Chainlink Network KPIs and LINK price fared poorly in FY22, but increasing market share dominance, revenue diversification, and transactions are reasons for optimism.
This is as good as it get's for a valuation of Chainlink. We borrowed some of your metrics here for our internal thesis and valuation, specially given that Chainlink has gone fully fledged multi product since then
You can only estimate. I took the estimation of 4% / 25M = 1.6^-9 per LINK staked. If a project is 10m cap that’s $0.016 per LINK. A few projects should be likely to hit 100M-1B cap though. Also maybe it’s distributed to the secondary 75M staking cap. 20 ish BUILD projects too. Good reason to think there will be a few dollars per LINK of value.
Is it possible to factor in BUILD rewards into the staking calculation? Also there are a few more feeds that aren’t listed on the docs or data.chain.link
- "I chose to do it that way because TVE is Chainlink Labs’ new 'North Star Metric.' However, I think Chainlink will more likely earn a flat fee for Price Feed TXs on the number of TXs it facilitates (sort of like SWIFT)." See 'Alternative Model' for a flat fee attempt, and 'Automation and VRF [Incomplete]' for some info on the other (much smaller) revenue streams.
- The intuition is that staking will be rolled out for the most important price feeds (i.e., the ones that generate the most GP.) If you want to be more conservative feel free to copy the spreadsheet and change the terminal value to 50%.
- Mind clarifying? I just assume that Chainlink's GPM converges to Gartner's current GPM by FY28. I'm sure there are better comps though.
- I surveyed a small sample of Chainlink node operators and generalized.
- (sheet 3, Q4 2022, revenues/gas costs on Ethereum & per tx) What have you determined revenues? If nominal fees paid by users, then numbers show each transaction on Ethereum was $17? but the it shows gas cost was only $7 per transaction. So whats the $10 differential?
These are revenue figures for Chainlink node operators. The difference between revenue and gas cost is their GP, i.e., the user pays a premium on top of gas costs to compensate NOPs.
so many numbers!!
Too lazy to write sentences 🤷♂️
This is as good as it get's for a valuation of Chainlink. We borrowed some of your metrics here for our internal thesis and valuation, specially given that Chainlink has gone fully fledged multi product since then
Yeah, and they add another BUILD token roughly every 2 weeks.
You can only estimate. I took the estimation of 4% / 25M = 1.6^-9 per LINK staked. If a project is 10m cap that’s $0.016 per LINK. A few projects should be likely to hit 100M-1B cap though. Also maybe it’s distributed to the secondary 75M staking cap. 20 ish BUILD projects too. Good reason to think there will be a few dollars per LINK of value.
Interesting. (4% BUILD equity share * (20 BUILD partners x $20mm median crypto startup post-val)) / 75mm LINK staked = $0.21/LINK Staked or 3.05% yield at $7.00/LINK.
Is it possible to factor in BUILD rewards into the staking calculation? Also there are a few more feeds that aren’t listed on the docs or data.chain.link
Good Q. Do you know how I can go about collecting data on BUILD rewards?
Thanks for all your comments. Very clear.
With regards to the Dune data, where did you pull this from? And when you say you sampled node operators? How did you do this?
The data is pulled on-chain from node operator and price feed aggregator contract addresses.
I just ran through operating costs with a few node operators.
Hey, excellent post. Few questions that came to mind:
- (sheet 1) why is Chainlink's revenue a percentage of TVE? How does it make money? Are there any other revenue streams?
- (sheet 2) why are you assuming the price feed coverage reaches (/even increases) to 100% of gross profit?
- (sheet 1) what are the different Gartner assumptions with regards to margins?
- (sheet 3) where did you get the numbers from with regards to IT infra, hardware, staffing in operating expenses (NOPs, cloud cost per node etc.)
- "I chose to do it that way because TVE is Chainlink Labs’ new 'North Star Metric.' However, I think Chainlink will more likely earn a flat fee for Price Feed TXs on the number of TXs it facilitates (sort of like SWIFT)." See 'Alternative Model' for a flat fee attempt, and 'Automation and VRF [Incomplete]' for some info on the other (much smaller) revenue streams.
- The intuition is that staking will be rolled out for the most important price feeds (i.e., the ones that generate the most GP.) If you want to be more conservative feel free to copy the spreadsheet and change the terminal value to 50%.
- Mind clarifying? I just assume that Chainlink's GPM converges to Gartner's current GPM by FY28. I'm sure there are better comps though.
- I surveyed a small sample of Chainlink node operators and generalized.
- (sheet 3) how have you worked out gas fees (& revenues)? which source? chainlink market?
See my Dune dashboards at top of substack.
- (sheet 3, Q4 2022, revenues/gas costs on Ethereum & per tx) What have you determined revenues? If nominal fees paid by users, then numbers show each transaction on Ethereum was $17? but the it shows gas cost was only $7 per transaction. So whats the $10 differential?
These are revenue figures for Chainlink node operators. The difference between revenue and gas cost is their GP, i.e., the user pays a premium on top of gas costs to compensate NOPs.