Bank of America and Chainlink

A number of press outlets have highlighted findings from a recent report released by the Bank of America noting the importance of Chainlink to the broader DeFi ecosystem, but will fundamentals be enough to cause a narrative shift for the token’s beleaguered PA as of late?

A Bank of America researcher singing the praises of Chainlink’s decentralized oracle system is a little surreal for those of us who’ve been following the project since its ICO, but its certainly reflective of the changing nature of crypto, as well as how traditional finance pays attention to the space.

The key takeaway here is that BoA sees Chainlink as being integral - not only to DeFi in its current iterations, but potentially also to broader commercial adoption of blockchain technology more generally. Authored by Alkesh Shah, head of BoA’s crypto research team, the report and its findings suggest that analysts see the potential for Chainlink leveraging network effects to become the dominant decentralized oracle provider at a scale much greater than it is today.

Despite a meteoric rise throughout 2018 and 2019, the $link token has under-performed the broader crypto market and many upstart assets, including L1 competitors to Ethereum, like Solana and Avalanche, especially in recent months. Most crypto observers realize that narratives are especially important with respect to speculative tokens and $link has failed to provide a captivating narrative for investors, at least in recent months. Despite a token that’s suffered poor PA as of late, Chainlink remains fundamentally useful to the space, which the report notes, highlighting its role in helping to grow the DeFi space, securing more than $60 billion in loans, up from just $7 billion a year prior.

While fundamentals are frequently divorced from PA in crypto, the report shines a positive light on Chainlink and suggests powerful network effects could mean it achieves meaningful dominance in the future. Whether such success will translate into returns for investors in the $link token remains to be seen.