle”. This is a problematic statement for two reasons:
   1. Oracles are critical infrastructure for blockchain. The vast majority of valuable ransactional data we want to bring onto the blockchain, all RWA creation, etc., to be used in decentralized applications and smart contract based apps, requires oracle data.
   2. Chainlink is not just an oracle. At this point, they are the largest and most important oracle provider but they also provider a number of other services which are critical to dapp and smart contract infrastructure. Perhaps the most important service they’ve launched outside of oracles are their interoperability protocol, known as “CCIP” (cross-chain interoperability protocol). Through CCIP they have built infrastructure which allows tokens to interact with multiple blockchains in a seamless fashion
2. Why is CCIP and what Chainlink is building there important?
   1. First, in order for blockchain to succeed at all, we need to abstract away all of the difficulties of user experience. The fact that you are ok with having 12 wallets and managing hundreds of currencies etc. doesn’t mean that’s what the tech should look like. The same as when people pay with a credit card most people don’t have ANY idea what happens under the hood after that, ultimately for mass adoption for blockchain people need to interact:
      1. Without knowing things like what protocols, dapps, tokens, etc. are being used
      2. Across many chains with ease
   2. CCIP facilitates the above by beginning to abstract away Layer 1’s. It allows builders to choose whatever L1 they want (for example, maybe they want to use ETH for a specific reason whereas another developer wants to use Avalanche for a different reason), while gaining access to the userbase of all interconnected Layer 1’s as well as the liquidity of all of these.
   3. CCIP not only allows public blockchains to interact, but also private blockchains to interact both with private and public chains. This is very important.

Where does Chainlink sit in the future of blockchain? The very center:

1. The most likely next bastion of blockchain is seeing traditional finance starting to mass tokenize assets, create new markets, and find more liquidity. Chainlink is the key to banks being able to interact with both each other and public chains in a new, tokenized world. It is the only option for banks to do this.
   1. But why wouldn’t banks just build their own solution?
      1. I see questions like this get asked related to all kinds of products. Why does Google acquire instead of build? The answer is very simple.
   2. Why aren’t banks just going to use [insert single layer 1 protocol here]?
      1. Banks first and foremost will want to interact with one another. No public L1 can facilitate private bank chains communicating. Eventually they will also want to interact with public L1’s more frequently because there are other products/use cases that exist there which private to private tx won’t allow. But the idea is they want to interact an exchange with the L1’s, not necessarily utilize them to build products on top of. This is what Chainlink facilitates, which L1’s are not trying to.
2. Chainlink has a flawless security record. No other oracle or bridge in the space can say this currently. Will quadrillions of dollars take the risk of flowing through protocols which have experienced multiple hacks? There is no competition currently.
3. Eventually we should see healthcare & insurance onboarding to blockchain, probably legal use cases, real estate, etc. These things, like the banking industry, are very complex, slow moving industries with tons of underlying architecture that will likely never change. These things are probably still 10+ years out. Blockchain will likely prove itself with finance first.

I don’t really get in general how blockchain helps banks, why are they tokenizing things at all?

The core answer here is the same as any business decision: It allows them to make more money. It does this in a number of ways:

1. It opens up new revenue opportunities. Blockchain and smart contract infra will allow banks and businesses to have access to products and markets which don’t currently exist
2. It opens up more liquidity. It allows these products to access money it couldn’t before. NFTs are actually a great example here - we now have a 24/7 “art” market. The traditional art sales market is very difficult for the average person to navigate. But a Fidenza can easily be sold or purchased in minutes on a fully liquid market with the advent of blockchain technology and smart contracts.
3. It saves money. Smart contracts stand to create an incredible amount of automation in complex contract and agreement language around asset transfers. You can weed out billions if not trillions of dollars in expenses by moving traditional finance infrastructure to the blockchain.

Ok but.. Like you said, banks have old architecture that will never change, so isn’t it unrealistic to expect them to just start using blockchain?

This is the beauty of what Chainlink has done. They purpose built for banking infrastructure. Working hand in hand with the world’s largest banks and SWIFT, they built CCIP with the sole core purpose of being able to onboard & connect with the traditional architecture. So banks do not have to change, SWIFT does not have to change. They simply need to “plug in”.

We now have evidence Chainlink is working hand in hand with HUGE players in finance - SWIFT, DTCC, Euroclear, and many others, to build critical blockchain infrastructure with and for them. It is indisputable, these entities themselves have broadcasted the intentions and products they’re building to the world. But, due mainly in part (I think) to disinformation strategies as well as the fact that – let’s be honest, most people get their info from crypto twitter and crypto twitter simply isn’t particularly intelligent – these things generally go ignored or misunderstood.

The biggest moves we’ve ever seen in blockchain in terms of bringing more liquidity in are coming likely within 1-3 years. Chainlink sits at the heart of that.

Happy to answer any questions.