Chainlink starts the value capture flywheel, potentially becoming the invisible winner of the on-chain economy?

Original text: Miles Deutscher, encryption KOL

Compiled by: Yuliya, PANews

As RWA tokenization and institutional adoption become the core narrative of this bull market, Chainlink is poised to become the biggest winner as a key infrastructure connecting traditional finance and the digital world. Miles Deutscher points out that Chainlink is not just a project; its value capture mechanism creates a powerful "flywheel effect"—the growth in network usage will directly translate into sustained buying pressure and value accumulation for the $LINK token.

It is worth noting that the recent launch of the "$LINK Reserve" mechanism by Chainlink has allowed the market to witness the true driving force of the "flywheel effect." This mechanism automatically converts and accumulates revenue from corporate partnerships and on-chain services into $LINK tokens, thereby directly linking the fundamental growth of the network to the token's value. Since the announcement, the price of $LINK tokens has increased by nearly 50%. Below is the original text of the article, which has been compiled by PANews.

$LINK may be one of the most obvious large-cap investment opportunities in this cycle, but most people might miss it. It is the biggest winner benefiting from the institutionalization of encryption, as well as the explosive growth of stablecoins, tokenization, and RWA (real-world assets).

This round of bull market is highly aligned with the narrative of Chainlink, and the main reasons behind it include:

alignment of macro trends

The total locked amount of RWA has surged 13 times in the past two years, growing from about 1 billion USD to over 13 billion USD, becoming one of the strongest growing sectors in the encryption field.

Institutions have recognized the slow and inefficient nature of the traditional SWIFT system, and they are unwilling to continue facing the pain points of fragmented execution; instead, they hope to use a complete end-to-end platform. This is also why Wall Street giants like BlackRock are actively promoting asset tokenization, and why companies like Stripe (which launched the Tempo chain) and Circle (which launched the ARC chain) are building their own blockchains.

In a fragmented, multi-chain environment, a "universal translator" is needed to achieve interoperability, and Chainlink is providing this solution. Any tokenized stocks, bonds, or real estate require oracles to bring their value on-chain, and $LINK is the market leader, holding as much as 84% of the Oracle market share on Ethereum, making it the core infrastructure of this multi-trillion-dollar transformation.

It is currently difficult to predict which L1 public chain will succeed, especially against the backdrop of many enterprise chains entering the market, and it is also uncertain which RWA application will stand out. But it can be confirmed that Chainlink is powering all of this, becoming the most typical investment target akin to the "gold rush shovel".

For a long time, the market generally believed that XRP would become the representative of institutional adoption, but from multiple perspectives, LINK's implementation in this field is even higher than that of XRP, and considering the valuation, its growth potential is more attractive.

data comparison

• XRPL DeFi TVL is approximately $85 million
• Chainlink Total Value Secured (TVS) is approximately $84.65 billion

Chainlink has over 1000 times more capital locked on-chain than XRPL, and its market share across the DeFi sector continues to grow, currently reaching 68%. Nevertheless, XRP's market capitalization is still about 12.1 times that of LINK, making LINK's value in the current price range appear more attractive.

It is worth noting that, aside from Bitcoin and Ethereum, Chainlink is also far ahead of any other protocol in terms of adoption in the traditional finance (TradFi) sector, and has been integrated by several TradFi giants, including:

• SWIFT
• DTCC (Depository Trust & Clearing Corporation)
• Euroclear (Euroclear Bank)
• JPMorgan
• Mastercard

Token Economics: Building the Value Flywheel

The value flow of the Chainlink network is mainly realized through the following ways, with two sources of income:

1. On-chain fees: When its services are used on different blockchain networks, on-chain fees will be incurred. These fees are used to fund network operations and repurchase $LINK tokens.

2. Corporate Cooperation: Reach agreements with large companies and institutions such as SWIFT or JPMorgan Chase, where these institutions pay to integrate Chainlink's solutions. A portion of the funds will enter the Chainlink reserve to support its long-term development.

Currently, the protocol will automatically convert all revenue (including fees from private chains in $ETH or $USDC) into $LINK and deposit it into the strategic treasury.

In addition, the staking mechanism is also crucial. Users lock $LINK to ensure network security and receive an approximate annual sustainable yield of 4.32%. This creates a continuous supply contraction mechanism that removes tokens from the open market.

This creates a permanent, automated repurchase mechanism that directly converts the adoption rate of the network into buying pressure, forming a powerful value flywheel:

Increase adoption → Increase revenue → More $LINK purchased and locked → Enhanced network security and resources → Improved utility

Technical Analysis and Summary

From a technical chart perspective, $LINK has broken through the weekly resistance level of 20 dollars. This price point has been an important bullish-bearish inflection point for years, and its significance is essentially equivalent to the 4000 dollar level of ETH.

In summary, Chainlink's value can be understood this way: if AWS, Azure, and GCP (the three major cloud service providers) were to spin off from their parent companies, their value would reach trillions of dollars. Chainlink is the foundational B2B infrastructure for the entire on-chain economy.