Chainlink's Total Value Secured Expansion Isn't Matched by LINK Token's Growth

Chainlink, a provider of real-world data to the smart contracts used in decentralized applications (dapps), has expanded significantly in the last 12 months, with the total value secured (TVS) on its platform leaping to about $58 billion from $7 billion in early 2021, an increase of more than 800%, crypto exchange Coinbase said in a report on Thursday.

The market cap of LINK, the oracle’s utility token, however, is up only about 30% to $6.1 billion during the same period, the report said.

This disparity between Chainlink’s TVS and LINK’s market cap may reflect several issues, said David Duong, Coinbase’s head of institutional research. “Market saturation may limit the platform’s future growth prospects, potential dilution of LINK’s circulating supply is uncertain, and imbalances pertaining to dapp demand, node operator fees and operating costs contribute to selling pressure,” he said.

Coinbase says it is possible that Chainlink 2.0, a planned upgrade of the product's technology, could address some of those issues, adding that the platform could see further adoption from additional use cases and “more cost efficient off-chain computations,” but the timing is still unclear, which makes it difficult to price in some of the potential developments.

In a report published last month, Bank of America said Chainlink could accelerate the adoption of next-generation blockchain use across finance, insurance, supply chain, gaming and gambling.