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Author: Zach Pandl, Head of Research at Grayscale; Michael Zhao, Researcher at Grayscale; Translation: @bitchainvisionxz
Key points of this article:
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Chainlink is the key connection hub between the crypto world and traditional finance, and between the on-chain and off-chain areas.Grayscale believes that Chainlink’s software technology suite will become the core infrastructure for blockchain technology applications such as asset tokenization and decentralized finance.
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Chainlink is often called a cryptographic “oracle,” but it is more accurately positioned as a modular middleware that enables on-chain applications to securely use off-chain data, achieve cross-chain interactions, and meet enterprise-level compliance requirements.
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The LINK token issued by this project is the token with the highest market value among “utility and service cryptoassets” and the largest non-layer network token with the largest market value in the entire crypto field (excluding stablecoins).Since Chainlink serves multiple blockchains rather than a single network, holding LINK tokens means gaining broad exposure to the crypto economy.We believe that this feature and other advantages make LINK one of the assets to focus on when building a diversified crypto portfolio.
Public blockchain technology is expected to reshape the landscape of digital currency and digital finance by weakening the role of centralized intermediaries.But the prerequisite for realizing this vision is that the blockchain must be connected to the real world.Almost all financial assets are currently issued off-chain and will need to be bridged to the blockchain through a tokenization process, at least in the short to medium term.Furthermore, certain elements of mainstream finance – such as regulatory compliance, dispute resolution and customer service – are not going away, so certain types of intermediaries are here to stay.This is exactly where Chainlink comes into play.
ChainlinkIt is the key connection between the crypto world and traditional finance.We believe that it has become an indispensable infrastructure in the blockchain-based financial system, and it is difficult to imagine how cryptography will become mainstream without the adoption of Chainlink’s suite of software technologies.Chainlink’s broad and growing application prospects, its token’s direct value accumulation model, and its unique advantages over other large-scale crypto assets make LINK an extremely attractive allocation option in a diversified crypto asset portfolio (see figure below).
1,Chainlinkand asset tokenization
To understand Chainlink’s technology and its future growth potential, it’s important to examine its role in the tokenization process of assets.When blockchain is more widely adopted, securities may be issued and tracked entirely on-chain.But currently, beneficial ownership of securities—as well as real assets such as real estate, physical goods, and collectibles—is still recorded in traditional off-chain ledgers (usually electronic accounting accounts).Asset tokenization refers to the process of registering asset ownership on blockchain infrastructure, allowing market participants to enjoy the technical advantages of blockchain, including more efficient settlement, smart contract interaction capabilities, and potential cost reductions.We expect Chainlink to play a central role in coordinating the tokenization process, and its announced partnerships with S&P Global, FTSE Russell and others should help achieve this goal.
The market for tokenized assets is continuing to grow: estimates put its current size at about $35 billion (excluding stablecoins), up significantly from $5 billion at the beginning of 2023.But these values are still minuscule compared to traditional asset markets.For example, the total size of tokenized assets currently represents only 0.01% (or 1 basis point) of the total value of global fixed income and equity securities, while stocks and bonds represent only a portion of the global asset base that may eventually be tokenized (see chart below).Continued growth in this market may mean expanded demand for Chainlink’s unique software solutions.
Chainlink’s technology will cover multiple aspects of the tokenization life cycle (see figure below):
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Before the tokenized assets begin to be traded on the chain,Reserve certificate(Proof of Reserve) can verify whether it is backed by sufficient off-chain assets;
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Automated compliance engine(ACE) can ensure that investors meet KYC/AML requirements;
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With the development of the on-chain market,data feed(Data Feeds) can obtain off-chain price information;
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Cross-chain interoperability protocol(CCIP) can be used to transfer tokenized assets between multiple blockchain ecosystems.
Tokenization will eventually achieve massive scale and change the way we hold and trade assets, but there will still be many practical issues to overcome along the way.In our opinion, Chainlink is currently the crypto project that offers the most compelling solutions to these challenges.
2, modular blockchain solutions
Chainlink is often described as a crypto “oracle,” a source of price data and other information from outside the blockchain (such as Bitcoin prices on exchanges).This was the starting point of the Chainlink project; today its scope has expanded significantly.A more accurate description of Chainlink would be modular middleware——It enables on-chain applications to securely use off-chain data, enable cross-chain interactions, and meet enterprise-level compliance requirements without the need to integrate solutions from multiple vendors.
To simplify understanding, Chainlink’s many modular components can be grouped into three broad categories: oracles/data feeds, Cross-Chain Interoperability Protocol (CCIP), and other solutions.These services are packaged into a toolset called the Chainlink Runtime Environment.
(1) Talk to the oracle:Chainlinkdata feed
Chainlink’s original product was its price and data feeds – “oracles” in crypto parlance.Data feeds are how smart contract applications access off-chain information.In Chainlink’s architecture, independent node operators (organized into decentralized oracle networks, DONs) obtain data from multiple high-quality data sources, reach consensus results off-chain through off-chain reporting (OCR), and publish the results to the chain for contracts to read.Importantly, these data feeds are run by independent operators – Chainlink itself does not operate any nodes.Because DONs are geographically dispersed and use different infrastructure, data feeds are designed to operate continuously even if an outage occurs in a single cloud server region.
ChainlinkWidely regarded as decentralized finance (DeFi), providing security for major currency markets, derivatives, and stablecoins across multiple chains (see image below).Aave, the largest DeFi protocol calculated by total locked value (TVL), is also Chainlink’s largest customer.
(2) Cross-chain interoperability:Chainlink CCIP
Chainlink Cross-Chain Interoperability Protocol (CCIP) is a programmable bridging enhanced messaging layer: it can transfer data, tokens, or a combination of both (tokens + instructions) between supported blockchains.Its bottom layer handles cross-chain asset transfers through Chainlink’s “TokenPools” standard, and security is guaranteed by the execution oracle network and independent risk management network.CCIP currently supports dozens of blockchains and approximately 200 tokens, powering assets such as Aave’s GHO stablecoin and Lido’s encapsulated pledged ETH, and has been used in high-profile integration experiments with traditional financial institutions such as SWIFT.Over the past six months, CCIP has moved an average of approximately $90 million worth of tokens per week (see chart below).
(3) to solve practical challenges:ChainlinkOther services
In addition to price feeds and CCIP, Chainlink offers a modular set of services covering data, computation and operations:
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Functions(Function call): Allows smart contracts to call external APIs and run lightweight off-chain calculations through the oracle network;
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Data Streams(Data Streaming): Provides low-latency market data and supports usage-based billing (subscription or pay-per-report);
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Proof of Reserve (PoR)(Proof of Reserves): Automatically generate on-chain proofs to verify whether tokens or funds have sufficient reserves;
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VRF(Verifiable Random Function): Provides a source of verifiable random numbers for games, minting, and draws;
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Automation(Automation): Trigger on-chain operations according to plans or conditions;
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ACE(Automated Compliance Engine): Enforce policy/KYC at the smart contract layer (rather than just the front-end), allowing developers to apply whitelists/blacklists, jurisdiction rules, or identity authentication, and have the rules take effect cross-chain with the contract.
3, Integration and collaboration:ChainlinkOperating environment (CRE)
Chainlink integrates many of its services into the Chainlink Runtime Environment (CRE).CRE can be viewed as a coordination process that connects these modules to form an end-to-end auditable workflow.The result is a modular, enterprise-grade software technology stack that users can start with a single service and expand as their needs grow, all the while meeting compliance and auditability requirements.
4,CRECase Study: JPMorgan ChaseKinexys × Ondo Finance
From May to June 2025, Chainlink, JPMorgan Kinexys and Ondo Finance jointly conducted a cross-chain payment delivery (DvP) test.DvP refers to the simultaneous settlement of assets and cash to avoid the risk of either party having delivered but not received payment.The asset side uses the tokenized treasury bond product OUSG on the Ondo chain test network, and the payment side runs on the Kinexys digital payment system of the permissioned chain network, and both parties realize automatic settlement.Chainlink’s CRE is responsible for process scheduling: hosting OUSG, confirming events off-chain, converting them into Kinexys payment instructions, passing API authentication, processing payment callbacks and releasing OUSG.The assets never leave the native network—only settlement instructions flow—demonstrating CRE’s ability to coordinate public chain assets and private chain infrastructure (see figure below).This test verified how Chainlink can achieve secure and synchronous settlement across chains.
5, competitive landscape
Although Chainlink is not without competitors, most of them are only involved in one aspect of its diverse business.In the field of oracles, Pyth focuses on ultra-low latency and first-party price data: exchanges and market makers publish signature updates to Pythnet, and the application directly pulls the latest data.Python has become a competitive oracle in transaction use cases and dominates Solana-based applications.Another oracle project, RedStone, adopts a modular and cost-effective model, supports pull/push delivery and on-demand verification, and is especially suitable for long-tail assets and emerging public chains.Both programs are competitive in their respective market segments, but neither covers proof of reserves, automation or enterprise compliance layer services.
In the field of cross-chain interoperability, Chainlink’s competitors are mostly specialized solutions.Wormhole delivers messages through a permissioned guardian node group, which is fast and widely integrated, but is limited by the relay mode.LayerZero provides lightweight endpoints with configurable security, giving applications flexibility in how they authenticate messages.If a protocol requires a solution that integrates bridging, data, compliance and operations, Chainlink has unique advantages.
The main risk to Chainlink’s dominance is that its position could be challenged if applications using other oracles and/or competing integration software gain market traction.To monitor this risk, investors should monitor the growth of non-EVM blockchains, as Chainlink’s adoption rate on these chains is lower than other protocols.
6,LINKToken
Chainlink’s LINK token provides payment and incentive power for the project’s multiple services.LINK is the token with the highest market value among “utility and service crypto-assets” – it can be called the “infrastructure tool” of on-chain finance. It is also the asset with the largest market value among non-layer network tokens in the crypto field (except for stablecoins).The total supply of LINK is capped at 1 billion, of which nearly 700 million have already entered circulation.The non-circulating supply is controlled by Chainlink, which releases new circulating supply at a rate of 7% every year.
Chainlink’s revenue sources include on-chain revenue (such as CCIP network fees) and off-chain revenue (such as corporate contract payments, including banks, data providers, etc.).LINK tokens realize value accumulation through a repurchase-like mechanism: In August 2025, Chainlink launched the LINK reserve library to programmatically convert service revenue into LINK and remove it from the circulating supply.The latest data shows that the reserve size is approximately 800,000 LINK, which is worth approximately US$11 million at current prices (see figure below).Despite the considerable dollar value, the current reserve size is still small relative to the circulating supply.
The core of investment in LINK lies in the growth potential of future demand for Chainlink services, thereby driving demand for the token..If the adoption rate continues to increase, Chainlink may accelerate the growth rate of the LINK reserve, leading to supply scarcity and rising prices.LINK tokens can also obtain additional income through staking, and the current annualized rate of return is approximately 4%-5%.Increased functional demand for LINK within the Chainlink ecosystem may also push up prices.The growth rate of demand for Chainlink services is lower than expected, which should be regarded as the main downside risk for investing in LINK.
7, conclusion
We believe Chainlink already has the potential for significant further growth.If one day mainstream financial institutions will trade trillions of dollars in tokenized assets on decentralized platforms, Chainlink is likely to become one of the core projects coordinating it.It has become the infrastructure of blockchain finance and occupies a favorable position in the future of seamless interaction between smart contracts and real-world assets, data and institutions.By acting as a multi-chain interconnection layer, LINK is not tied to a single network, but instead provides broad exposure to the overall growth of the crypto economy.Therefore, LINK is one of the core assets that needs to be allocated when building a diversified crypto asset portfolio.
