ChainLink Token (Ethereum) [LINK] | Exponential DeFi (2024)

LINK is the utility token for the Chainlink protocol. It is mainly used to pay for Chainlink node operators for providing data and information from off-chain sources to on-chain smart contracts via decentralized oracles. The second use case is for node operators to stake LINK as collateral to provide oracle services. The primary goal of staking is to increase the economic security and user assurances of Chainlink oracle services. If a node operator fails to meet its on-chain obligations, then a portion of staked LINK can be slashed and redistributed. This provides a strong incentive for nodes to provide accurate data as well as deliver them in a timely manner. A secondary goal is allowing the community to directly participate by staking to support the performance of oracles. The third goal of staking is to enhance the distribution of rewards to stakers with protocol fees expected to become a larger portion over time (vs. inflationary token emissions). Lastly, node operators who stake more tokens can access higher-value roles such as Decentralized Oracle Networks (DONs).

The total supply of LINK is capped at 1B tokens. The token supply is allocated between token sales investors (35%), node operators as premined rewards and airdrops (35%), and the founders and parent company (30%). The node operator rewards are effectively fully liquidt as they are not locked within any contract and can be distributed at will.

Greater demand for Chainlink's oracle services will lead to token value accrual as LINK is required to pay node operators for their services. This leads to greater demand for node operators to buy and stake more LINK to offer more price feeds as well as participate in enhanced roles like DONs.