VanEck has launched a new crypto asset ETP in Europe providing directly backed exposure to LINK, the native token underpinning the Chainlink network.
Chainlink is a blockchain abstraction layer that enables blockchains to interact with external data and systems.
The VanEck Chainlink ETN (VLNK GY) has been listed on Deutsche Börse Xetra in euros.
Chainlink is a decentralized ‘oracle’ network – a blockchain abstraction layer that enables blockchains to interact with external data and systems through entities known as oracles.
Oracle networks have been instrumental in the evolution and proliferation of hybrid smart contracts which are smart contracts that combine blockchain-based code with off-chain oracles.
Hybrid smart contracts are already being used to power use cases across dozens of industries; however, the technology is perhaps most notably forming the backbone of the decentralized finance (DeFi) ecosystem.
DeFi applications utilize blockchain-based smart contracts to ensure the underlying terms of its financial agreements are settled automatically, securely, and without the need for a costly middleman. Like most financial products, however, DeFi agreements rely heavily on external pricing data for interest rates, asset prices, and so forth.
By also utilizing blockchain-based technology, oracles ensure the correct data is retrieved from a high-quality data provider, is verified, and then delivered onto the blockchain without manipulation from hackers.
LINK, an Ethereum-compatible token, is used to pay oracles for their services. With a total market capitalization of $4.5bn, LINK is currently the 28th-largest cryptocurrency globally.
The new ETP provides 100% “physically” backed exposure to LINK while maintaining the added oversight, security, and liquidity inherent in the ETP structure. The ETP’s underlying LINK holdings are custodied by Bank Frick.
The ETP comes with an expense ratio of 1.50% which matches the cost of the CoinShares Physical Chainlink (CCHA GY).
Swiss crypto ETP specialist 21Shares also offers a Chainlink ETP – the 21Shares Chainlink ETP (21XL GY) – which comes with an expense ratio of 2.50%.