Zach Rynes | CLG Profile picture
Oct 3, 2020 24 tweets 12 min read Read on X
1/ Creating Definitive Truth, a thread giving insight on Sergey's recent presentation at #SmartCon 2020 covering how @Chainlink generates definitive truth about the real world, the acquisition of deco.works from @Cornell, and much more

#Chainlink $LINK
2/ It's key to understand the importance of definitive truth, the indisputable state of reality

Without it, you have information asymmetry, disproportionately benefiting a select group who have access to privileged information

In essence, definitive truth is data you can trust
3/ Blockchains generate definitive truth about on-chain data

This is achieved with an immutable ledger that cannot be tampered with or manipulated to benefit any one party

Each block in the chain has a cryptographic hash of the previous, creating indisputable definitive truth
4/ This definitive truth is then confirmed by numerous independent machines around the world that generate consensus, ensuring this truth is always valid and available to all

The Bitcoin Blockchain has 10,000 nodes that continually verify the true ownership and transfers of $BTC
5/ The Ethereum blockchain is similarly decentralized but the definitive truth generated is not just about the ownership and transfers of $ETH

But also definitive truth regarding other on-chain data like ERC20 token balances and the state of each smart contract on the network
6/ #Chainlink extends this by providing blockchains definitive truth regarding real world data and events

With #DeFi, there is a large demand for Price Feeds, but Chainlink oracles are able to generate definitive truth regarding any off-chain data
7/ Chainlink creates definitive truth regarding the real world through a decentralized network of oracle nodes

These nodes can fetch data from any off-chain API, aggregate it into a single reference point, and deliver it on-chain to any blockchain for smart contracts to consume
8/ The reason we need an oracle is that blockchains cannot connect to external off-chain systems without sacrificing the reliability and security properties that make the blockchain useful in the first place

This is an inherent problem for all blockchain networks
9/ Chainlink solves this problem and expands the capabilities of smart contracts by providing definitive truth regarding any off-chain resource

By combining the truth about both the on-chain and off-chain worlds, the vast majority of agreements can be trustlessly automated
10/ The first major application of this duel-sided definitive truth has been the creation and growth of the Decentralized Finance (#DeFi) economy

Many of the most adopted and innovative DeFi projects are powered by Chainlink oracle networks, securing over $3B+ in value
11/ However to be clear, definitive truth goes far beyond crypto and will permeate all financial markets

Through all the advantages provided by definitive proof based technologies, the global economy will inevitably shift to data-driven smart contracts
12/ To put into perspective just how much potential for growth there is, consider that the entire #DeFi ecosystem is only 2.5% of all value in cryptocurrency

To say we're still early is the understatement of the decade
13/ The remaining market size for #DeFi and other definitive truth based smart contracts is in the trillions

$10Bn - DeFi (1x)
$360Bn - Crypto (36x)
$1,100Bn - Gold (110x)
$90,000Bn - Stock Market (9,000x)
$281,000Bn - Real Estate (28,100x)
$1,000,000Bn - Derivatives (100,000x)
14/ What this boils down to is a global systemic shift from brand-based contracts to math-based smart contracts

High counterparty risk -> Low counterparty risk
Low and dropping yields -> Consistently high yields
Security non-existent -> Built-in security

It's a no-brainer move
15/ Some Web 2.0 firms aren't waiting around and are already making the switch to becoming a 'crypto native' company

Through decreased counterparty risk, higher yield, and hedge against fiat inflation, they are the initial pioneers in what will become the universal standard
16/ To further this goal of generating definitive truth about the real world, @Chainlink announced three major things at #SmartCon 2020

The acquisition of @Cornell's DECO
Launch of the Chainlink Labs Research Program
Hiring of academic genius @AriJuels as Chief Scientist
17/ DECO is a privacy preserving oracle technology developed at Cornell University & IC3 under Ari Juels

DECO allows all data transmitted over HTTPS/TLS to be confidentially attested to without revealing the data or requiring any server-side modifications for data providers
18/ The data privacy + integrity guarantees provided by DECO are even more powerful when combined with #Chainlink's network of decentralized oracles

This allows for a wide array of datasets to be brought on-chain, including premium, private and unique market datasets for #DeFi
19/ DECO can be used to confidentially prove collateral solvency for DeFi

In this regard, Chainlink has recently partnered with @BitGo to create a $WBTC Proof of Reserve Reference Contract

Imagine such a reference contract for stablecoins and tokenized real world assets 👀
20/ DECO allows users to confidentially prove their identity and bank balance for DeFi applications that follow AML/KYC laws

This is critically important for institutions wanting to benefit from smart contract and DeFi technology, while being able to ensure their compliance
21/ Additionally, DECO is crucial in situations where there is only a single source for the data

Enterprises are able to monetize their confidential datasets without revealing the data itself through Zero Knowledge Proofs (ZKPs) that definitively prove the data's origin
22/ Additionally, Enterprises who utilize Chainlink are able to sell their datasets and APIs to smart contracts across every blockchain

This includes every blockchain that exists today and into the future, providing a futureproof solution
Through this highly scalable approach, all of the world's data can be brought on-chain to be consumed by a growing collection of smart contracts

By using Chainlink as a blockchain abstraction layer, enterprises are able to support all the environments where commerce occurs
That's the thread my frens, enjoy the knowledge bomb

By generating definitive truth regarding real world events and data, Chainlink exponentially increases the capabilities of the smart contract economy, which will inevitably scale up to become the global economy

You Just $LINK

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More from @ChainLinkGod

Jun 7
The reason why @Coinbase Commerce doesn’t support self-custody $BTC baselayer payments is simple

UXTO chains like Bitcoin lack the programmability necessary to meet the requirements of most merchants

1) Merchants don’t want to be exposed to crypto price volatility risk

Ethereum and EVM chains solve this by being able to programmatically covert whatever crypto token is used as payment into a stablecoin like $USDC, when can then be optionally redeemed for $USD and sent to the merchant’s bank account

UXTO-based chains like $BTC lack the native programmability to convert their native asset into stablecoins onchain, so a custodial solution is required

2) Merchants don’t want to deal with manual burden of resolving incorrect payments (eg: underpayment)

Ethereum and EVM chains solve this by being to programmatically reject payment with incorrect payment amounts

This is literally a single line of code in a smart contract (require payment amount == invoice amount, otherwise revert)

UXTO-based chains like $BTC lack the native programmability to revert payments based on amount, so a custodial solution is required



Net result is that Coinbase made a calculated decision that the overhead/friction/cost of supporting baselayer $BTC payments was simply not worth it

Payment processing for self-custodial wallets is challenging, it’s not nearly as a simple as just giving a customer an address to pay into, they will fuck it up, it needs to be idiot-proofed

Can lightning fix this for $BTC? Possibility, but there’s a great deal of friction today in terms of managing inbound/outbound liquidity and channel rebalancing

Lightning also means you can support one additional asset, $BTC, while integrating with EVM chains means you can accept hundreds to thousands of crypto-assets (including stablecoins and $WBTC) and get paid directly into your bank account programmatically if you desire

That said, I hope Lightning improves enough to make it a realistic option for merchants to leverage
Additional context/commentary from the Coinbase Commerce team themselves about UXTO payment support:
@udiWertheimer had a great thread documenting the pain that @TaprootWizards went through with accepting $BTC baselayer payments:
Read 6 tweets
Jan 1
Happy new year frens, welcome to 2024 🙌

Obligatory thread of some of my unfiltered thoughts and predictions regarding the major crypto trends this year

🧵 Image
• Bitcoin as a Dominant Asset Class

The catalysts for $BTC are clear; a dozen or so spot ETFs a week from approval, halving in April, multiple interest rate cuts, and fiat money printer brrrrr

Initial ETF inflows won’t be as massive as expected but will ramp up over the yearImage
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$BTC spot ETF Issuers will battle over management fees (sub 40bps fees), advertising will be strong (Super Bowl ads), and a lawsuit with the SEC over allowing in-kind issuance/redemption vs just cash

$ETH ETF will be next and then no ETFs for other tokens this year (2025 tho…)


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Read 18 tweets
Dec 18, 2023
A liquid restaking token that is backed by liquid staking tokens deposited in a restaking protocol which rehypothecates staked ETH

This is getting pretty deep, can we add another layer of liquidity and risk here? I don’t think we have enough
Note that there’s four+ layers of risk

1. Risk of staking ETH
2. Risk of liquid staking ETH
3. Risk of restaking ETH
4. Risk of liquid restaking ETH

You’re not only exposed to slashing and smart contract bug risk at each tier, but risks that only appear when composing protocols
Hell, why not take this further

Deposit your liquid restaking token into an AMM DEX, get an LP token back in return, and then deposit that LP token into a money market as collateral so you can borrow even more ETH to liquid restake

Adds 3 more layers of risk to the process
Read 5 tweets
Nov 25, 2023
"Chainlink is just an oracle"

What started as a single ETH/USD Price Feed has since expanded into a fully-featured platform of services

There are now 1,000+ #Chainlink oracle networks that span external data, offchain compute, and cross-chain interoperability

A thread 🧵 Image
Oracles connect blockchains to external systems, enabling them to execute based on inputs/outputs from the real world

Before chainlink, oracles were highly centralized and insecure, with frequent oracle attacks resulting in exploits and loss of funds

garbage in -> garbage out Image
Chainlink solved this problem through the creation of decentralized oracle networks (DONs), backed by strong cryptoeconomic incentives and high quality node operators

Chainlink isn't a monolithic network, but rather a platform for creating oracle networks
blog.chain.link/how-chainlink-…

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Read 24 tweets
Nov 3, 2023
Arta TechFin, a Hong Kong-based financial services institution, is collaborating with #Chainlink Labs on the creation of regulated, fiat-based, cross-chain tokenized funds 👀

Chainlink CCIP will enable the transfer of fund tokens across public and private chains, increasing liquidity through cross-chain atomic settlement

Chainlink Data Feeds will provide transparent data for onchain Net Asset Value (NAV) reporting, making the data instantly available to all market participants

Chainlink Proof of Reserve will verify that the onchain fund tokens are backed and secured by designated assets under traditional and crypto custodians

The future is on
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Arta TechFin (HKSE: 0279) is a hybrid financial (HyFi) platform bridging traditional finance with blockchain-based financial system via technology innovations

Its regulated one-stop solution enables corporates, financial institutions, and family offices to access traditional assets and digital assets

Arta TechFin, through its various subsidiaries, are licensed under Hong Kong Securities and Futures Commission

Other licenses include Hong Kong Stock Exchange participant, insurance brokerage license, trustee license and money lending license in Hong Kong as well as Eurex and Chicago Mercantile Exchange participants
@SergeyNazarov on the collaboration at @HongKongFinTech Week:
Read 5 tweets
Sep 22, 2023
$LINK is the true institutional coin

And not because of flimsy handwavey narratives or vague hyped up “connections”

But because @Chainlink has been working directly with the largest financial institutions globally on accelerating tokenized asset adoption via #CCIP

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The Society for Worldwide Interbank Financial Telecommunications (@swiftcommunity) on using CCIP for interoperability



Swift is used by 11,500+ financial institutions globally for inter-bank messaging, facilitating international money/security transfers swift.com/news-events/pr…



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Participants in the Swift blockchain interoperability collaboration included 12+ of the largest financial institutions and market infrastructure providers in the world including:

DTCC
Euroclear
Clearstream
BNY Mellon
BNP Paribas
Citi
ANZ
Lloyds
SDX

More on the participants:
Read 7 tweets

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