ChainLinkGod: XRP Army vs. Chainlink Marines

Transcript

And I think that's kind of unlocked a whole lot of bullishness. I kind of see it as like Chandlick's been throwing these timber logs on a pile for years and they just struck the match and threw it on the pile and then like now we're seeing the fire really growing. So I think I want to just give you a chance to clear the air here. What is the purpose of the link reserve? How does it work? >> Is there any math as far as like how much revenue chain link is generating? How much would you expect to go into this reserve on a recurring basis? Welcome back to the Rowup. We are your hosts. I'm Andy.

>> I'm Robbie. And this is your home to learn from the biggest guest, the brightest minds at the tip of innovation. Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. Let's talk all things Chain Link. Uh we had Zack on, I don't know, maybe like three or four months ago, Zach. So, good to have you back. It seems like a lot has changed. Uh but also probably a lot has stayed the same. So good to see you. All right, we're going to talk Link Reserve. We're going to talk uh Swift, their upcoming conference. We're going to talk um the the uh just latest in the institutional race. But I got to start XRP Army versus Chain Link Marines. Zack, I've been

putting out these tweets that have been saying that this is a battle that Link's going to flip XRP. They've been going viral. You've been fired up on them. Um, maybe give us your side of the story, man. How did this beef start? It's got been going on for years. You're talking about NDAs that that these guys have been, you know, hush- hushing breadcrumbs, trying to put together the best rumors possible on the XRP army side, but you seem to be, you know, very sure that Chainlink is the one that is actually kind of making this happen. You know, what, you know, how did this start? Give us the story here and and give us your side of the story.

Yeah, I mean this debate goes back to at least from what I remember 2019. So like kind of early days when I really got into crypto Twitter. But it what it comes down to ultimately is just who is the best position to benefit from the institutional adoption of blockchains for at least you know since Ripple was a thing that was always XRP's narrative that you know XRP would be the one to benefit. They're the ones working with the banks. You know there's all these NDAs. It's all hidden behind the scenes but when it happens oh you better be ready it's going to happen. I've been hearing that like stories along those lines for at least seven years personally that like the you know banks are right around the corner. They're just about adopted and like that whole time these past seven years chain link has actually been working with

institutions and not in like a there's a PDF from 10 years ago that mentions chain link or you know it's all NDA so I can't talk about it but it's like swift comes out and says hey we're using chain link for this. JB Morgan comes out and says, "Hey, we're using Chainlink for this and UBS and SBI and like all these entities have said very publicly like how they're using the Chainlink tech stack." And then at the same time, I see like the overall narrative specifically with like kind of normie investors is still like, "Oh, XRP is going to be the winner." So to me there's this huge disconnect between what the narrative has been for like 10 years which is like oh XRP is going to win all the banks to what I actually see in reality which is that XRP's kind of core product just has

not seen meaningful traction with institutions whereas what I see with chain is the exact opposite. I see a meaningful growing acceleration in usage. So it's just these kind of massive disconnect and then you know along the way you have these fun debates about uh people thinking XRP is cheaper than link because the price is lower because they don't understand market cap and all those fun Twitter Twitter debates. But ultimately just comes down to like if institutions come on chain which is exactly what we're seeing now like it's pretty evident who's going to benefit. I think I think Chandlink's just the clear winner in that regard. Introducing Extended exclusively on Stark, a nextgen perspective on chain today. Deposit in the community

vault for attractive returns, XMV compatible, and engage in unified margin spot trading, lending, and perp trading exclusively live at extended.app on Starknet today. To be to be fair, the the lawsuit against XRP must have slowed them down significant and probably stopped them in their tracks, right? So, do do you think that, you know, they're way behind now? Uh, a lot of these other, you know, chain link was able to go and and acquire all these relationships. Do they have any sort of momentum now that that lawsuit has been has been uh, you know, put to rest? Are are you starting to see more signs of life? um they're still light years behind some of the relationships that

you guys have have gotten, but are are you are you thinking about them as a competitor? How do you see similar projects in the space, other oracles, other other teams like this? >> Yeah. So, I wouldn't discount that like the lawsuit, you know, it didn't help them at all. I'll say at this point they can no longer use that as a shield or an excuse for why they're not used, right? >> But the US regulators during the previous administration went went against a lot of projects. they went hard against Ethereum and Ethereum has come out even stronger like they were growing in adoption during that time. I can't say that's you can't really pin it on that reason alone in my opinion. But like from a technology perspective, chain link and XRP are two very different things. Like XRP is a blockchain. They're about crossber

payments and this XRP bridge currency. Chainlink is much more about connectivity. You know what what what do tokenized assets need? What do smart contract applications need? You know, they need data and they need crosschain and privacy and compliance and all these services that chain link provides. So really from like a technical perspective, they're actually very complimentary. Ripple uses chain links data feeds for their stable coin, their RLUSD stable coin. That's why it's listed on a because they have a chain link price feed. So like from a technical perspective, they are complimentary in that regard. But in my mind, when I think about, you know, how the landscape's going to evolve is that there's going to be thousands of blockchains and there's going to be even more tokenized assets and digital assets that institutions want to trade. In order for the XRP thesis to really play

out as they think it will, institutions either need to adopt the XRP ledger as their blockchain, which is that's a pretty big bet that they're not going to go with any other blockchain or use their own ledger, or they're going to use XRP as like this bridge asset in their digital asset transactions, which I personally just have not seen that traction take off. Whereas, when I look at chain link, the thesis I see is more are institutions going to adopt blockchains? If yes, they're going to need chain link services. It does not matter if it's Ethereum or Salana or you know Kexis by JP Morgan some permission chain they're going to need data crosschain compliance connection to Swift all this and regardless of what asset they want to use in those uh transactions whether it's stable coins or CBDC's or tokenized funds or or like

Bitcoin or something you're still going to need chain link services. If you want a lending market you need to price the collateral. If you want pers, you need to be able to price those trades. Like the no matter what kind of asset or blockchain that's being used in an institutional context, you're still going to need chain link. Whereas XRP is a much more specific bet that they're going to adopt their tech stack and their ledger and their asset, which I just find that to be personally unlikely and just much more riskier of a play. So when I look at like other players in the space, like there's specific entities and they do price feeds and there's entities and they do crosschain or they do compliance. They typically do one of those things. Chainlink's the only one that I've seen that is doing all of these different verticals all within one

platform. So I don't see any one forone competitor to chain link. Basically anything in the space can work with chain link which is why you know there's thousands of integrations and users of chain link. But I assume at some point there'll be a competitor in the same way that you know Google and Microsoft compete because they both have this giant tech platform that spans the entire web 2. I we'll see something like that in web 3. >> Yeah. Um, I guess last thing on this kind of topic is clearly XRP and ADA, Cardano have done something right with the way that they've built this fervorous community of people who I mean, as politely as possible, know so little about how crypto actually works,

yet are so vocally loud and excited about the fact that these specific companies or projects are the future of the entire space. Um whereas it seems like chain link maybe has really attracted a strong you know core marine community with regards to uh these like kind of crypto hardcore believers from Reddit from 4chan early early adopters but maybe like struggle to have a mainstream normie retail like message like do you think that there's something that like are you guys working on something that is appealing like like basically what I'm getting at is you know there's there's a very left curve like oh XRP is going to be used by the

banks. Bullish like and some for some reason that has perforated and proliferated so much um of that of that kind of population, but it seems like chain link maybe hasn't gotten that population so excited about chain link, you know, is is there anything is there a reason why is something that you guys are are like are have thought about from your messaging? Um or or does that really just not even matter? and like what actually matters is the people that you guys are working with and um you know trying to actually get those people involved. >> I think I think you're spot on in the perspective that Ripple, Cardano and a few other coins have just perfected this retail or normie persona to retail investor like that pipeline you know

your your Uber driver your barber or yeah >> always going to talk about XRP first like I have to give them credit on that that whatever they did if they did anything it worked very well. I would say the core difference is that XRP has had the thesis of banks plus blockchains for 10 years. So they've been very consistent on that story and they've just existed for a long time. And what I've kind of seen looking at, you know, where do normies kind of get their information? Well, they get it from Facebook and they get it from Tik Tok and these places. And so when I look at it, I just see the most insane misinformation and just grand conspiracies about, you know, Black Rockck's going to buy 7 trillion of XRP or, you know, all all these BIS is secretly adopting XRP in their private

ledger. Not saying everyone in the community, you know, believes that or anything, but I just see that so commonly across the place. And that I think the Chandler community has always taken kind of a no approach where like they're not uh uncomfortable grilling the team if they think something's not correct. like they will do that and I think a lot of other communities don't have that energy. They'll just eat up whatever story that they're served on a platter by the social media algorithm. So I think there's kind of just at least from the roots of the community they just took two very different paths. But I will say there's been a lot of work of kind of simplifying what the chain link messages over time and it's it's a difficult task because chain link just does so much.

You know you have a data story but you also have a crosschain story. You have an institutional bank story and you have this compliance story and this privacy story. like how do you create one story that kind of wraps everything up together? I don't think there's like going to be one perfect answer for that, but I think as more and more institutions like start using chain link and you know the economics continue to prove the story kind of creates itself within the community. I found that the best narratives and the best stories don't don't come from teams, they come from the community themselves because they're able to find what's sticking. You know, these memes propagate over time and then the team can kind of lean on those stories. So, I've seen that play out a little bit in Chandlick as well. And I think in general as chain

goes down more of this unified platform approach then you could just say oh it's a decentralized AWS like is it is a developer platform you go build applications there more as the building blocks are put there then that's more intuitive but yeah it's also a question of like who's your audience is your audience retail investors or is your audience the banks and web3 developers because right those are going to be two very different stories you got to talk to both but you know there's some projects that only talk to retail and they don't really have much of a developer community as a result and I think That's I think that's shortsighted of them.

>> Yeah. >> You're you you pretty clearly articulated chain links audience, right? And and there's a quite quite a few of them. Telling a a unified story maybe may maybe be difficult, but you've identified Swift, Mastercard, JP Morgan, UBS, Bank of New York, Melon, City, Franklin Templeton, Fidelity. Like there's all of these names and that's according to your tweet that you posted a few days ago. These are all using chain link uh or excuse me, you know, the global financial system is adopting link. That's just to name a few. And so, you know, these these institutions are part of chain link's audience. You're going you're talking to them or the chain link team is talking to them. Uh other teams are

targeting retail or you know, normies and you're talking to the banks. What is it that when you tell them it makes them want to work with you? What is it that you're saying in these conversations when they hear it? They're like, "Okay, yes, we we'd like to adopt Link. We're going to choose you as an institutional partner, whether it's blockchain services or it's data services." You're you're going into these these conversations, you guys are saying things, and they like what they're hearing. What What is it that you're saying? >> Yeah. So, I'm not in those conversations personally, but I've talked to the people who, you know, talk talk with those clients and really just comes down to like, are you solving their core requirements? Because there's a lot of projects, a lot of crypto projects in general are looking for a problem to solve. They've come up with a great

technology and now they're just trying to figure out like who wants to use this thing and for what use case. So for Chainlink, it's really the reverse. It's talking to the client going, "Okay, you want to do a tokenized fund. What do you need to make that possible?" Oh, you need net asset value data. Okay, well let's go build that solution for that. Oh, you need the ability to bridge your token from your private ledger to Ethereum or something. Okay, well let's use CCIP for that. So it's very like problem solutionoriented where I think a lot of projects and a lot of a lot of companies in the space they just either they don't have the connections to get the user requirements or they just are so honed in on building really cool interesting tech that they don't really stop to think about okay does this

actually meet the institutional requirements because there's a lot of products in crypto that that really don't just yet. So once you have those solutions, what chainlink's been moving more and more towards is okay, how can you use the chainlink platform, the tech stack in a self-s served manner because historically it's been okay, chainlink labs is going to go build something for you, but you know that takes time and you have to deal with the team. As the platform is more self-s serve an institution go, okay, I just saw that JP Morgan is using chainlink for crosschain settlement. I want to do that. And if they can come into the chain link platform and just use it in the same way they use AWS, they just plug the things together. they don't actually ever have to deal with the team or talk to the team if they don't want to. They

certainly can. You know, there's, you know, get support and 247 uh on call support and all that, but you know, I I think that's kind of the goal is how can you actually solve the problems that they have with real products and how can you reduce the friction by enabling them to not even have to talk to a human and just go out and build things because institutions are very similar in web 3 devs in that regard where they just want to build stuff. They want to solve problems, they want to get users, they want to generate revenue. like it at the end of the day, the goals of Tradfire are not really that different than crypto in terms of building apps and getting users and making money. It's just, you know, they are more regulated and they're in a different uh use case vertical, but that that's kind of always

the way that I've seen chain link approach things and and in general like, you know, from a just from like a marketing perspective, there'll be certain projects that will they'll talk about the token price and they'll go on TV with a t-shirt of their ticker logo on it and talk how well the to coin's going to do. I cannot personally ever see Sergey doing anything like that. That That's not the way. >> We wearing a flannel, dude. >> Oh, or suit. He's wearing a suit sometimes. >> Yeah, a suit. Exactly. Um, Zach, so let's talk about that then. The the uh Link Reserve now is is coming out and I I've been I've been, you know, kind of writing about this in the last couple months. Like, guys, it's not 2020 anymore. Like there are so many crypto tokens now with so many different

narratives and ideas that like you need to give somebody a damn good reason to buy your token. like it is no longer like oh like we're all just going to go up and it's going to be great and we're all going to go down it's like sure maybe we get some period of like whatever alt season or altcoin outperformance but like really there are there are now and I think hyperlquid as well as the new Trump administration both kind of push this agenda like further than you know any previous event where one you can redirect uh value back to token holders with the administration less risk less regulatory scrutiny. Um, and then two, Hyperlid came out and said like, "Look guys, we're just going to take all of our revenue and just buy that token back and if you're not going

to do something similar, then why would I buy your token? I'm just going to buy Hype." And so maybe there's other factors, but you know, when it comes to my mind, I I get to, you know, the point of where we're at now, which is like, give me a damn good reason to buy your asset and invest. Otherwise, I'm just providing exit liquidity for insiders. I think that's a lot of like the mindset people have. Now, with chain link, um, you guys have rolled out this link reserve. There's been all sorts of just commentary about it. So, I think I want to just give you the chance to clear the air here. What is the purpose of the link reserve? How does it work? Um, who is in charge? And, you know, what does this actually look like from a practical like protocol mechanical like

engineering perspective? uh in in terms of how chain link ends up, you know, getting linked to buy and hold in the reserve. Um you know, just kind of clear the air here. There's a lot of misinformation going around. >> Yeah, I'm happy to. So the chainlink reserve which was announced a few weeks ago is a strategic onchain reserve of link tokens that is funded by both onchain revenue generated by the usage of chainlink services as well as off-chain revenue generated via these enterprise deals and the integration of chain link on various blockchains. So the reserve itself is technically an an extension of something that was released earlier this year called payment abstraction which is infrastructure that chain link created to reduce payment

friction. What that enables is that a user can come to the chainlink platform and pay in their preferred form of payment for fees, the chain link service fees. So you can come in and you can pay with cryptonative assets like ETH and USDC or other crypto assets. And you can come and you can pay in off-chain fiat, so like a bank wire transfer. And what payment abstraction does is it takes those assets on chain if they're not already converts them into link using a decentralized exchange which initially is unis swap and then it transfers those assets to those destinations of one of which is now the reserve and the reserve is really designed for the long term. So this is like a many many year development. This is not like a short-term scheme and it's really designed to support the network's

long-term sustainability. So the link token is a cap supply token a billion coins eventually all will be circulating in the market but there's still the need to be able to grow and expand the network and create useful services and grow revenue and you know having a strategic financial reserve of assets to deploy is very valuable if you want to keep growing your project even once everything's circulating. So, you know, now that chain link is revenue generating, you know, chain link noted that uh chain link has generated hundreds of millions of dollars in revenue historically. Now, it's in a position where it can start uh deploying that historical revenue into the link token and store this into this strategic reserve where it's not going to be touched for multiple years that they confirmed. So, it's really just about driving long-term growth and

sustainability as well as answering the question of, you know, Chainlink is working with Swift or JP Morgan or some bank, some entity, and they're paying for Chainlink services in dollars offchain because for whatever legal business reasons, they can't pay with cryptocurrency. There's plenty of businesses like that. You know, should should chain link say like, "No, you can't pay us in that. We're not going to take your money." Like, of course not. They're going to take the money and then put it back into the system. So by putting that revenue onchain and converting it into link, it's directly connecting this huge pot of enterprise revenue that chain link is generating and continuing to grow and directly connects that back to the token which then fuels the systems long-term growth and sustainability. So it's really creating a unification between all these different sources of revenue which as

far as I'm aware and I'm happy to be corrected like this is the first time that a project has brought offchain enterprise revenue onchain and converted it and put it back into its own native token. Like there's hyperlquid with their buyback system which was fantastic to see but it's all onchain like you you can see all the flows but when you're signing a legal contract with a bank because they need someone to sign a contract with because that's how they do business deals >> then you have to be able to connect that back to the token. I think that this uh chain link reserve which is effectively a buyback program is a very clear answer of how does that revenue connect back to the token support the network sustainability and grow the network economically. So, it's kind of a unification and what I've seen is that

people have been very bullish on chain link from like a technology perspective and an adoption perspective, but they never saw the connection of how that ties back to the Blink token. And I think with the reserve, it provides a very clear answer of how you as a token holder are contributing to the system and and benefit in addition to staking. And I think that's kind of unlocked a whole lot of bullishness. I kind of see it as like Chandlick's been throwing these timber logs in a pile for years and they just struck the match and threw it on the pile. And then like now we're seeing the fire really growing. And I think when match was struck, people just couldn't make the connection.

>> Well, because everyone knew that you guys were like a good project, right? Everyone knew that you guys had these enterprise deals and that it's expensive to use chain link. Like word on the street is that chain link's expensive. Like like we should use a different oracle provider, right? Or stuff like this. But um now you can actually take that revenue and bring it directly onchain and and use it to be buying link which um it kind of completes the arc for those who have believed for a long time. So, so Zack in Intuition says that this is a this is a one-way street. Like what what you're saying here is that uh there's going to be deals that are made, teams are going to pay with dollars offchain, fiat into bank accounts. That money is going to be

moved onchain. It's going to be used to buy Link. Link is a fixed supply asset. There's only there's a finite supply and we're just going to store this link away. We're just going to put it into the reserve and we're not going to touch it for years. I mean like maybe this is public info, maybe it's not. Like is there any math as far as like how much revenue chain link is generating? How much would you expect to go into this reserve on a recurring basis? And then like my intuition says this is going to fill up relatively quickly like link is just going to get sucked out of the market and stored into this reserve and then what you know.

>> So I would note that the reserve is one destination where revenue goes. There's also nodes in the network need to be able to be paid because they need to keep you know the lights running and there's also staking which is a third component that's a portion of revenue we'll be going to as well but yeah I mean ultimately what I see the initial reserve announcement um they've put in $1 million a week for the past two weeks so it's it's just begun so based on market price I think it's about 2.5 2.4 4 million currently. I think that creating the reserve was really just a confirmation that hey the token is actually a core part of the system that when chain link gets adopted in the future and you know more and more banks and institutions come on chain you can understand how that connects back to

the link token because there's a lot of projects in the space where they generate revenue and then they just keep it for themselves and then they kind of just let the token go by the wayside and pretend like it doesn't exist or you know you know get give little cherries or something like they they there's it's a very common dynamic where you have projects who issue equity and and tokens and then they have preferential treatment to the equity holders over the token holders like it's a very real dynamic in the space and I think what Chainlink is basically saying is like hey there's there's none of those games here the token is the core economic asset of this network uh so I think really the long-term potential is you know when institutions come on chain they start tokenizing assets because it really just have just begun like we see

some T bills see some private uh credit coming on chain but it's it's pretty minuscule and then we have the SEC chairman coming out saying Hey, tokenize everything. We're going to bring the whole on the stock market on chain. And they have Larry Fin saying the same thing. And you have all these guys top level either government or institutional leadership saying tokenization is the way forward and RDBL is like a few billion currently. So for me, the whole market is really just begun. So like projecting is very difficult to tell at this stage because we just have seen such a small segment actually come in at this ch at this stage and you know chain like the platforms continue to grow as well. a big source of monetization is you know deploying chain link services on blockchains but in the future that may switch more towards enterprise deals

with institutions you know they're deploying a large fund and they need all these services so it's like there's going to be a lot of moving pieces but personally I'm very very bullish on the ability of chain link to generate re >> yeah that and that that I think that's the conclusion I draw is that we listed off several financial institutions that are using chain link or adopting chain link what some way one way or another that's the demand side and what you're talking about all this this reserve filling up is the only I think the only conclusion to draw is that there's this supply side crisis that works.

>> You sound so bullish, man. >> I just don't know how you sound like an Ethereum put all of this away. It just I'm curious to see like at the other end of this once you know this supply starts to get sucked out of the out of the open market like then what how like what is going like what is the plan with all of this link in this reserve you know once it starts to fill up. I'm just curious. >> I mean ultimately the long-term goal is that the reserve is able to grow faster than its withdrawn fund. Like if Chainlink is really successful, like they're going to want to be able to tap into it and deploy new Oracle networks and be able to use those resources. But if more revenue comes in than you're tapping from, I mean, that's just, you know, like you said, a massive supply

sink. So, I think that that is like the best case scenario where revenue and adoption just goes exponential and we just see this growing black hole of link being stored in this reserve that just doesn't need to be tapped because it's better suited to sit in the reserve than be deployed. Yeah, Zack, uh, let's let's shift gears into the upcoming Swift conference. Um, I think it's about a month and a half out. Uh, what is the plan for Chainlink there? Uh, who's going? Um, what is the expectations? Is there anything that you can share? Is there any expected announcements, things that you've heard? What is the usual kind of setup for the Swift conference that Chain Link uh, kind of participates in? Yeah, I can't speak to specifics to to this year's, but historically what

we've seen, and just so people know, Cyos is Swift's annual financial conference. They've been doing that for many years. Uh Sergey was there like in 2016, and then now for the past, I want to say three years. Chainlink has been uh there every single Cypos giving a talk, connecting with institutions, having a booth, like it's it's a good area to connect with a lot of institutions and and drop news related to institutions because you'll get the most amount of attention from that relevant audience. So, I would probably expect Sergey to give a talk. Uh, maybe something about Swift. I don't want to like speculate. I can't really say to be honest what's going to happen at Cybos this year, but historically because Swift and Chainlink have been working together for so many years and they've entered pre-production on the ability for Swift member banks to connect to

blockchains through Chainlink architecture. That's what they've been working on for a few years. Um, they're very, very tight partners. Uh, so I can't say, you know, specifically what's going to be announced this year. I don't know. Uh but usually uh that's always really good connections for Chandler to make there and kind of make a big splash with with the institutions all being in one place in what time. >> Yeah. And uh a little plug for SmartCon as well coming up in November. >> Will you be there, Zach? >> Yes, I will be there. It'll be in New York. Everyone listening should come. It should be a fun time. Sergey of course will be there and you know every year there's always good announcements at SmartCon. So either virtually but in person, you know, if you can make it that'd be fantastic. Very exciting.

>> Yeah, Rob, that's about all that I have. I think we're coming up on time. Uh, anything else for Zach? >> Zach, this has been great. Um, I think I fully understand the thesis on both the protocol side as well as the token side and you guys have been able to leverage these conferences. I guess my my only other question is what other conferences do you recommend? like this this one that you know you you mentioned has a ton of you know opportunistic institutional connections at at play. Is there any other ones that you've you've found successful when it comes to making some more of these institutional connections yourself or anyone else on the team you know that you've heard?

>> Yeah, last year see Singapore Fintech Week was a good one. That's where we drop news about how we're working with UBS, SBI as well, Swift naturally on tokenized funds as well as the ability for tokenized funds like the subscription and the redemptions to the fund to be settled using traditional Swift fiat payments while the fund is actually tokenized on chain. So as an institution, I can buy and sell tokenized funds while using my traditional payment rail. So that was received very well at that conference. So like you have like this whole segment of like crypto conferences and then you have like the whole these institutional conferences and I think like we're seeing a little bit of bleeding between the two but then you know chain link is as always the bridge between those two different worlds. So uh towards the end of the year we always see like a bunch

of financial conferences pop up that good good news usually drops. Beautiful. >> All right, Zack, thanks for your time, man. Uh best of luck uh in the XRP versus Link Wars on Twitter. Enjoy the bullishness on the timeline. I'm sure it's fun. And uh we'll we'll we'll catch you soon. We'll see you at SmartCon probably. >> Fantastic. Great talking to you guys. You too. Thanks, Zack.