BofA Says Chainlink Likely Driver for DeFi’s TVL Growth to $203B

The decentralized oracle network has secured more than $60 billion deposited into smart contracts.

Feb 17, 2022 at 11:43 a.m. UTC
Updated Feb 17, 2022 at 7:47 p.m. UTC

Will Canny is CoinDesk's finance reporter.

Chainlink could accelerate the adoption of next-generation blockchain use across finance, insurance, supply chain, gaming and gambling, Bank of America said in a research report following a fireside chat with Chainlink co-founder Sergey Nazarov.

  • The market-leading decentralized oracle network (DON) has seen major adoption. Chainlink is the likely driver behind the growth of decentralized finance’s (DeFi) total value locked (TVL) to $203 billion as of Feb. 15, a gain of 313% year on year, analysts led by Alkesh Shah wrote in the note on Wednesday.
  • DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain, without needing to use traditional middlemen.
  • The adoption and growth of DeFi last year was driven by the “ability for hybrid smart contracts, or self-executing and tamper-proof digital agreements, to verifiably and securely access real-world data through oracle nodes like market prices, time of day, weather and GPS location,” the report said.
  • As of Feb. 15, Chainlink oracles secured more than $60 billion deposits into smart contracts, up from $7 billion at the end of 2020, the bank said.
  • The oracle network generated more than 2.5 million verifiably random numbers for non-fungible token (NFT) distribution and gaming, up from almost zero at the end of 2020, the report said.
  • NFTs are digital assets on a blockchain that represent ownership of virtual or physical items, and can be sold or traded. “Oracles also enable the next generation of blockchain use cases, which require real-world data and could disrupt mature industries,” the bank’s analysts said.
  • Bank of America noted that over 1,100 projects leverage Chainlink’s network, and companies including the Associated Press, AccuWeather, Sportmonks and 800 others have launched oracle nodes to monetize their data.
  • LINK, the network’s native token, is the 22nd largest crypto by market value at $8.1 billion, the report said.
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Will Canny is CoinDesk's finance reporter.

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Will Canny is CoinDesk's finance reporter.

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