BofA Says Chainlink Likely Driver for DeFi's TVL Growth to $203B

Chainlink could accelerate the adoption of next-generation blockchain use across finance, insurance, supply chain, gaming and gambling, Bank of America said in a research report following a fireside chat with Chainlink co-founder Sergey Nazarov.

The market-leading decentralized oracle network (DON) has seen major adoption. Chainlink is the likely driver behind the growth of decentralized finance’s (DeFi) total value locked (TVL) to $203 billion as of Feb. 15, a gain of 313% year on year, analysts led by Alkesh Shah wrote in the note on Wednesday.

DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain, without needing to use traditional middlemen.

The adoption and growth of DeFi last year was driven by the “ability for hybrid smart contracts, or self-executing and tamper-proof digital agreements, to verifiably and securely access real-world data through oracle nodes like market prices, time of day, weather and GPS location,” the report said.

As of Feb. 15, Chainlink oracles secured more than $60 billion deposits into smart contracts, up from $7 billion at the end of 2020, the bank said.

The oracle network generated more than 2.5 million verifiably random numbers for non-fungible token (NFT) distribution and gaming, up from almost zero at the end of 2020, the report said.

NFTs are digital assets on a blockchain that represent ownership of virtual or physical items, and can be sold or traded. “Oracles also enable the next generation of blockchain use cases, which require real-world data and could disrupt mature industries,” the bank’s analysts said.

Bank of America noted that over 1,100 projects leverage Chainlink’s network, and companies including the Associated Press, AccuWeather, Sportmonks and 800 others have launched oracle nodes to monetize their data.
LINK, the network’s native token, is the 22nd largest crypto by market value at $8.1 billion, the report said.