Today, Chainlink announced the launch of a strategic onchain reserve of LINK tokens to support the long-term growth and sustainability of the Chainlink Network.
Institutional demand for Chainlink is on the rise and a growing number of large enterprises are paying offchain for access to the Chainlink platform, which provides essential infrastructure for stablecoins and tokenized real-world assets. The Chainlink Reserve accumulates LINK from such offchain payments, which are expected to increase in the future, as well as onchain service usage.
The Chainlink Reserve is an onchain smart contract on Ethereum that operates as an extension of Payment Abstraction, a novel cross-chain system that reduces friction within the Chainlink Network. Payment Abstraction allows users to pay for Chainlink services in various alternative assets that are automatically converted to LINK using Automation, Price Feeds, and Cross-Chain Interoperability Protocol (CCIP).
Launched in March, Payment Abstraction was initially deployed to convert the Chainlink Network portion of fees generated by Smart Value Recapture (SVR), an innovative solution for users of Chainlink Price Feeds to recapture oracle-related Maximal Extractable Value (MEV) from liquidations. With the Reserve launch, Payment Abstraction has officially expanded to support offchain payments for Chainlink as well as multiple onchain services.
Demand for Chainlink has created hundreds of millions of dollars in revenue from offchain enterprise payments. Over $1M of this revenue has already been converted to LINK and placed in the Reserve, which will gradually accumulate more LINK over time without any withdrawals planned for multiple years.
The Chainlink Reserve is the latest facet of Chainlink’s existing economic pillars for creating a sustainable oracle economy through user fee growth and operating cost reductions. By expanding the use of Payment Abstraction to convert offchain revenue into a strategic onchain supply of LINK, the Reserve supports the Chainlink Network’s expansion through key sustainability goals outlined in Chainlink Economics.