Chainlink’s recent $162 million LINK unlock marks a strategic shift.

Chainlink’s approach changes market dynamics

In the world of blockchain and cryptocurrency, Chainlink (LINK) has recently been attracting attention. The project executed a significant token launch, unlocking 11.25 million LINK tokens worth $162 million. A notable portion of this release, most notably 8.2 million LINK worth approximately $128 million, went to Binance, a prominent cryptocurrency exchange.

Typically, the launch or ‘unlocking’ of a token is viewed with skepticism and is often associated with potential market volatility. However, Chainlink’s current strategy deviates from the norm. The organization had previously stated its intention to allocate the newly released tokens primarily for operational purposes. This involves providing incentives to nodes on the network, called oracle rewards.

This strategic move is part of Chainlink’s broader token distribution plan that was publicly announced in June. The uses of these tokens are multifaceted, including aspects such as diversifying funds for continued development and rewarding node operators.

Rory Piant, Community Director at Chainlink, provided insight into the inflationary impact of this token launch. “This projected 12-month LINK token release rate, as measured by the inflation rate of circulating supply, is lower than most other Web3 projects in the top 100 by market capitalization,” Piant said. These calculations are based on the change in circulating supply over the past 12 months (May 31, 2022 – May 31, 2023) for which data is readily publicly available.”

Piant has further expanded its classification of Web3 projects to include a wide range of ventures from L1 blockchain to AI. “The expected annual LINK token issuance rate is a constant amount of LINK (approximately 7% of the total annual supply), so the actual annual inflation of LINK will decrease each year,” he said.

This strategy reflects the nuanced approach of Chainlink’s operating model, potentially redefining its market impact. Unlike typical token launches that often cause market volatility, Chainlink’s recent moves appear to be calculated steps towards sustainable growth and network enhancement.

Despite Chainlink’s strategic approach to token unlocking, concerns are still being raised about market stability and the overall impact of such a significant financial strategy.