The Prophet Returned from the Cold
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The Prophet Returned from the Cold
How Chainlink's new flywheel becomes an overlooked value play in the cryptocurrency space?
Navigating Web3 tides with focused insightsBy: Thejaswini M A
Translation: Block unicorn
The 1992 Dream Team crushed opponents by an average of 44 points in Olympic basketball, but there's one detail most people don't remember.
They nearly lost their first scrimmage against college players.
It wasn't a talent issue. Michael Jordan, Magic Johnson, and Larry Bird were on the same team—on paper, they should have been unstoppable from day one. But superstars don’t automatically become a championship team. You need a system that turns individual strengths into collective advantages. You need someone to build the connective tissue that lifts everyone up.
Dream Team coach Chuck Daly did something seemingly boring in the first week—far less glamorous than highlight dunks: he established passing lanes. He defined pick-and-roll timing. He built the infrastructure that turned a group of Hall of Famers into an unstoppable force. By the time the Olympics arrived, magic happened. Every pass created a better shot. Every defensive rotation made the next one easier. Each player made the others more valuable.
The genius was in creating infrastructure that amplified everyone’s abilities.
This is essentially what Chainlink has done in crypto.
While other crypto projects try to be blockchain’s Michael Jordan, Chainlink quietly became digital finance’s Chuck Daly. They built the infrastructure that makes everyone else’s shots easier.
In 2019, Chainlink launched its mainnet with a simple goal: bring sports scores and weather data onto Ethereum so people could bet on football matches without relying on centralized bookmakers. Six years later, JPMorgan uses that same infrastructure to settle cross-chain treasury trades—with the Federal Reserve nodding in the background.
Chainlink solved what’s known as the “oracle problem” in crypto—the reality that blockchains are like digital islands, unable to talk or listen to anything. If you want your smart contract to know Apple’s stock price, whether it rained in Kansas yesterday, or if someone actually has the dollars they claim to in their bank account, you need something to carry that information onto the blockchain. That something is an oracle, and Chainlink is the oracle that ate all the others.
Chainlink already secures over 60% of decentralized finance (DeFi) value, approaching 80% on Ethereum. As traditional assets move on-chain, they’ll need the same infrastructure DeFi uses. Chainlink is the market pioneer and is building the standard others follow.
Let me explain this infrastructure.
Chainlink never set out to be the bridge between Wall Street and Web3. But at some point, traditional financial institutions realized a problem: if you want to tokenize treasuries, you need a way to prove those treasuries actually exist and are worth what you say they are.
Enter Chainlink’s Proof of Reserve, which sounds fancy but is really just a very sophisticated way of proving you’re not running a fractional reserve scam.
All of a sudden, every major stablecoin issuer needed this service—because telling regulators “trust us, we definitely have $100 billion in treasuries” no longer cuts it, especially after Terra and FTX collapsed.
Then came the Cross-Chain Interoperability Protocol (CCIP), enabling assets to move across different blockchains. It’s like building a universal translator. It helps banks communicate across blockchain silos. The result? JPMorgan can now send tokenized deposits from their private Ethereum network to a public Solana network—with Chainlink acting as the trusted messenger.
Chainlink also built tools specifically designed to help institutions comply with regulations.
Their new Automated Compliance Engine (ACE) automatically handles all the regulatory paperwork that makes crypto transactions legal. Want to move tokenized assets across chains while maintaining anti-money laundering (AML) compliance, know-your-customer (KYC) verification, and audit trails? Chainlink handles all of it automatically, ensuring every transaction meets any jurisdictional requirement.
This positions them perfectly for the coming wave of tokenized finance. Every bank, asset manager, and government agency wanting to experiment with blockchain must first solve compliance.
Chainlink’s 2025 story is particularly compelling.
Tuttle Capital filed for the first Chainlink ETF in January, with the SEC expected to decide in fall 2025. The timing aligns perfectly with the current pro-crypto regulatory environment.
JPMorgan’s Kinexys used Chainlink to complete the first-ever cross-chain delivery-versus-payment settlement between the traditional banking system and public blockchains.
Intercontinental Exchange—the parent company of the New York Stock Exchange—integrated Chainlink Data Streams to bring forex and precious metals data on-chain. When the world’s largest securities exchange needs oracle infrastructure, they choose Chainlink.
Mastercard partnered with Chainlink to allow its 3 billion cardholders to directly buy cryptocurrency. When a payment processor needs compliant crypto infrastructure, they choose Chainlink.
Chainlink launched data feeds for U.S. equities and ETFs, providing real-time price data for stocks like Apple, Tesla, and the S&P 500.
Central banks in Brazil and Hong Kong are using Chainlink for central bank digital currency (CBDC) pilots and cross-chain settlement experiments. When governments need blockchain infrastructure, they choose Chainlink.
The pattern is consistent: when institutions move from experimentation to production deployment, they standardize on Chainlink.
The Flywheel of the Treasury Printing Press Activates
In August, Chainlink announced a plan called “Chainlink Reserves”—essentially a stock buyback program for the Chainlink era. The company takes fees earned from enterprise clients (JPMorgan, Mastercard, NYSE) and uses them to buy LINK tokens on the open market.
Here’s how the flywheel works:
Step 1: Enterprises pay for Chainlink’s data feeds, cross-chain services, and compliance solutions. Co-founder Sergey Nazarov confirmed they’ve already generated “hundreds of millions in revenue,” with a significant off-chain portion.
Step 2: All payments—whether fiat, stablecoins, or other tokens—are automatically converted into LINK via their Payment Abstraction system.
Step 3: A portion of LINK goes into a strategic reserve and is locked for years.
Step 4: As more institutions tokenize assets, demand for Chainlink services grows—generating more revenue and triggering more automatic LINK buybacks.
The beauty of this system is that it ties LINK demand directly to real-world business adoption. Traditional crypto projects rely on speculation or in-ecosystem token utility.
Since launching the reserve program, they’ve accumulated over 150,000 LINK tokens—worth about $4.1 million. That may not sound like much, but consider the trajectory. They’re moving from pilot programs to simultaneous production deployments across multiple institutions.
Chainlink is evolving from a data provider into what co-founder Sergey Nazarov calls a “transaction system.” Modern institutional trading requires more than just price data:
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Data Feeds: For accurate pricing and valuation
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Cross-Chain Capability: To move assets across networks
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Identity and Compliance: To meet regulatory requirements
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Proof of Reserve: To verify backing assets
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Reporting and Auditability: To satisfy institutional oversight
Chainlink may be the only vendor offering all these services in a single integration. When institutions want to tokenize assets, they can work solely with Chainlink instead of stitching together solutions from multiple vendors.
This gives them a unique position in the coming wave of tokenization. As Nazarov noted in a recent interview, less than 1% of global assets are currently tokenized. Even reaching 5% would mean the entire crypto market expands tenfold.
The scale of this opportunity is staggering. Traditional finance represents around $500 trillion in assets. Chainlink’s argument is that most of these assets will eventually move on-chain—and they’ll all need the comprehensive suite of infrastructure services Chainlink provides.
The Divergence Between Bitcoin and Tokenization
Sergey Nazarov has put forward a compelling argument about crypto’s future. Bitcoin might capture safe-haven demand during turbulent times, potentially reaching trillions in value. But tokenized assets will surpass Bitcoin by several orders of magnitude.
Bitcoin, as digital gold, appeals to investors seeking non-correlated assets during uncertainty. Tokenized assets are more efficient versions of existing financial products—products already worth hundreds of trillions.
When sovereign wealth funds and pension funds allocate to crypto assets, they won’t put 50% into Bitcoin. They’ll maintain diversified portfolios of equities, commodities, bonds, and real estate—only in tokenized form. The total addressable market for tokenized assets is the entire traditional financial system.
This shift will fundamentally redefine what we mean by “crypto.” The space will no longer be defined by cryptocurrencies like Bitcoin and Ethereum, but by tokenized versions of traditional assets. Chainlink is positioning itself as the indispensable infrastructure for this transformation.
Supply Dynamics
LINK’s circulating supply increased from 470 million tokens in 2021 to 680 million today—an increase of 44%. This looks concerning until you understand what those tokens funded.
That 210 million token dilution financed one of the most aggressive infrastructure builds in crypto history.
Supply expansion was effectively Chainlink’s Series A, B, and C rounds—except instead of giving equity to VCs, they sold tokens to fund development. Critics call it dilution; supporters call it necessary investment.
According to Tokenomist, 41% of LINK’s total supply (411.9 million tokens) remains locked with no scheduled unlock events. This suggests the bulk of dilution may already be behind us, with most historical unlocks occurring during development from 2018–2022.
The strategic reserve launched in August 2025 fundamentally changes this dynamic.
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41% of tokens remain locked with no planned unlocks
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The strategic reserve creates sustained buy pressure
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Net effect depends on balancing enterprise revenue growth against future unlock decisions
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Early accumulation data shows the reserve is growing consistently
The timing creates an interesting inflection point. Supply growth funded infrastructure that now generates hundreds of millions in enterprise revenue. That revenue, in turn, funds the strategic reserve—removing tokens from circulation as institutional adoption accelerates.
What looked like bearish dilution in recent years becomes the foundation for sustained demand in 2025 and beyond. Investors focused only on supply expansion miss the infrastructure being built. Those focused only on current buybacks may overlook the revenue trajectory that determines future accumulation speed.
All of this leads to one question.
What happens when the infrastructure layer becomes more valuable than the applications running on top of it?
In 2025, Chainlink’s Total Value Secured (TVS) surged past $93 billion across DeFi protocols, tokenized assets, and cross-chain infrastructure. They provide data feeds to thousands of DeFi protocols. They’re the bridge technology enabling traditional banks to experiment with public blockchains. They’re building compliance tools that determine which crypto applications are legal and which aren’t.
That $93 billion isn’t the value of the infrastructure—it’s the value of applications entirely dependent on Chainlink’s infrastructure. The infrastructure itself is Chainlink’s oracle network, data feeds, and cross-chain messaging system.
But if Chainlink disappeared tomorrow, how much of that $93 billion would become worthless? How many DeFi protocols would cease functioning? How many tokenized assets would lose price data?
The answer: most of it. This suggests the infrastructure may already be more valuable than the applications—even if the market hasn’t priced it in yet.
They’ve become systemically important in crypto—a status few protocols achieve. Network effects are clear: the more institutions use Chainlink, the more others want to use it because everyone else already is.
In crypto, when everyone needs the same underlying service, network effects reinforce themselves. The more institutions use Chainlink, the more others want to use it because everyone else already does. Revenue is sticky because the infrastructure collects fees regardless of which applications succeed or fail. DeFi protocols come and go, but the data layer supporting them keeps charging. Applications are commoditized; infrastructure is monopolistic. And monopolies, as we know, tend to capture most of the value in an ecosystem.
Cracks Beneath the Foundation
But let’s be honest about what could go wrong—because Chainlink’s bull case assumes many things that may not hold forever.
The first issue is that oracle networks are technically hard to build. But the difficulty isn’t software—it’s getting everyone to agree to use your version. Chainlink’s moat is network effects and first-mover advantage, not some insurmountable technical barrier. Google and Amazon could build competing oracle services tomorrow if they wanted to. So could Microsoft. Any major cloud provider with strong engineering teams could.
The second issue is regulatory capture risk. Chainlink is becoming so systemically important that if it fails, a large part of the tokenized financial system collapses with it. That’s the classic “too big to fail” scenario that makes regulators nervous. What happens when a senator realizes an unregulated private company controls the data flows for trillions in tokenized assets? Chainlink could suddenly find itself under regulatory scrutiny that turns a profitable business into a compliance nightmare.
The third issue is the tokenization assumption. Chainlink’s entire value proposition relies on traditional finance migrating en masse onto blockchains. But what if it doesn’t? What if banks decide their private blockchains are good enough and don’t need to interact with public chains? What if the regulatory environment shifts to make tokenization harder, not easier? Chainlink is building infrastructure for a future that might never arrive.
The fourth issue is competition from the very institutions they serve. JPMorgan uses Chainlink today—but JPMorgan also has thousands of engineers and billions in R&D budget. How long before they decide to build their own oracle system rather than pay Chainlink forever? The same question applies to every major bank and asset manager attempting tokenization.
The final issue is whether any middleware company can maintain pricing power long-term. History shows infrastructure layers tend to commoditize over time. The internet started with expensive dial-up and became commoditized broadband. Cloud computing began with Amazon charging premium prices and evolved into multiple vendors competing on cost. Why should oracle networks be different?
Chainlink is betting they can maintain network effects and switching costs indefinitely. That’s possible—but such bets often work… until they suddenly don’t.
But for now, this success story looks nothing like the decentralized, disintermediated financial system crypto originally envisioned. Instead, it looks more like the old system with better APIs. Banks are still banks, regulators are still regulators, and money still flows through institutions the government can control.
Chainlink isn’t replacing the traditional financial system. They’ve built a translation layer that lets the traditional system “speak blockchain.” Now, as this translation layer becomes indispensable, it remains unclear whether crypto is truly decentralizing finance—or simply providing better tools for centralized finance.
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