chainlink eric schmidtSotN 45 - Chainlink 2.0 with Chainlink God

chainlink google finance chainlink network erc20 chainlink eric schmidt SotN 45 - Chainlink 2.0 with Chainlink God

bankless nation welcome to another episode of state of the nation weve got crypto prices up weve got a lot going on in the crypto and d5 and ethereum space and weve got chain link god on the podcast today this is the episode that we live stream generally on youtube it also comes out on the podcast we dive into one particular topic that has made the headlines recently today the topic is chain link 2.0 and david i dont know about you man but like i really want to understand uh chain link and i want to understand link the asset it is being used by many d5 protocols if not most d5 protocols and i think were going to dig into that with chain link god i didnt ask you how youre doing though how are you doing david im doing just a fantastic casually launched a dow today but thats a conversation for a different start uh state of the nation uh today like we said like you said were all talking all about uh chain link uh and uh and this is actually the first uh piece of content about chain link that weve put out on the bankless podcast and bankless youtube uh so thats thats pretty exciting and we have a chain-link god himself uh the unofficial i would say crypto twitter face of channeling to come and uh tell us all about chain link 2.0 and how chainlink 2.0 can improve upon oracles in ethereum this is going to be an awesome episode guys so stay tuned as well before we get into it david we got to talk about whats new in the bank list ecosystem the first is an announcement that you just alluded to an announcement that we made on the bank list uh website on the bankless newsletter and that is bank list the community is officially launching a dow david i remember when i started the newsletter and you and i both started the podcast uh we realized very early that we had a like quite an incredible mission right like trying to bring trying to educate the masses on crypto trying to bring a billion people into the ecosystem and uh become bankless uh empower them with self-sovereign money technology and from inception when we started this thing we knew that it needed to be bigger than just us and so we recruited kind of you know excellent people and bankless media media studio like lucas campbell and others but even that is not enough to accomplish this vision so the bankless community for a very long time has been talking about organizing itself coordinating in a dao and so we have an opportunity now to figure out what that looks like so we are throwing our support behind a genesis team that has launched an initial distribution for a bankless dow and that dow is aligned with the bankless mission which is basically to onboard the world to bankless money systems like ethereum like bitcoin like defy were going to play a role in that i hope thats really up to the bankless community to decide and now the dow members so well include some links about that in the uh in the show notes including to a link to the newsletter that i mentioned where where were kind of announcing our support for this thing but david its a big day for the bankless community like im super excited that we are uh decentralizing ourselves we are essentially um giving the entire bankless community full permission to execute on this vision because bankless at the end of the day isnt just a media company its not just a podcast not just the show that you listen to this is a worldwide movement so the dow is an excellent opportunity for you to get involved yeah the best trick we ever pulled was uh by going through and talking to every single industry expert whos focusing on the power of tokens the power of internet scaled organizations and the the desire to create something new in and uncharted lands and in in this process im reminded of our podcast that we did with jesse walden who talked about the big tent mentality we uh podcast about chris burnisky and and also our podcast with joel monegro and really getting down to the heart of people who are really paying attention to what it means to create digitally scaled internet scaled organizations because i i think i could speak for both of us when i when i said i have no desire of making some like large c-corp company like thats not what i want i dont want a bajillion employees under bankless llc i just want to be one part of a broader revolution which is what the bankless dow can facilitate uh and so if i im i long live bankless dao yeah im super excited to see where they take it and uh once again guys therell be some links in the show notes for you to get involved and see whats up with that david we also have to mention upshot today so this is super cool this is a perk for members of the bankless community as well i think of upshot as what theyre trying to build is almost like the zillow of nfds so you know how zillow will evaluate homes and will come up with a zestimate like a price whats the value of your home theyre trying to do that with the nfts and they are enabling all bankless members who have a a badge token to to exclusive access to their beta right now for the next seven days or so before it goes public so this is me with a bankless badge in my account im signing in i get exclusive access no one else upshot beta no one else gets this except for the bankless community members uh and what can i do here i can start to appraise uh nfts uh that means like figure out and answer questions about how valuable they are so here are some nfts on super rare and here i am i can answer questions about these nfts i can choose to skip which of these nfts is more valuable maybe i think its this one maybe i think its that one and the net of this david is its like working for a protocol so as an nft appraiser you get paid by upshot to do this uh super cool tech here and uh were excited to uh to to announce its its beta launch to the bankless community with upshot yeah the mechanism here is like hot or not where you are presented with two nfts and you dont have to your job isnt to assign a dollar value your your job is to pick your favorite nft between the left and the right so its actually really kind of like easy and you dont really have to think too hard about it i mean you do need to go and look at like token supply you go need to go look at the artists but its really just like you know pick your favorite other two which one do you think is more valuable and as theres and this is kind of like a big data like movement right like all you have to do is input data into the system uh and get you get rewarded for for doing so and so i think this is a really unique and uh genius way to get some sort of emergent behavior actually instantiated into you know ethereum and actually dictate what nfts are valuable more valuable than others guys another yet another way that you can work for a protocol today david ive got to ask you the question before we get to chain link god that i ask you at the start of every state of the nation and that is this what is the state of the nation this week my friend the state of the nation you actually created this one ryan so tip of the half of you is coordinating the state of the nation is coordinating and like many good states of the nations it means more than one thing bankless dow is being coordinated under a new doubt and so thats cool chain link is this off-chain data coordination system for getting data onto ethereum and really all we are doing when we are talking about crypto economics talking about tokens is we are coordinating capital and labor in goals and objectives uh and so todays state of the nation ryan is coordinating awesome that sounds awesome well were really excited to get into this with chain link god but before we do so we want to thank the sponsors that made this episode possible bankless is proud to be supported by uniswap uniswap is a new paradigm in asset exchange infrastructure instead of a cumbersome order book system where trades are matched with other humans uniswap is an autonomous piece of software on ethereum which is what ryan and i call a money robot no human counterparties or centralized intermediaries just autonomous code on ethereum input the token you want to sell and receive the token you want to buy something brand new in the uniswop ecosystem is the uniswap grants program is now accepting applications for grants we have been saying this for a while and well say it again dows have money and they are in need of labor if you think that you have something to contribute to the uniswap dow apply for a grant to uniswap just look at the size of the uniswap treasury its almost 3 billion this mountain of capital is looking for labor do you have something of value to contribute to the uniswap dal no matter how big or small your idea is you can apply for a uni grant at unigrants.org and help steer unit swap in the direction that you think it should go thats exactly what we did to get uniswop to be a sponsor for bankless and you can do the same for your project thank you uniswap for 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that i get my cash back in eth so whenever i buy something i get a little bit of eath bonus back to me at the same time you can open up a free account in under three minutes at gemiini.com go bank list and if you trade more than a hundred dollars within the first 30 days after sign up youll be gifted a free 15 bitcoin bonus check them out at gemini.com go bankless guys welcome back weve got chain link god here we are gonna talk about all things chain link including the recent chain link 2.0 news figure out what oracles are figure out why chain link is important talk a little bit about lengthy acid and ive got to admit im a little bit of an oracle noob in some respects im hoping chain link god could educate us as well if you dont know who chain link god is are you even on twitter because he is everywhere particularly uh when it comes to the link community he is a voice for the link community and uh has a ton of excellent information about chain link how it works and is the perfect guest to explore this topic with us today chain link god how are you doing today im doing great thanks for having me on guys happy to share all the knowledge that ive accumulated about chain link over the time it is great and i think like uh for me personally i dont know about you david but like pseudo-anonymous guests are some of my favorite to to talk to because you guys can say whatever you want right thats the beauty of it isnt it yeah absolutely thats the beauty of the internet as well you know what lets start with um actually defining the problem set here i want to like zoom all the way out chain link god and talk about um oracles the role and the purpose of oracles i know david alluded to the ability of chain link to bring off chain data back on chain is that the purpose of oracles tell us what why oracles are necessary important and useful for this industry absolutely so when youre looking at a blockchain blockchains are designed to generate a large amount of security consensus on like specific transaction types so transferring tokens thats what its defining security around blockchains inherently cant connect to external data resources you know the price of ether or the weather in san francisco or any other external resource that doesnt live on the blockchain already you need some kind of entity and oracle to deliver that data on chain so it could be actually consumed by the smart contracts within that environment so blockchain miners cant do that themselves because if there was if there wasnt consensus about the data the entire network would break and thats obviously not ideal so you want to have a separate oracle network that relays this data onto the blockchain and its critical that you dont just use like a centralized oracle some server in someones basement somewhere because that entirely defeats the purpose of using a decentralized smart contract on a decentralized blockchain if a single entity can just corrupt the execution of that contract so what you really need is some type of framework for creating these decentralized oracle networks that fetch a specific data point maybe the price of bitcoin against ether aggregate it from many sources and then deliver a single data point on chain so that it can actually be consumed so thats kind of like one example but really oracles its pretty much just connecting the on-chain world of contracts and connecting that to the off-chain messy world of non-determinism and all this messy data out there so you can really think of it as like the bridge between those two environments so lets keep going with some of these easier questions just to really set the the foundation here so uh chain link god uh uniswap has oracles why cant we just use unit swap oracles for everything thats a good question so the primary obvious one is that uni swap specifically only gives you like token data prices of tokens its not going to help you if you want to know like the price of like gold somewhere or the weather somewhere or the election results but specifically when you hone in on price feeds theres like four or five key issues of why you cant just use a uni swap time weighted average price and theyre kind of nuanced but the first one in the primary one is that a t-wap feed which kind of provides some context you cant just take the spot price from uni swap because it could easily be manipulated you need the time weighted average price to prevent that manipulation but when you take the time weighted price it be that data point becomes inaccurate during times of extreme volatility so really a t-wop is a lagging indicator that becomes out of sync with the market-wide price during periods of time when you need accurate data so its like this inverse correlation that you really dont want and so that kind of gets into the security of it where a t-wap you can only really increase security if you take a larger time sample but the larger time sample you take the more inaccurate it becomes so if you want to scale security you have to decrease accuracy if you want to increase accuracy you have to decrease security that inverse correlation is like the exact opposite of what you would want for a good price feed so with chain link it doesnt have that limitation because its not a t-wop it takes the volume weighted average price from all of the exchanges around the world all the decentralized ones all the centralized ones aggregates into a single value to get the current spot price and then delivers that on chain if you want to scale security you can add more nodes you can add more data sources you can add more collateral to it you dont have to trade off some accuracy for your security and so the third point that last one ill hit on is market coverage when you take data from a single exchange youre getting like a tiny sliver view of what the price of an asset is and that market can become illiquid over time it can be manipulated cheaper to attack the entire market-wide price so chain-link specifically with its price feeds is designed to generate a market-wide volume-weighted price that accurately reflects the state of reality about a specific asset price so t-waps and uni-swap its okay if like a token just trades on uni swap and it just launched but once it gets more liquid and trading more youre going to want to upgrade to a chain like feed to get that full coverage and actually scale your security so yeah theres definitely a lot of nuances there and why i heavily recommend a decentralized oracle network rather than on-chain t-bob right yeah so so thats really the nuanced conversation between on like on-chain data that ethereum does know but what youre saying that you know even though ethereum already knows it a chain-link oracle system could provide some competitive advantage versus what you could get naturally on chain and thats one conversation and the other conversation is that uniswap like you said you alluded to unit swap doesnt know the weather or the temperature in argentina or it doesnt know the outcome of the presidential election of 2020. uh and so but why cant we just you know we everyone knows the outcome of the election in in 2020 or in the other or like the the outcome of a world series event why cant we just input that and data into into the chain why does it need to be this decentralized network pitch us on the decentralization side of things so when youre looking at an oracle network what its fundamentally doing is its delivering the data a contract needs to execute and when that contract executes its going to be moving a lot of value you know upwards of billions of dollars if you allow anyone to just input that data then theyre just going to put data that favors them that doesnt actually represent the state of reality so if you want to actually generate a strong consensus you want to take the same approach that blockchains do about transactions but use that decentralization about data sources because otherwise you would be relying on a single source of truth which means its a single point of failure which that centralization is you know the anti-thesis of what were trying to get after with smart contracts so decentralization the main goal is to increase the tamper resistance so we can create contracts that secure billions and eventually trillions of dollars that counterparties cant manipulate into their favor like they can today with centralized agreements so decentralized oracles is the way you get accurate information about the world that cant be manipulated by any single entity or small group of entities daily god im wondering if you might agree with me on this so i often think that the world of public blockchains and crypto defines scalability in a very limited sense so often when people talk about um bitcoin scalability or ethereum scalability theyre only talking about um scalability of of transactions per second that is like trustless transactions per second um but there are so many other axes for scalability that are important if we want a truly decentralized permissionless money system and i just want to just paint this picture for uh listeners that i think what youre saying i would agree with you is that oracles are actually a scalability technology um for a couple of reasons like one they allow us to scale to real-world off-chain assets which is incredible and maybe you could say more abstractly off-chain events which is even a larger aperture for us so like thats an element of scalability but their scalability is only as good as their level of trustlessness and decentralization right because it would be very easy for us to get some of this price feed data from a trusted provider say you know nasdaq or new york stock exchange or something like that but that is again not scaling uh trustless price fees its not scaling trustless on chain data and that is the true vector of scalability for this entire system do you agree with that and like can you talk about that anymore do you think that people understand that oracles specifically trustless oracles are key in order to scale permissionless open money networks like ethereum yeah i would entirely agree people usually think of like like you said scalabilities and doing more transactions but scalability also applies with how much value is being secured you know if you have a very low security oracle network and you keep increasing the value without scaling your oracle solution you know it that contract is going to end up being corrupted eventually anyways so what you really need is the ability to scale the crypto economic security of not just you know the network on which the contract operates but the oracle network which delivers the data to that contract and if if you think of it as like a more broad abstract concept you can think of the combination of oracles and blockchains as scaling the amount of value that humans can create just in general so if we want to be able to take over the global economy into a better state where its not controlled by any single entity we have to scale not just the transactions per second but also scale the amount of security that we can actually provide to secure these contracts so thats kind of a large aspect of chain link is how do you scale security because as the value within contract rises you need to increase that scalability of security so chain link has various different mechanisms for increasing the node count for increasing the amount of data sources the amount of explicit stake or the amount of implicit incentives but generally youre scaling security thats like the primary goal of oracles so lets get into the details of how that is actually actually done uh chain link is a cryptoeconomic system and on bank list we like crypto economic systems thats generally how we scale trust minimization and therefore more value to further and further corners of the globe so uh chain link can you start us down the path of explaining how chain link is a cryptoeconomic system and how it uses crypto economics to secure data sure so with the crypto economics theres kind of two different paths you can take theres the implicit incentives path which chainlink has today and then theres the explicit staking path which is kind of what was laid out in the white paper so with the implicit incentives aspect this is kind of a dynamic that i dont im not sure if people fully grasp the the power of where if you look at the network chain link nodes are being paid in and they hold link tokens and they have a strong financial incentive to uphold the value of those tokens to ensure that their financial holdings are not devalued and that their future cash flows are not devalued either so it makes it so its more profitable to be honest and continue providing uh real operational work to the network because you want to maintain the value of the tokens you are extremely financially exposed to so you can kind of look at this dynamic the same way as how bitcoin and ethereum does it where miners are paid in that native token both the subsidy and the fees paid by users and they want to maintain the value of their holdings and their cash flows in both the tokens they hold in the asics and the miners that they hold and this applies just as much to chain link where nodes want to maintain the value of their link and maintain the ability to use their link to generate more link in the future and that gets into the explicit staking aspect where thats where you deliberately deposit your linked tokens to a service agreement and it gets slashed if you do something the service agreement says you werent supposed to do if you deviated or you didnt respond thats a much more direct financial penalty to a specific node who is specifically being malicious but the implicit incentives is kind of wrapping the whole network to be overall reliable and healthy because theres a financial incentive for everybody within that ecosystem to maintain the value of that token they hold and they will continue to get paid in because they want to continue these cash flows in their revenue chain link god i have a quick follow-up with for you about that implicit incentive so i see exactly what youre saying with uh the implicit incentive right so somebodys not going to uh cheat if they are vested in the chain link ecosystem it hurts their bottom line it hurts their wallet um joey crew came on the podcast not sure maybe sometime over the summer from uh pantera he sort of opened my eyes up to to to this concept is basically im going to run this by you basically his argument was yeah well uh centralized organizations have the same implicit incentive not to cheat so lets say you are providing an oracle service to the blockchain and you to ethereum lets say and you are espn for instance right your implicit incentive is to provide the right score to the chain or else what or else theres reputational risk theres cost to your shareholders so if you have any espn you know stock or equity and you know a new story comes out that youve been providing misleading data and trying to cheat the system stock price goes down future cash flows go down its the same sort of implicit incentives i feel like youre talking about and these exist in centralized oracle providers uh talk to me about that are arent we just talking about something that just exists anyway whether its decentralized or not at least on the implicit incentive side yeah thats a good question thats something i have considered in the past i think the key difference is like when you have a centralized corporation a centralized entity they have complete control over their own operation but when you have a decentralized network of hundreds to thousands of independent civil resistant entities the act of corrupting the network requires an extreme amount of social coordination to actually pull that off so this implicit incentive its kind of each node knows that its in their best interest in everybody elses best interest to continue operating the network correctly so they can continue earning these cash flows and its not a single entity who can make a single decision say yeah im going to be malicious and do this tomorrow but you need you would basically need to majority attack the network and that that honest majority assumption is the same we see for bitcoin and ethereum and thats what secures those networks is that you have a decentralized network of civil resistant and independent entities so its it has that social coordination friction that kind of prevents this from happening and thats derived from the uh the selfish implicit incentives that each individual node has themselves so its its a little bit different when you compare it to centralized entities who have complete control over their own operation and i want to be clear for listeners because i think were going to come back to this when we talk about chain link 2.0 but the explicit staking incentive that you were talking about thats not here yet but that is coming in chain link 2.0 is that correct thats correct yeah very good all right well earmark that and come back to it later listeners so just doing a more again setting the foundations about what train link uh really is lets talk about all of the ecosystem players who are all of the lets talk about every single participant in the chain link network right so there are data consumers who people who are looking for price feeds or just oracle feeds there are oracle providers people that are providing this information and staking link who else is involved with these systems and how do they all interoperate with each other yes you can kind of think of it as like a stack almost so what you have at the bottom is like the original data itself wherever that raw data may be you know if its price data its all these different thousands of different exchanges and on the layered top you have the data providers or more commonly data aggregators which are professional data aggregation firms whose entire business model is around generating accurate and reliable data about a specific event a specific piece of data and you they basically like with price feeds they would provide market coverage but you cant just trust one data provider because single point of failure so you have a you have chain link nodes who are responsible for querying multiple data providers for a specific piece of data like etheusd aggregating that into a single value but you cant just use a single node thats a single point of failure so you need to have a decentralized network where all of these nodes contribute their data into a single data point and that aggregation happens within that oracle network which is one entity then they deliver on chain which is then consumed by smart contract applications and developers like the ave the synthetics the dydx all these other financial applications even the nfts and whatnot so its kind of like a supply chain from the raw data up into the refined data and then the consumers and then kind of all throughout this entire stack you have the community of the each individual operator of each piece of infrastructure who is its kind of like a well-oiled machine if one piece doesnt work the tech stack doesnt work so its its all kind of integrated with each other and sometimes data providers are the chain link nodes sometimes you have different ways that networks are set up where there is just a single data source because its like a enterprise backend system so its kind of like fluid with who these entities are but you need all of them otherwise you dont have an oracle network of any use to anyone i see so that that was going to be sort of my my follow-up question because i think uh the the picture youre painting is very clear in my head about kind of this layered you know stack of different service providers my question is kind of like maybe you partially answered that um where does the chain link network start and where does it end off so obviously lets say at the bottom layer the the price providers the the exchanges theyre not part of the chain link network necessarily you also talked about this this aggregator layer of the stack im not sure if theyre part of the chain link network but certainly the nodes on the network are that are providing the feed to the chain then you have consumers on the top that probably arent part of the chain link network is it is it mainly the nodes or are sometimes the aggregators part of what you might call the the chain link network yeah thats a good question so by default every chain link node is a part of the chain like network thats kind of what it means to run a chain link node we have data aggregators and sometimes theyre part of the network because they run their own chain link node and directly deliver their signed api with their private key other times theyre outside of the ecosystem chandler can support both types of data providers and when you get to like even the exchange data most exchanges are just exchanges but we see things like kraken who actually run their own chain link node and are directly delivering their data onto ethereum so it can be consumed so its kind of optional if you want to be in the in the chain link ecosystem or not or in the chain link protocol chandler can leverage data whether youre running a node or youre not so its kind of like a blur right now its mainly those node operators but as it becomes painfully clear that monetizing the growth of defy is very profitable were going to see more of those data providers and even more of those exchanges running their own chain link node and directly selling their data to smart contracts through chain-link infrastructure so its kind of like a its a bit its kind of blurry like theres no fine line to it really so coinbase publishes their own oracles about price feeds and i think what youre saying or what you could could argue is that well they could just continue to do exactly what theyre already doing but they could all they could integrate with the chain link protocol and issue their their price feeds through chain link and and in that case chain link would be like a distributor of uh coinbases oracles coinbases price feeds and actually in in theory according to the the the arguments from from chain link coinbase almost has no reason not to theyre already doing this why dont they just get paid for it from the chain link system um right and and and in theory that like the bold case for chain link is that well everyone will just follow this path um do you have any uh you want to add anything onto that before i go on to the next question i would say with coinbase theyre not they call it an oracle but its not really an oracle its a signed api connection it doesnt actually deliver the data on chain you still need an oracle network for that but when you think of like all of these entities who want to deliver the data on chain chain links just an easy solution to make that possible and youll still want an oracle network to aggregate from many sources so its like its an obvious way to monetize your apis and generate more revenue like its its a no-brainer for these providers so chain-link maybe we could talk about like just the the number and specific or in specific applications on ethereum theres a lot of defy apps that consume chain link oracles lets name name off some of the big ones if you could and also are they paying the chain link system for that information and talk about the flow of the link token throughout the system right so theres theres a lot of different types of applications that are using chain link like the larger ones we see is like ave a decentralized money market where you can lend and borrow the tokens you can see uh synthetic assets like a synthetics where you can mint representations like gold or oil or even like tesla stock in s p 500 you have like decentralized derivatives like dydx you have various nft platforms pretty much any type of application that needs external data resources is using chain link already or well be using chain link so when were looking at the usage of the link token each user within the chain link network if theyre using chain link price feeds that means theyre a sponsor and that means theyre paying some portion of the fees but a kind of an important nuance is that chain like price feeds which is like the primary offering from chain link its like a shared cost model if theres if somebody needs ethiosd theres just one eth usd feed and theres about like 30 users and theyre all pooling their fees together meaning each user is not paying the full costs theyre only paying a fraction of the total costs and then you add the network subsidies on top of that so it makes chain link by far the most cost effective solution because users are never paying the full costs and so all of this link being paid by users and by the subsidy goes into the oracle network and then gets paid to the nodes for their services so its kind of this this reference feed model is like at the core of the economics of uh price feeds you also have something like vrf where contracts need to specifically acquire linked to them pay a chain link node to get verifiable randomness into their application thats like a a request and receive model while a price feed is a continuously updated resource that you could just query anytime in a single transaction so that thats kind of like the different flows of link but generally its paying for oracle services and then eventually with explicit staking collateralizing those oracle services for those users i want to bring bankless listeners back to another mental model that weve talked about so often on bankless you named a whole bunch of different d5 protocols that that use chain link and this is because so many systems need price feeds one of the formulas weve talked about before is basically if you have a some store value asset some something thats valuable tokenized on chain and you add an oracle you can create a synthetic any kind of synthetic its like price feed plus collateral equals anything tesla stock apple stock like you know the the the price of the department that that davids in right now like anything can be created in this combination and so were seeing this explosion of all of these synthetic assets on defy and all of them need price feed oracles but um i i want to make sure i understand sort of the cash flow component here when youre talking like say an ave that that is a consumer of this price feed data theyre paying the chain link protocol in link tokens is that correct so theyre actually like theyre consumers of all of these various price feeds and they need link in order to pay for them right so with with each price feed each price feed has a specific contract associated with it and that contract needs to be funded with link and every time an update is produced that contract allocates a link payment to each node operator for their service so the contract effectively needs to be pre-funded by link and thats pre-funded by the network subsidies and by the link used by users to fund that specific contract the request to receive model is a bit more direct you dont pre-fund anything you just pay the link directly to the node and then you get your data back in the later transaction but this reference feed contract model is like a pre-funding mechanism so that you can get like assurance that youre going to be getting data for as long as that contract continues to hold link in it and anybody can put link into it but the users are have a strong incentive to ensure that they still have access to this data and they pay in order to access this data so i think were going to get into link token economics a little bit but i just want to make sure i understand so is that a source of link demand on the system right you can kind of think of it as like ethereum if you want to make ethereum transactions you need to acquire eth somehow from somewhere and same with chain link if you want to use chain link services you need to acquire link from somewhere to pay the operators for their services so this is link acting as a medium of exchange unit of account kind of a money inside the chain link system is that correct exactly its like its like the money of the oracle economy you could think of it as so if chain link is actually pushing uh data on chain how do they how does it actually enforce people to pay for that why cant why cant applications just go and find that if its published somewhere on chain how is the enforcement of link payment actually enforced why rather than just like some application going and finding the data that was published yeah that ones a bit more of a tricky one because once you put data on a blockchain anybody can see it anybody can access it from off chain right so really it comes down to incentives if you are a protocol with 10 billion dollars in user funds and you feel like youre just going to be freeloading data youre providing no assurances to your users that contract can shut down at any time because youre provided zero guarantees for services but if youre a direct consumer who is paying you have a very strong service guarantee that the user funds within that contract are going to be protected because youre going to continue receiving data for that and theres different methods you could use commit and reveal schemes but it gets a little more tricky with like siphoning contracts so really it comes down to those incentives that large protocols securing a lot of value need guarantees theyre not going to be having these shoddy weak feeds that may or may not exist tomorrow who knows who really cares they do care because user funds are at risk so its its a small price to pay because of this shared price model each user is paying very little and each user wants these guarantees that theyre going to receive this data so it comes down to those economic incentives but does that make it an opt-in system as in like if you want that data to be secure you better be paying for it and if you dont pay for it then it might be insecure is that the model essentially you yeah you would want to pay to get guarantees that youre going to be receiving data today and into the future and theres models of the contract where you have to be specifically whitelisted in order to be added to it and some contracts use that model but that one has different considerations because a blockchain is very public you know that you cant really get around that unless youre using privacy solutions like chain links deco with zero knowledge proofs that makes it much easier to just completely avoid this problem because you never reveal the data you only have a zero knowledge proof proving something about data without actually revealing the data so thats like the long-term approach to these oracle networks is not even revealing the data just allowing the data to be used to generate some computation and then posting the computation on-chain and that can never be freeloaded because its never revealed to anyone right that that makes sense because im im just reminded of like the the classic moloch problem right where there are 10 fishermen around a lake and theyre all over fishing the lake and so they all need to make an agreement to be responsible and only fish 70 percent but then that one person is like well ill let everyone else pay for it you know ill let everyone else take the costs but ill over fish right i wont pay the train link oracle with link tokens ill just consume the data and ill let everyone else pay for it if everyone else follows that same pattern then actually no one actually pays for anything and then everything crumbles apart but it sounds like thats been addressed right its those economic incentives and then this layering of additional cryptographic mechanisms to actually prevent this entirely so its like its going to take a multi-layered approach just because blockchains are so inherently transparent but yeah its kind of one of those nuances of having an oracle network and its kind of minimized by like its not going to cost the users very much to consume this data because theyre one of like eventually hundreds to thousands of users consuming the theta david theres always that one fisherman that screws it up for always that one god damn right yeah well his names moloch by the way uh so chain link god so when we talk about the appetite for data on the blockchain uh on ethereum i know its uh its voracious right more data please because we want more assets because more assets equals more equity and these are liquidity eating machines how how do people consumers signal uh to chain link oracles that they want a new data source so if i want some price feed for like lets say uh a sports event or a new a new asset um how does that get communicated to the chain link network in order to to service and spin up that new uh price feed so theres a couple different approaches when you look at like the chainlink protocol itself its not a single monolithic network its actually like a framework for building independent heterogeneous networks and anybody can launch their own node anybody can build an oracle network consisting of whatever nodes that they choose so they can coordinate all this activity on their own if they want to just get this data immediately and theres also you know kind of like how the ethereum has the ethereum foundation chain link has chain link labs and they will help projects bootstrap these oracle networks because they have a lot of knowledge and a lot of experience in actually getting these networks up and running but given that chain links inherently a permissionless protocol if you want data you can get it on chain theres the tools available to you as a developer through existing nodes by launching your own node or using any combination of the two so its essentially you can bootstrap it however you need but really you would be communicating with the node operators of the network if theres existing node operators you know are reliable and you want in your oracle network you can communicate to them and say hey i want to get you know the game score of this specific event on this specific day and you can coordinate and pay them for that services because its like a peer-to-peer economy you know its direct supply and demand theres no central coordinator because there is no central network its all these independent networks that self-coordinate to generate specific pieces of data and just so im understanding the full picture here so those oracle providers theyre getting paid link but their costs to run an oracle service are what is it basically like infrastructure costs uh aggregation costs and then also say in the case of ethereum eth gas costs is that is that what like comes out of their profits essentially yeah theres a couple of capital costs theres the cost of like running the server itself which is not very much because you know were not doing proof of work or any hash computation theres the cost of purchasing api subscriptions to like premium data sources so you can actually get that and those have different models yearly or per call access and the primary one especially for ethereum is the gas costs actually paying for the fees to get data on chain and you know that thats kind of as ethereum gets more and more adopted that becomes more of a glaring issue so recently chain link released a scalability upgrade called off chain reporting which essentially moved the aggregation of data move that off from on chain and move that off chain which basically reduces the amount of gas thats consumed by up to 90 percent so that dramatically lowered the capital costs of needing to pay for gas for oracle nodes and so as these networks become more efficient those gas costs get lower and lower and lower because those are the primary costs right now its just an unfortunate state but itll be itll be solved over time as e2 comes out as more projects begin transitioning to layer two networks like optimism stockwear arbitrum and maybe other uh side chains but essentially chain link is such a large consumer of gas because theres hundreds of price feeds and hundreds of data feeds on ethereum that need to be updated continuously maybe some are updated every 0.5 percent deviation threshold which means if the price moves 0.5 percent and on chain update is published and ocr dramatically lowered the cost of that by basically batching node responses into a single transaction but you know youre never going to escape paying for gas fees if youre trying to put data onto ethereum what you can do is use this shared cost model where you have many users and so its like an economies of scale effect but i would definitely say that youre going to follow today those following on youtube we have gas station up chain link is the 13th largest consumer 105 000 today in the last uh 30 days usd value and node operators are paying that amount right yeah thats being paid by node operators to post date on chain specifically by the the transmitter in each ocr feed so that would be like a million dollars without ocr which would be ridiculous so more improvements are definitely to come in that regard and so thats kind of where link comes into play you have to compensate these notes if they werent compensated they would never pay a hundred thousand dollars a day to put data on chain theres no economic reason not to if theyre not being paid chain link i want to get into the topic of chain link as a chain agnostic problem but first i want to tie off this conversation on about how data comes to ethereum uh and different kinds of data data has different like value ascribed to it and i think the the tl dr as to how different types of data have different value is if an attacker can corrupt the data how much value can they extract from that attack right like and so different types of data will have different amount of attackable surface area to it so how does chain link the network scale up and down security to make sure that each different type of data with each different oracle is appropriately secure so that an attacker cant attack the the oracle and present a fake data and fake price feed or fake just truth about the world and be able to capture or steal or attack some some value as a result of that fake reporting how does chain link make sure that all types of data is secure right thats kind of like the goal you want to get the cost of attack to be much higher than the cost of reward and that reward is the total value locked of each protocol consuming that data so theres like a kind of a litany of different things you can implement you can increase the number of nodes within the network increasing the social coordination issue of trying to corrupt a network you can use more expensive and highly reputable nodes that have more future revenue at car at stake that they could lose if they were malicious you could increase the number of data sources so you you have a broader view of what youre looking at you can use more expensive and premium data sources which uh provide higher guarantees of uptime and accuracy you can even do more implicit incentive size where you pay the oracle nodes greater amount of link because that increases their opportunity cost of being malicious because theyre not going to want to lose that future revenue and theres also like cryptographic methods with deco which uses zero knowledge proofs and town crier which uses trusted execution environments where the oracles cant manipulate the data even if they wanted to its kind of like this black box environment that enforces correct relaying of data and then the final one and thats the one everyones excited for is explicit staking you can have nodes lock up more link tokens which creates a directly higher opportunity cost of being malicious because they would get slashed for that link so you can use any of these parameters its kind of like kind of like a dashboard or you can fine tune all the top dials so if youre if your network is securing only a thousand dollars you probably dont need that many nodes maybe you know five is enough for that but if youre securing a billion dollars well youre going to need much more youre going to need 30 50 100 youre going to have to keep scaling that up more nodes and more data sources so its its all fine-tuned for each network and so how does competition uh come into play here because from my mental model of cryptoeconomics is that competition is always at the heart of them right so if there is a lot at stake there it should be in theory a lot of revenue to be made for honest behavior right if you are doing what if you are reporting honestly crypto economics should compensate you and if theres a lot at stake like theres the like 12 billion dollars locked in ave therefore there should be a lot of revenue coming out of ave into the chain-link system uh because of how much is at stake there so so if you are reporting uh price feeds into ave do you and i i believe according to my mental of crypto mental model of crypto economics there should be a lot of revenue being passed between ave and chain link so how does that work and how does uh is there just simply more revenue to be made for reporting on more valuable data feeds so theres kind of a different dynamic when the amount of value in like avi increases and they can pay more fees to the oracle network and as more protocols start using that network and pay more fees those fees can either just be given to the node increasing the revenue or a more practical approach is using those increased fees to onboard more nodes and onboard more data sources so as the fees increase your securities the security of the network increases proportionately and more more at the chain like revenue right yeah exactly and so like the individual revenue from each node may be static but the network is continuing to grow over time and its like a free market economy each node is competing with each other to provide the best services at the lowest cost so lets get into the conversation of chain agnosticism because this is something im particularly curious about and i dont actually know the answer to this is where does chain link actually live so theres kind of two aspects of that question theres the protocol and then theres the token so with the protocol chain link node software is inherently blockchain agnostic you can run a chain link node to deliver data to ethereum to bsc to polygon any network and that has no cross-dependency of any of the blockchain so something like bsc yeah its extremely centralized but its a lot faster meaning chain-link feeds on that network can be a lot faster and a lot cheaper and so you can essentially natively integrate chain link into any layer one blockchain or any layer 2 blockchain without a dependence on any other network so ethereums the most used thats where d5 pretty much lives but you can have these native integrations on other chains and we already see you know a bunch of different integrations across like star wars echo x to ibsc all these different networks and then the other aspect is the token so if youre running a chain link network on bsc you cant you could pay link on ethereum but thats not practical what you can use is a token bridge where you lock up link token on ethereum into a contract and then mint a representation of it on another network and you can transact using that representation you can burn it and get that original link on ethereum og version back so its all the economic value is essentially on ethereum being collateralized and its being distributed out into these other networks kind of like a commercial bank does to these other networks so its you you would essentially allow chain like networks on other networks to pay and to operate at the native speed of whatever that network is and ethereums kind of like the home base like the headquarters of where things come back so so all of the chain link clients they are blockchain agnostic because theyll put data wherever theyll be received but the token has final settlement on ethereum right so there is some sort of homage that chain link does play to specifically ethereum to the exclusion of all other chains and yeah pretty much you could think of like ethereum as like the the final settlement layer if you know if i do crazy thought experiments ethereum somehow fails dont see that happening you have to prepare for the worst situation you could redeploy the link contract on another chain with the same owners and if social consensus agrees thats the correct version thats the new settlement layer for link i dont think thats going to happen but if it needs to happen it could happen essentially its just using ethereum is the most secure network so its the most obvious solution oh that perfect answer love it uh so chain link got it i want to go into a little bit more details about chain link 2.0 and also the future of chain links so were going to get into that next but first were going to take a moment to talk about some of these fantastic sponsors that make this show possible balancer is synthetics is ethereums decentralized derivatives liquidity protocol what does that mean synthetics is a platform for creating and trading synthetic assets which are assets that are priced via an oracle rather than bids or asks traders can use the quenta exchange which hosts and trades all of the synthetic assets created by synthetics traders on cuenta can trade synthetic tokens like sbtc s oil or sd5 because quinta is powered by synthetics traders experience zero slippage on their trades no i didnt mean low slippage i meant no slippage because that is the power of the synthetics platform no slippage on your trades you can also easily short assets with isynths which are synthetic assets 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into the conversation of chain link 2.0 because this brand new chain link white paper was recently uh released and its got some cool new uh cryptography uh crypto economics baked into it and kind of a brand new design of the chain-link system and so chain-link i kind of want to hand it to you what what would you say is like the big new thing in chain-link 2.0 so i would say the big thing is that oracles are usually seen as like a data delivery mechanism thats their primary use but this white paper basically presents a vision of how oracles can also provide off-chain computation to scale existing blockchains provide privacy order fairness and basically extend the ability of blockchains to provide value and create whats basically called hybrid smart contracts where you combine both the on-chain code of a contract with an off-chain oracle network and you can basically have the code living in both environments so you can have settlement on the blockchain with transparent code and interacting with private keys and then oracle network to provide computation and then that can sync back to the main chain using a layer two mechanism so its its really this new infrastructure of how an oracle works and a new definition of what it means to be a decentralized oracle network its not just data delivery its everything a blockchain doesnt provide so its like its the other half of the puzzle piece uh completing the god protocol as its so put so the the really nice thing the nice like mental model i have about chain lakes and oracles in general is like its the its like the radar antenna for a blockchain right blockchains only know about themselves and they need an oracle system to understand what is true about the world around them um but really just to to go into as good of details as we really can about this maybe you can explain like what was uh missing or lacking in chain link the og 1.0 chain link and just uh and what is now here with with chain link 2.0 what what can chain link 2.0 do that chain link 1.0 cant do so the primary thing is its you can almost think of it as like a layer two because these oracle networks these dons the new version as theyre called it can store state kind of like a layer two but its not a generalized layer two its like an application specifically or two you know it just specifically grabs the price of eth and then does computation of contracts that need that price of each off chain in this layer two environment and then settles back onto the main chain that could be like a roll up or validium or whatever the protocol so its kind of like its its not just a delivery mechanism of like a middleware communication bi-directional its actually like doing the computation of a large portion of the contract offloading the work of a blockchain but then using the blockchain as like a security anchor youre providing guard rails and final settlement for these agreements that are executing off chain so that thats like the primary difference that chain link doesnt do today it doesnt hold state of you know the state of a contract is just delivering data but with dons they can actually hold the state of specific agreements and each dawn network can store the state of different contracts and interact with other dons to get data so its like a complete reimagining of what it means uh what what the role of an oracle is in the ecosystem so you know we we we talked earlier about oracles being sort of one dimension of scalability um what youre talking about here is kind of expanding that that that scalability that something like chain link is providing to off-chain computation um can you talk about why on-chain computation is a constraint for chains today and i i do understand it as a as a constraint so for for instance ethereum even with um eth 2.0 it is sort of you know sharding out this this um this data layer and theres going to be a lot more space from a data perspective but on-chain computation is still going to be like fairly scarce so can you talk about the general problem that chains have doing on-chain computation how this could be offloaded what pain point it solves for chains like ethereum sure so we have a block chain like ethereum has tens of thousands of nodes its very redundant computation and thats great for settlement but you dont necessarily need that redundancy for every individual small interaction of a contract so ultimately doing everything on the layer one is extremely expensive its going to take a lot of gas the more complex things you do the more expensive it gets and theres also other things where you know a blockchain is inherently transparent and doesnt provide privacy so if you want privacy of some specific piece of your contract logic youre going to have to put that off chain and that off chain can be a dawn so it can grab the data it needs compute on it and then deliver a final settlement result which is secured by the blockchain so its like youre minimizing how much work you need to do in this decentralized network and using it as the base layer trust settlement layer while doing things much cheaper much faster and in a private way and with other benefits like order fairness prevent mev and doing that all off chain which can basically provide the best of both worlds you get the security of the blockchain and you get the scalability and the privacy of off-chain systems in the form of oracle networks and thats combined together into a hybrid smart contract so it basically oracles they help any aspect that a blockchain is not necessarily great at and thats currently scalability and privacy for the main parts lets go into the subject matter of what the computational requirements for being a chain link node operator entails so if theyre if they are storing state does that mean that they are downloading and hosting data and do they need to host that data forever and and also like what are the computational requirements like ethereum proof of stake has very strong commitments to just being able to be done on a regular consumer laptop like what what does a whats the hardware requirements for a chain link node right so theres no specific like defined value because a blockchain all the nodes need to have the same requirements because its one network with chain link all these different networks some may have very low requirements some may have like extremely high data like data warehouse requirements it kind of depends on what you want so storing data a dawn a big difference here is that it actually has a ledger but its not a standalone ledger its a ledger thats specifically anchored to a main chain so its really more like a layer two in that aspect and that ledger can be persistent it can continue to exist or it can just be temporary maybe its only needed for a week and then its discarded because its no longer needed its kind of like a on-demand basis what do you actually need do you need really low hardware requirements great you can create a dawn for that if youre okay with more like a salon eos model bsc you can do super warehouse dawn network model like its its kind of whatever you would want to do for your don network so its generally like hardware requirements today are extremely low because there isnt computation in that regard but once its doing computation there is just an infinite spectrum of how much you want to do chainlink god you keep using this term dawn what is dawn uh yeah i should explain that thats just an acronym for decentralized oracle network that kind of just defines this new oracle network model understanding theyre kind of like pods right like each dawn is its own kind of character is that right you can kind of think of it as like you have a field and each flower is an independent dawn network like theyre not attached to each other they each independent entities so like the chain like network is not a network its actually a network of networks its like a collection of all these networks they dont necessarily have any dependencies on each other each don each network can do its own service have its own service parameters of how its supposed to do that service so its kind of like that ultimate heterogeneous design design a network exactly as you need it to so speaking of the different kind of tiers of of network and and you said this is sort of a network of networks design uh my understanding of the the white paper is there theres like sort of the you know the default network as well and also this backstop its almost like theres a two-tier oracle system and that backstop provides more additional security to sort of the front line oracles im not sure if im getting that correctly but but can you talk about this and how would you articulate this this design right yeah so what ryans referring to is the explicit staking mechanism that uses a two-tier oracle network where you have a default tier thats low cost very high throughput maybe a little bit more centralized thats just continuously generating reports then you have this second tier backstop oracle network which is higher cost more decentralized uses maybe the most reliable networks in the nodes that have the largest opportunity cost to lose and so when you combine these two where the second layer basically resolves the dispute of the first layer what that means is that you only need to pay the costs of the first tier but you get the security of the second tier because its like a its secured by the credible threat of arbitration its like getting threatened to being sent to the principals office youre not going to up because you know youre going to get punished when you get there so this second tier security basically allows the chain link networks dons to scale without compromising on the security that they provide users well the principals office has a third tier and that was always my parents when i got home its tears all the way down my my one question is are these two tiers differentiated by link but at all or is there something else that differentiates the this uh how how you find yourself in one tier or another yes so the first tier thats where nodes explicitly lock up link and they lock that into contracts and any node in that network can raise an order an alert gets determined by the second tier network and if its determined like an oracle report was false they slash that stake that second tier network is directly secured by nodes who own a large amount of link they get paid a large amount of link they have a large opportunity cost for being malicious so if you wanted to corrupt that network you would effectively have to 51 attack the entire chain-link network because each second-tier node is heavily financially exposed to link and if they falsely resolve a dispute theyre going to basically destroy the trust of the chain-link network destroying the value of their holdings and destroying the value of any future revenue they would earn and they could have earned into the future so in that regard its kind of those implicit incentives that fall back to like what bitcoin and ethereum has where bitcoin miners dont explicitly stake anything but they do get paid in bitcoin and they own asic equipment which is like future bitcoin so they care about the proper operation of the protocol in the same way with the chain like second tier theyre the ones who have the most skin in the game and when a dispute only appears like once a month its an obvious choice do i want to keep making money yes or no and the obvious choice for any node is going to be yes if it is no well you have the whole social coordination friction issue thats mixed and practical so really the key differentiator is that the first tier network you know can really be any node the second tier network would be specifically the most reliable nodes with the most skin in the game that would be like the core differentiator so both would own link but the first two would explicitly stake the second tier would have heavy financial exposure wait so the both tiers stake link right the first tier explicitly stakes in a service agreement which can be slashed and then the second tier network wouldnt explicitly stake but they would be the most reliable nodes so they have links staked in other networks which means theyre heavily financially exposed to the value of the link token and theyre heavily exposed to the future revenue that they would generate so its that second tier that determines when the first tier would get their slash staked so its kind of its like a backstop security mechanism when when would they receive revenue when would would the second tier the more powerful tier when when do they receive revenue from the first tier so they would receive revenue if a dispute is called then they get paid for resolving that dispute but these second tier nodes would be the most reliable chain link nodes so they would be generating revenue in other networks as first tier notes so they would be generating revenue from both the disputes that the arbitrage they take over every so often and then they have the revenue they generate from all the other oracle networks that they participate in so if youre a second tier node are you also by definition a first tier node two not necessarily in the same network you dont have to not necessarily okay right it could be like a mix and match they could be maybe theyre not its kind of whatever the data requester wants to define for their model they could just use lower quality medium nodes for the first tier and then high quality nodes for the back tier so they dont have to pay these backstop nodes like almost never because theyre never called into dispute because the first tier network knows if they up then theyre going to get their slash staked by the second tier who have way more exposure to the network than they do so im kind of giving like getting like a supreme court slash uh supreme court versus i dont know whatever the most state level courts or city level courts right where every like if if things dont go well at the city or state level courts things get escalated to like you know state level or or federal level courts right is it that that seems to be the mental model that is arising in my head what my question is is what prevents uh all of the second tier stakers from colluding amongst themselves because if you know the second tier stakers second tier nodes are checking the first tier nodes whos checking the second tier nodes so the second tier nodes they would have a they would have extremely strong financial incentive to correctly resolve these disputes because if they corrupt a dispute then the confidence in the chain like network falls and that directly affects the value of the link that theyre heavily financially exposed to and because they were malicious they would forfeit all of the future revenue and because theyre the most reputable and the most used networks the most used nodes in the network that would be an extreme cost for them and kind of in addition to this implicit incentives which we see the same thing in bitcoin and ethereum theres also cryptographic methods like deco you can use a zero knowledge proof to prove whether a first tier node accurately relayed a data from a data source so you dont even necessarily have to trust the second tier if you just use a zero knowledge proof to prove something from a data source which is supposed to be the data that was delivered zero knowledge proofs are a little bit expensive to generate so you dont necessarily do that for every first report you would only do that if theres a dispute and then you pay those costs and the second tier node has a strong incentive not to manipulate the dispute but even if they wanted to they couldnt if there was a cryptographic proof backing it so chain link we talked earlier in the episode that there was you know added to the crypto economics and chain link v2 is this sort of explicit slashing mechanism uh can you explain that is that the main change and how does that impact the the use cases for link as an asset yeah so that explicit staking thats what basically what the first tier network would be doing if you would service a network you would have to lock up link and if youre honest do you get that link back if youre dishonest according to the service agreement you would you would be slashed and given to the alerting note of who said you were doing something wrong so when you add explicit staking to link it dramatically evolves like the economics of the link token because right now you can kind of think of it almost like a parallel to ethereum ethereum or ether right now is being used to pay for fees but with proof of stake youre going to have to lock that up in order to secure the network and so youre using that as a store of value to collateralize the network in the same vein with chain link users not only today need to acquire link to pay for services but once nodes have to explicitly stake they also have to acquire link to lock up and stay competitive with other nodes who are also locking up their link and trying to provide the most economic guarantees so it kind of evolves channeling from being specifically like a meeting exchange utility token to now also a store a value token that earns you future cash flows its like link is the right to generate revenue in the chain link network and thats you kind of think of it as like almost like a tokenized asic in a way where its staked link is future link so its its a dramatic evolution of how link would be valued and how link would be used within the network so thats kind of why a lot of people are excited in it because it gives a lot more utility and a lot more like direct financial value youre directly collateralizing a contract and that amount of security you can provide depends on the price of link and depends on how much link is staked so its like a dramatic evolution in the tokenomics of link so another mental model that bankless listeners are familiar with is something we talk about often which is there are three asset super classes one is a capital asset and thats something that that produces revenue for you in the future an asset like property for example theres also a commodity that could be used to create something else so its used as a consumption good and then theres a store of value i think youre making the argument that link is being embedded with characteristics that kind of span these these classes if im not mistaken so if you if you own link and stake it youre using it as sort of a story value collateral within the system right and of course in link 1.0 it was used as sort of almost a consumption good because if you were a consumer of linked price feed oracles you need link in order to pay for those goods and then its a capital asset in in one way if you are staking link uh you know you have the right to receive a few future link uh i i suppose supply so would you say it fits across all three of those asset super classes yeah i would definitely say so its consumable like i said in the sense youre converting a link token into data oracle services that you need its a store of value because it needs to collateralize the value of the protocols it secures and its also a right to cash flows from the data being collateralized so its its very like ethereum and its like final form for ether its its very similar and its entirely complementary ether and link you know kind of boost the growth of each other so they each have these kind of they will have these common similar economic properties once the full token economic models are fully fleshed out for each one so chain link got look weve been recording this podcast podcast link is at all time highs right now i dont know if thats a coincidence or not first time youve been on the podcast no idea but theres a market cap of almost 20 billion what like why is chain link and link the token specifically worth 20 billion dollars and because youre pseudo anonymous i know you can give us an honest answer yeah i think a lot of people a lot of the value in crypto in space in general its heavily driven on narratives and people see chain link securing defy they see d5 depending on what metric you look at over a billion dollars and they know that the whole ecosystem is going to grow to secure trillions of dollars so people see you know 20 billion and they see that relatively as being and almost a steal because the amount of value that chain links going to end up collateralizing and its going to end up securing its going to pale in comparison to what its going to need to be at to you know in order to secure the data running the global economy so thats kind of like the thesis that people have the entire space runs on narratives and so if you think of bitcoin as digital gold ether as like the global computer and link as like the collateral of data or just the data economy its kind of those three trio that people see as like the blue chips of what run the cryptocosm ecosystem the group that propagates the narrative of course is the social layer behind any project or any asset in this space and i think the chain-link community has a really unique uh social layer in that you are represented as a greed frog on this podcast and there are like literal armies of green frogs that are advocates of of link if you go anywhere on twitter in fact i think my my co-host has had some battles with the green frogs um off and on over the years um you know so can you explain the community when we when we had vance spencer on from framework ventures he sort of described this as sort of a bottom up community in some ways who are really rallying around the price and narrative of of link the asset what what do you make of this like how do you explain the green frogs in the in the link community who are these people so its you know the link community its a broad diversity of people and its kind of hard to tell because its all the same color green but really the community kind of originally formulated on 4chan on the business and finance board thats where like the community really like the seed was planted and it kind of grew from there and it really transitioned mostly to twitter but the memes in the approach of what i think of as like trial through fire where you just completely rip something apart to get down to the first principles find out why something has value why it needs to exist and then you can work your way back up and so people may see the community as maybe a little bit more abrasive in that sense but thats because theyre incredibly passionate and i think if your project doesnt have some type of maximalist energy or some like group maximus to it it probably doesnt have that much value to it anyways if people arent that passionate about it so our community like its a whole spectrum from people who just focus on you know creating memes and theyre more non-technical cheerleaders and they support the project in their way and then you have more of like the educational academic types who want to create better oracles you have people in d5 who know oracles need to exist to secure the ecosystem and so they kind of you know its kind of like a spectrum when youre in the link community youre in the link community but youre also kind of in the ethereum community and youre kind of in the defy community and youre kind of in the bitcoin community even like its the lines are a little bit blurry but when you focus in on like the core community those are the people whove been following the projects since like 2017 2018 and they had the vision of what oracles could be used for long before chain link really existed at all so its kind of everybodys rallying behind the vision of creating smart contracts that can actually make the world better that can actually improve the quality of life for people and how people go about advocating it while they have their their own unique ways i think the memes are the most efficient form of communication and thats why the chain of communities latched on so much as it did because the memes really catch on so what would you say to the criticism that at maturity this industry crypto economic systems bitcoin ethereum all these projects they need to ultimately manifest themselves in the real world and and they need to make real world change and at some point it needs to be um you know theres nothing against being like pseudo-anonymous in this space but only having anonymous people and im not saying that is what im not saying that is classified by what chain link is uh chain link is more than just anonymous green frogs right um but i would i would expect that over time as the system become more integrated with the rest of the world there becomes a just a more typical uh community behind these systems and if chain link does want to like mature into its final form it actually will need to migrate away from the green frogs into a more typical community however you want to characterize that what would you how would you respond to that chain like god i think i dont think it would like transition but every community that grows in popularity inevitably gets deluded by normies who just see the narrative so thats just kind of like a natural progression that we will see i think that the community is important for like this initial grassroots raising awareness but i think once enterprises and you know the prime customers they will see smart contracts they will see how they can cut their profit margins or increase it by 10 20 percent and theyre not going to care if green flogs like it or dont like it they they want the cost savings they want the advantages so i think like we have a lot of green frogs but then we also have like the ecosystem companies chain like labs link pool reputation.link all these different companies who are like integration uh partners who help projects get chain linked and then the chain like community kind of raises awareness about what work is actually being done so inevitably over time youll see less frogs not because theres less of them but because they got deluded by everybody else who joined and who are anonymous because they dont know the history they dont know the background of why there are so many frogs they just they like the project so i think thats inevitable for any project itll probably happen for chain link i think the core community will always stay this way generally but its definitely gonna get more diversified in that aspect i think personally conversations like the one that you are having with us uh just now chain link god are are are really helpful and its not you know about appealing to to normies but i have had the impression on twitter uh before that like there is kind of like almost a a mob mentality with the link community where if you say something against link and maybe im venturing into that with this last statement now i dont know but prepare yourself for for the mob to latch on you and its less intelligent arguments and more just like like memes and like you know refugees throwing and it almost feels like youre being swarmed by bots this conversation is so much different than that you have given us like an articulation of you know both chain link in the in the in the past the need for oracles uh chain link in the future also the value proposition for lengthy asset quite frankly thats the com type of conversation that uh that i think is really helpful for continuing to propagate link and were just glad you you spent the time to to join us on on bank list and and tell the community more about it so thank you chain link god yeah of course im happy to spread knowledge people have their unique ways of sharing their their passion doesnt maybe its not always the most effective but everybody has their methods and i think i think sharing this information getting it out to the ethereum and just crypto community i think its going to help a lot of people so i appreciate you guys having me on here well its certainly gotten you this far has gotten linked the project to 20 billion dollars and of course uh link is chained like oracles are powering much of this space so uh thanks a lot for coming on guys risks and disclaimers of course defy is risky is risky you could lose what you put in but we are headed west this is the frontier its not for everyone but were glad youre with us on the bankless journey thanks a lot hey we hope you enjoyed the video if you did head over to bankless hq right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence we recommend joining our daily newsletter podcast and community as a bankless premium subscriber to get the most out of your bankless experience youll get access to our market analysis our alpha leaks and exclusive content and even the bankless token for airdrops raffles and unlocks if youre 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