The tokenomics of the LINK token. 1. Chainlink nodes will be

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The tokenomics of the LINK token. 1. Chainlink nodes will be

paid in LINK tokens only. There will be conversion tools for people that want to use fiat but will be converted to LINK. at the end of the day only LINK tokens can power the network since the nature of ERC-677 token, built specifically for LINK, is to transfer data.

2. LINK tokens are used as collateral value. Smartcontracts will use Chainlink nodes that carry a % value of LINK to the value of the Smartcontract. So yes, you can start a node without LINK but no one will use it. High value smartcontracts or any contract that has value will use nodes that carry the same or a % of value of LINK.

3. Decentralized networks that are home to smartcontracts will need decentralized data to execute. Chainlink is currently the only option. Thats why you will see everyone in this space partner with Chainlink

So....
Smart contract creators will demand a certain level of reputation or amount of collateral, to be paid in LINK tokens, that suits the value of their smart contract. A $1million bond would require a lot more collateral, than, say a smart contract dealing with $100. You wouldn't select the low rep/low collateral available nodes for something like a huge bond. Chainlink is actually targeting these high value contracts. Sergey has discussed at length why high value contracts in the financial world require a decentralized oracle: it puts all the risk onto the oracle rather than the smart contract creator. The smart contract creator doesn't risk losing money - the node operators do. The Chainlink network is genius like that.

There is infinite amount of collateral available because the token price can rise to meet it. Now you have to research how large ALL these markets are. Derivatives, insurance etc...

LINK is taking the flexibility of the Internet model, providing a framework to wrap all the monetizable data and other associated trust-minimized services in cryptographic truth. This draws demand on the LINK token from an implicit perspective (using the services in the same manner as ETH gas and the implicit incentives created for node operators re future profits) and later from an explicit perspective (stake put up as a form of collateral for the level of security higher value contracts demand).

Every bit of data or active hybrid smart contract that flows through Chainlinks ecosystem will cause the floor value of the LINK token to shift up. Right now we are in such early stages that we are looking at the sheet ice coming off the tip of the iceberg.. the scale of what they are doing is so immense that it takes time to build out the infrastructure (how long did the Internet take to go mainstream for example - this is going much faster).

How much of the worlds data can be monetized and used in hybrid smart contracts? How much of the worlds GDP will end up flowing through hybrid smart contracts and how much collateralized security will that require? Chainlink stands to skim a % of that value in its token value appreciation due to the demand on the token for its implicit and explicit use (albeit logarithmically reduced via super linear staking to make it all scalable). Along with numerous other trust-minimized usecases.

#blockchain #cryptocurrency #english #link

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24.05.2022

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Tim Tokenomics explained

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The tokenomics of the LINK token. 1. Chainlink nodes will be

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