Crypto Key Debates: Chainlink and Avalanche

While many investors may be familiar with layer 1 blockchains, Chainlink is different because it's a blockchain-agnostic application that primarily operates as a toll booth operator for blockchain applications and integrations, creating a unique value proposition.

Chainlink is the industry standard oracle network, with a possible emerging economic moat due to its cross-chain interoperability protocol (CCIP) service. An oracle is a crypto protocol that serves as a decentralized source of "truth," meaning it transmits information that originated on one specific blockchain, onto another blockchain. As more RWAs are tokenized, Chainlink could benefit as the provider of off-chain data onto the blockchain, in addition to sharing more crypto native data across different blockchain ecosystems.

Within our industry model, Chainlink sits in the infrastructure segment, between foundational networks (settlement layer) and applications. The risk of the infrastructure segment that it's not an end product per se, so if a better solution gets introduced, the segment could easily be swapped out.

Six areas illustrate Chainlink's services, infrastructure, and token mechanics:

• Oracles. Data is the foundation for all Chainlink's service offerings. Oracle data powers data feeds, data streams, DataLink, and Proof of Reserves (PoR, which is a verification method demonstrating a crypto platform's ability to maintain its users' digital assets). Chainlink is the market share leader compared to other oracles, which is why it's considered the industry standard, according to Token Terminal as of September 1, 2026. While the data services are a commodity business, the large installed base of customers creates a vertical integration opportunity for Chainlink's other services. The primary drivers of growth in this area are stablecoin supply, RWAs, perpetual futures trading, prediction markets, and lending collateral assets.
• Oracle Extractable Value (OEV). Historically, Chainlink received revenue for providing data feeds. OEV is a service provided to lending applications to help them manage collateral risk. Small standalone crypto operators would previously handle this on behalf of lending applications using oracle data. This process now allows the oracles and the lending applications to participate in the economics around collateral risk management. The primary long-term driver of OEV is growth in on-chain lending, but the economic framework of OEV could potentially expand to other oracle-driven liquidation systems, like perpetual futures markets.
• Interoperability. A CCIP is a trusted messaging service that allows different blockchains to communicate with each other, serving as a bridge between two blockchain ecosystems. While simpler bridges exist, CCIP differs by providing an additional risk-management layer. When moving assets from one blockchain to another, CCIP verifies a transaction, re-verifies the transaction with a separate security layer, then executes the transaction. CCIP is built upon Chainlink's existing oracle business, which secures trillions of dollars of financial activity, according to Chainlink as of September 4, 2026.
• Workflow. Historically, Chainlink was viewed as a collection of products including oracles, interoperability, and data services. Chainlink Runtime Environment (CRE) created a unified orchestration layer that allowed developers to combine these services into a single workflow, potentially increasing switching costs and strengthening Chainlink's competitive moat.
• Institutional Infrastructure. Major regulated financial institutions work with Chainlink, which provides compliance capabilities, identity/know your customer (KYC) solutions, and privacy features.
• Smart Value Recapture (SVR). Historically, fees would be paid to Chainlink in other cryptocurrencies (ether, stablecoins, and fiat). Since Chainlink also earns revenue off-chain, this revenue would otherwise not create additional demand for LINK. The SVR provides a way for LINK value capture from off-chain revenue, while allowing for payment flexibility on chain. As a result, any revenue or transaction not paid for directly in LINK, is converted to LINK.

Chainlink's native cryptocurrency, LINK, is a utility token that allows users to interact with the Chainlink protocol. Anyone using a service provided by Chainlink pays for the service fee in LINK. LINK is also paid to node operators who source and validate data. Chainlink uses a staking consensus mechanism, so nodes stake LINK to participate in validation activities.

The four pillars of our framework are evaluating a cryptocurrency's network effects, leading market share, tokenomics, and risks. Network effects measure the value of a network based on usage. As more users join a network, the network becomes more valuable to each new user. This creates a positive feedback loop. Tokenomics measure metrics like a cryptocurrency's maximum supply, concentration of ownership, governance rights, and the ability to earn yield.

• Network effects. Chainlink appears to benefit from network effects. It has touchpoints on the crypto native side (through layer 1 blockchains and applications), and additional touchpoints on the traditional finance side (including banks, asset managers, payments and other services looking to integrate on-chain). When developers look to build a new product, they may prefer to integrate the oracle with the largest market share that they're already familiar with, which is why established network effects can be meaningful. This may be reinforced through CRE.
• Leading market share. The key metric for an oracle is total value secured (TVS), which measures the amount of money that trusts an oracle. Other similar metrics include total value enabled (TVE), which is the value of transactions facilitated by an oracle, or total verified messages, which is the cumulative sum of all verified outputs published on smart contract blockchains by an oracle. Chainlink has over $20 billion in TVS, over $32 trillion in TVE, as of August 2026, according to data provided by Chainlink Labs. Based on several industry metrics, Chainlink is among the leading oracle networks and quickly growing its market share within the interoperability product suite. The next largest oracle, Pyth Network, has $8.6 billion in self-reported TVS as of September 2026.
• Scalability. For layer 1 and 2 blockchains, transactions per second (TPS) is the standard measure of scalability. Chainlink is an infrastructure application, and oracle network scalability is demonstrated by its ability to service thousands of independent data feeds across dozens of blockchains, while maintaining decentralized verification and high data quality.
• Tokenomics. Total supply is capped at 1 billion LINK. Nearly 750 million are in circulation according to data from Glassnode as of August 31, 2026. Chainlink reports that 7% of the reserve supply is released into the market each year. Validators who stake LINK are rewarded in LINK, but the rewards are not funded from the Chainlink treasury. Rather, revenue earned by the protocol is converted into LINK, which is then paid to the operators. We rate LINK's tokenomics as average, supported by its capped supply and staking utility, but constrained by a less direct value-accrual mechanism relative to some other blockchain networks.
• Risks. Aave, a crypto-lending protocol, is Chainlink's major source of OEV revenue. While Aave is the largest crypto lending protocol today, having the bulk of revenue tied to one specific protocol creates concentration concerns. Should anything ever happen to Aave, it could impact demand for LINK due to lower demand from fewer assets being converted to LINK for the SVR. Another risk is that even if Chainlink adoption and revenue grows, it might not result in higher demand for LINK tokens.

As crypto adoption, stablecoins, lending, and tokenized RWAs expand, demand for Chainlink's data, interoperability, and infrastructure services could grow in our view. LINK may provide focused exposure to the continued convergence of traditional finance and blockchain networks. But note that LINK faces market volatility, competitive threats, and regulatory uncertainty.

Investors may assign LINK a higher valuation if they increasingly view Chainlink as a platform rather than a group of standalone services. Oracles—Chainlink's primary business—are commodities. CCIP is, at its core, a bridge, which is another commodity service. Oracles, bridges, and interoperability protocols sit within the infrastructure segment of our industry model.

These protocols, which typically aren't directly integrated with end users of crypto products and have low switching costs, are easy to displace. Bridges, oracles, and interoperability protocols are similar to cybersecurity software providers.

Historically, cybersecurity companies were fragmented, offering firewalls, antivirus, secure access, endpoint management, and other offerings, all as standalone companies. Eventually, platformization began, where cyber providers created a vertically integrated offering for customers. Chainlink was traditionally viewed as an oracle, but now it's viewed as a platform with additional offerings, which potentially reinforces the value of the existing oracle platform.

Another similarity to cybersecurity is that the longer Chainlink goes without a major exploit happening under its watch, the greater the potential for its economic moat to grow as other competitors may lose customers to Chainlink.

Some investors may already be starting to view Chainlink as evolving toward a broader platform model. Chainlink is already vertically integrated with its customers and in some technology markets, vertically integrated applications have historically gained advantages over time due to network effects. One strong piece of evidence supporting the platform argument may be the successful adoption of CRE, the solution Chainlink launched in November 2025 to provide a platform-like experience for blockchain developers, shown below.

However, CRE's public production launch in November 2025 is still recent, and early adoption may not prove that Chainlink has established durable platform-like network effects. Competing solutions could gain share and CRE adoption may not translate directly into higher LINK demand.

Avalanche is a smart contract blockchain ecosystem that allows for the creation of customizable blockchains within its own network. While it's the smallest smart contract blockchain ecosystem in terms of total value locked (TVL), it's developed a niche in RWAs. Its high transaction speed allows for scalability and the ability to create custom blockchains that are part of the broader Avalanche ecosystem, which is a unique offering relative to other layer 1 blockchains.

Avalanche's native cryptocurrency, AVAX, is a utility token that allows users to interact with the Avalanche network. AVAX is used to pay transaction fees, secure the network through staking, and participate in certain governance decisions. Validators stake AVAX to help process transactions and maintain network security. AVAX is also required to launch new custom blockchains within the Avalanche ecosystem.

• Network effects. While Avalanche does have network effects, we specifically look for protocols with industry-standard network effects. Avalanche was launched in 2019 as an alternative to already established smart contract platforms. We view Ethereum as the industry standard for smart contract blockchains, and as such, Avalanche does not have this industry standard position.
• Leading market share. TVL is the metric we use to measure market share for smart contract platforms. According to data from Token Terminal as of September 7, 2026, Avalanche has $3.4 billion in TVL, making it the fifth-largest smart contract blockchain, but significantly smaller than Ethereum, Tron, Solana, and BNB Chain. That said, many industries have a few competitors that control majority of the market share, while smaller specialized players carve out their own niches, which appears to be how the smart contract segment of layer 1 blockchains is evolving. In that regard, Avalanche is a leader in its niche—enabling users to build custom blockchains on top of its network. While its total value of RWAs is small compared to other blockchains, RWAs represent a majority of its TVL.
• Scalability. Recall that the standard measure of scalability for layer 1 blockchains is transactions per second (TPS). Avalanche can process over 4,500 TPS, putting it in line with Solana's average of 3,000-4,000 TPS according to data from Avalanche as of September 15, 2026. Avalanche's unique consensus mechanism is what enables its ability to quickly process transactions. Instead of requiring all nodes to reach consensus, the blockchain uses randomized subsampling and repeated voting to quickly attain network consensus.
• Tokenomics. AVAX has a hard-capped maximum supply of 720 million tokens. Approximately half of the supply was created at launch, with the remainder issued over time as staking rewards to validators and delegators that secure the network. Unlike most blockchains, transaction fees are permanently burned rather than paid to validators, partially offsetting new issuance. Demand for AVAX is driven by transaction fees, staking, validator requirements, and the creation of new Avalanche layer 1 blockchains. AVAX holders also have limited governance rights over certain network parameters. We rate AVAX's tokenomics above average due to its capped supply, decreasing inflation rate, fee-burning mechanism, staking rewards, and limited governance rights.
• Risks. The primary risk to AVAX is uncertain value accrual. Avalanche has a smaller market share than leading smart contract platforms, and network usage has recently trended lower. While custom-chain adoption can increase demand for AVAX, it might also allow economic activity to occur outside the primary network. As a result, ecosystem growth may not translate into proportional growth in AVAX demand, creating uncertainty around long-term value accrual for token holders.

The majority of the assets on the Avalanche blockchain are RWAs, and most activity on the blockchain is high utility (stablecoin issuance, lending, asset management, and liquid staking), so what Avalanche lacks in market share, it makes up for in quality.

If investors are to put a higher premium on blockchains perceived to be leaders in RWAs, Avalanche may see its tokenized assets expand faster than other chains, which could increase demand (and prices) of its native AVAX token.

Historically, networks with the highest TVL have been rewarded with larger market capitalizations. If tokenized RWAs, institutional settlement, and custom enterprise chains become major categories within crypto, Avalanche has a credible path to earning a premium valuation relative to its TVL.

RWAs are a fast-growing segment of the crypto market, reaching nearly $50 billion, according to data from Token Terminal as of September 24, 2026. However, most tokenized RWAs remain concentrated on larger blockchains: a majority are on Ethereum, while less than $2 billion are on Avalanche. This suggests Avalanche remains a smaller player today, though its RWA focus could become more valuable if investors begin placing a higher premium on the quality or institutional relevance of blockchain activity. Keep in mind that these are still new and progressing technologies that could be obsolete or replaced relatively quickly.

Avalanche provides a distinct offering relative to other smart contract platforms and can be a leader within a niche — which is historically what smaller competitors have done in other industries where a handful of competitors capture a majority of the market.

We previously proposed that smart contract platforms could be valued using a metric similar to a buffet coefficient—which is market cap divided by GDP (sum of all fees generated on a smart contract platform). This can help provide a point-in-time idea of how expensive or cheap a smart-contract platform's cryptocurrency is, relative to its own history.

LINK and AVAX offer exposure to different parts of the crypto ecosystem. Chainlink is tied more closely to interactions between different blockchain ecosystems and applications, and increasingly, real world integration, while Avalanche is a smart contract platform with a clearer niche in RWAs and custom blockchain development.

For investors, the key question is whether these protocols can convert adoption and network activity into durable demand for their native tokens—particularly in a market where competition remains intense and long-term value accrual is still uncertain.

Investing in cryptocurrencies involves risk, including the risk of total loss of principal invested. Cryptocurrencies (such as LINK and AVAX) are highly volatile, are not backed or guaranteed by any central bank or government; are not deposits; are not FDIC insured; are not SIPC protected; and lack many of the regulations and consumer protections that legal-tender currencies and regulated securities have. Due to the high level of risk, investors should view digital currencies as a purely speculative instrument. Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended.