Chainlink is implementing a treasury accumulation strategy. Starting August 7, the project introduced the Chainlink Reserve, a new mechanism to convert part of its revenue into LINK tokens.
How does the Chainlink Reserve work?
Chainlink will use its on-chain and off-chain revenue to strengthen the reserve. Off-chain revenue, coming from businesses, includes service and maintenance fees, while on-chain revenue is generated from usage fees and revenue sharing.
All this money is processed by Chainlink's Payment Abstraction system, which converts it into LINK tokens. These tokens are then stored in a smart contract on the Ethereum network, ensuring that the reserve is transparent and visible on Etherscan. Since its launch, the reserve has already accumulated over $1.2 million in LINK tokens.
What is the purpose of the reserve?
Unlike publicly traded companies like Strategy and Metaplanet, which use reserves to provide exposure to assets for their shareholders, Chainlink has a different purpose. The measure aims to increase the price of the LINK token by associating the company’s performance with the demand for the token.
As Chainlink's revenue grows, the need to purchase more LINK tokens for the reserve increases, creating additional demand and reducing the available supply. This strategy is designed to generate upward pressure on the price of LINK in the long term.
