Author: Thejaswini M A

Translation: Block unicorn

The Dream Team of 1992 crushed their opponents in the Olympic basketball games with an average margin of 44 points, but there’s a detail in this story that most people don’t remember.

They almost lost their first scrimmage against college players.

The issue wasn’t talent. Michael Jordan, Magic Johnson, and Larry Bird were all on the same team, theoretically making them unbeatable from day one. But the problem is that superstars don’t automatically make a championship team. You need a system that can convert individual strengths into collective advantages. You need someone to build the bonds that elevate everyone.

Dream Team coach Chuck Daly did something seemingly very boring in the first week, far less flashy than highlight dunks: he established passing routes. He determined the timing of screens. He created the infrastructure that transformed a group of Hall of Fame players into an unstoppable force. By the time the Olympics rolled around, miracles happened. Every pass created better shooting opportunities. Every defensive rotation made the next one easier. Every player made the others more valuable.

The genius lay in creating the infrastructure that amplified everyone’s abilities.

This is essentially what Chainlink does in the cryptocurrency space.

While other crypto projects tried to be the Michael Jordan of blockchain, Chainlink quietly became the Chuck Daly of digital finance. They built the infrastructure that made it easier for others to take their shots.

In 2019, Chainlink launched its mainnet with a simple goal: to bring sports scores and weather data onto Ethereum, allowing people to bet on football games without relying on centralized betting companies. Six years later, JPMorgan is using the same infrastructure for cross-chain government bond trading settlements, with the Federal Reserve nodding in approval behind the scenes.

Chainlink solved what is known in the cryptocurrency world as the "oracle problem," which is essentially that blockchains are like digital islands, unable to communicate or listen to anything. If you want your smart contract to know the price of Apple stock, whether it rained in Kansas yesterday, or if someone really has the dollars they claim in their bank account, you need something to relay that information to the blockchain. That something is an oracle, and Chainlink is the oracle that has consumed all other oracles.

Chainlink already supports over 60% of decentralized finance (DeFi) value, approaching 80% on Ethereum. As traditional assets migrate onto the chain, they will need the same infrastructure as DeFi. Chainlink is the market pioneer and is building the standards that other platforms will follow.

Let me explain this infrastructure.

Chainlink didn’t initially intend to be the bridge between Wall Street and Web3. But at some point, traditional financial institutions realized a problem: if you want to tokenize government bonds, you need a way to prove that the bonds actually exist and are worth what you say they are.

Thus, Chainlink’s Proof of Reserve system emerged, which sounds sophisticated but is essentially a very complex way to prove you’re not running a fractional reserve scam.

Suddenly, every major stablecoin issuer needed this service, as simply telling people "trust us, we absolutely have $100 billion in government bonds" was no longer sufficient to satisfy regulators, especially after the Terra and FTX crises.

Next came the Cross-Chain Interoperability Protocol (CCIP), which allows assets to move between different blockchains. It’s like building a universal translator. It helps banks communicate across blockchain barriers. The result is that JPMorgan can now send tokenized deposits from their private Ethereum network to the public Solana network, with Chainlink acting as the trusted messenger.

Chainlink has also built tools specifically to help institutions comply with regulations.

Their new Automated Compliance Engine (ACE) can automatically handle all the regulatory paperwork needed to make crypto transactions legal. Want to move tokenized assets between blockchains while maintaining anti-money laundering (AML) compliance, know your customer (KYC) verification, and audit trails? Chainlink automatically handles all of this, ensuring every transaction meets any regulatory requirements in your jurisdiction.

This positions them perfectly for the upcoming wave of tokenized finance. Every bank, asset management company, and government agency looking to experiment with blockchain technology first needs to address compliance issues.

Chainlink’s story for 2025 is particularly compelling.

Tuttle Capital applied for the first Chainlink ETF (exchange-traded fund) in January, with the expectation that the U.S. Securities and Exchange Commission (SEC) will make a decision in the fall of 2025. The timing aligns perfectly with the current regulatory environment supporting cryptocurrencies.

JPMorgan’s Kinexys completed the first cross-chain cash settlement between the traditional banking system and public blockchains using Chainlink.

The 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 stock exchange needed oracle infrastructure, they chose Chainlink.

Mastercard partnered with Chainlink to enable its 3 billion cardholders to purchase cryptocurrencies directly. When payment processors needed compliant crypto infrastructure, they chose Chainlink.

Chainlink launched data streams for the U.S. stock market and ETFs, providing real-time price data for stocks like Apple, Tesla, and the S&P 500 index.

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 standardly choose Chainlink.

The "Flywheel" of the Treasury Minting Machine Goes Live

In August, Chainlink announced a program called "Chainlink Reserve," essentially a Chainlink version of a stock buyback program. The company uses the fees it receives from corporate clients (JPMorgan, Mastercard, New York Stock Exchange) to buy LINK tokens on the open market.

Here’s how the flywheel works:

Step 1: Corporations pay for Chainlink’s data streams, cross-chain services, and compliance solutions. Co-founder Sergey Nazarov confirmed they have generated "hundreds of millions in revenue," with a substantial portion coming from off-chain.

Step 2: All payments—whether in fiat, stablecoins, or other tokens—are automatically converted to LINK through its Payment Abstraction system.

Step 3: A portion of LINK goes into a strategic reserve and is locked for several years.

Step 4: As more institutions tokenize assets, demand for Chainlink services increases, generating more revenue and more automatic buybacks of LINK.

The beauty of this system is that it directly ties the demand for LINK to real-world commercial adoption. Traditional crypto projects rely on speculation or token utility within their ecosystems.

Since launching the reserve program, they have accumulated over 150,000 LINK tokens, worth about $4.1 million. This may not seem like much, but considering the growth trajectory, they are transitioning from pilot projects to production deployments across multiple institutions.

Chainlink is evolving from a data provider to what Sergey Nazarov calls a "trading system." Modern institutional trading requires more than just price data:

• Data streams: for accurate pricing and valuation
• Cross-chain capabilities: to move assets between different networks
• Identity and compliance: to meet regulatory requirements
• Proof of reserve: to verify supporting assets
• Reporting and auditability: to meet institutional oversight needs

Chainlink may be the only provider that offers all these services in a single integration. When institutions want to tokenize assets, they can simply work with Chainlink instead of piecing together solutions from multiple providers.

This uniquely positions them for the upcoming wave of tokenization. As Nazarov pointed out in a recent interview, currently, less than 1% of assets globally are tokenized. Even reaching 5% would mean a tenfold expansion of the entire cryptocurrency market.

The scale of this opportunity is staggering. Traditional finance represents about $500 trillion in assets. Chainlink’s argument is that most of these assets will eventually migrate on-chain, and they will all need the comprehensive infrastructure services that Chainlink can provide.

The Divide Between Bitcoin and Tokenization

Sergey Nazarov presents a compelling argument about the future of cryptocurrency. Bitcoin may capture safe-haven demand during unstable times, potentially reaching trillions in value. But tokenized assets will exceed Bitcoin by several orders of magnitude.

Bitcoin, as digital gold, attracts investors seeking uncorrelated assets during uncertain times. Tokenized assets are more efficient versions of existing financial products, which are valued in the trillions of dollars.

When sovereign wealth funds and pension funds allocate to crypto assets, they won’t invest 50% in Bitcoin. They will maintain a diversified portfolio that includes stocks, commodities, bonds, and real estate—just in tokenized form. The potential market for tokenized assets is the entire traditional financial system.

This shift will fundamentally change our definition of "cryptocurrency." The crypto 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 in this transformation.

Supply Dynamics

The circulating supply of LINK has increased from 470 million tokens in 2021 to 680 million today, a 44% increase, which may seem concerning until you understand the purpose of these tokens.

This dilution of 210 million tokens has funded the most aggressive infrastructure buildout in cryptocurrency history.

The supply expansion is essentially Chainlink’s Series A, B, and C funding rounds, except they didn’t give equity to venture capitalists; they funded development by selling tokens. Critics call it dilution, while supporters call it a necessary investment.

According to Tokenomist data, 41% of LINK’s total supply (approximately 411.9 million tokens) remains locked, with no planned unlocking events. This indicates that the major dilution phase may have passed, with most historical unlocks occurring during the development period from 2018 to 2022.

The strategic reserve launched in August 2025 fundamentally changes this dynamic.

• 41% of tokens remain locked, with no planned unlocks
• The strategic reserve creates ongoing buying pressure
• The net effect depends on the balance between corporate revenue growth and future unlocking decisions
• Early accumulation data shows reserves are continuously growing

This timing creates an interesting turning point. The supply growth has funded the infrastructure that now generates hundreds of millions in corporate revenue. This revenue, in turn, funds the strategic reserve, removing tokens from circulation as institutional adoption accelerates.

What seemed like bearish dilution over the past few years has become the cornerstone of sustained demand for 2025 and beyond. Investors focused on supply expansion have overlooked the infrastructure being built. Those only paying attention to current buyback volumes may miss the revenue trajectory that will determine the future accumulation rate.

This raises a question.

What happens when the infrastructure layer becomes more valuable than the applications running on it?

In 2025, Chainlink's total value locked (TVL) surges to over $93 billion across decentralized finance protocols, tokenized assets, and cross-chain infrastructure. They provide data streams for thousands of DeFi protocols. They are the bridge technology enabling traditional banks to experiment with public blockchains. They are building compliance tools that determine which crypto applications are legitimate and which are not.

This $93 billion is not the value of the infrastructure—it entirely depends on the application value of Chainlink's infrastructure. The infrastructure consists of Chainlink's oracle network, data streams, and cross-chain messaging system.

But if Chainlink were to disappear tomorrow, how much of that $93 billion would become worthless? How many DeFi protocols would cease to operate? How many tokenized assets would lose their price data?

The answer is: most. This indicates that the infrastructure may already be more valuable than the applications, even if the market has yet to realize it.

They have become systemically important in the crypto space, a status that few protocols achieve. The network effects are evident: the more institutions use Chainlink, the more others want to use Chainlink because everyone else is already using Chainlink.

In the crypto space, when everyone needs the same underlying services, network effects become self-reinforcing. The more institutions use Chainlink, the more others want to use it because everyone else is already using it. Revenue is sticky because, regardless of which applications succeed or fail, the infrastructure continues to earn fees. DeFi protocols come and go, but the data layer supporting all these protocols continues to collect fees. Applications are commodities; infrastructure is monopolistic. And monopolies, as we know, often capture most of the value in an ecosystem.

Cracks in the Foundation

But let’s candidly discuss the potential issues, as Chainlink's bullish argument assumes many things that may not hold forever.

The first issue is that building an oracle network is technically challenging. But the difficulty lies not in the software but in getting everyone to agree to use your version. Chainlink's moat is the network effect and first-mover advantage, not some insurmountable technical barrier. Google and Amazon could build competitive oracle services tomorrow if they wanted to. Microsoft could do the same. Any large cloud provider with a strong engineering team could.

The second issue is the risk of regulatory capture. Chainlink has become so systemically important that if it fails, a significant portion of the tokenized financial system would collapse as well. This is precisely the "too big to fail" situation that makes regulators nervous. What happens if a senator realizes that a private company without government oversight controls the data streams for trillions in tokenized assets? Chainlink could suddenly find itself facing regulatory scrutiny that turns its 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 to the chain. But what if that doesn’t happen? What if banks decide their private blockchains are good enough and don’t need to interact with public chains? What if the regulatory environment changes, making tokenization harder rather than easier? Chainlink has built infrastructure for a future that may not materialize.

The fourth issue is competition from the entities they serve. JPMorgan is currently using Chainlink, but JPMorgan also has thousands of engineers and billions in R&D budgets. How long would it take them to decide to build their own oracle system instead of paying Chainlink forever? This question applies equally to every large bank and asset management company attempting to tokenize.

The final issue is whether any middleware company can maintain pricing power in the long term. History shows that infrastructure layers often commoditize over time. The internet started with expensive dial-up services and eventually became commoditized broadband. Cloud computing began with Amazon charging high prices and eventually became a competitive cost among multiple vendors. Why would an oracle network be any different?

Chainlink bets that they can maintain network effects and switching costs indefinitely. This is possible, but such bets often work until they suddenly don’t.

But for now, this success story looks starkly different from the decentralized, disintermediated financial system originally envisioned for cryptocurrency. Instead, it resembles an old system with a more refined API. Banks remain banks, regulators remain regulators, and funds continue to flow through institutions that governments can control.

Chainlink has not replaced the traditional financial system. They have built a translation layer that allows the traditional financial system to "speak blockchain language." Now, as this translation layer becomes indispensable, it remains unclear whether cryptocurrency is providing better tools for decentralized finance or merely enhancing centralized finance.

That’s all for today.

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