Chainlink API Market
A quality post from some anon. Screencaps and text.
All right, this is my good deed for the year.
Once I’ve posted my spiel, I’ll respond to any questions about operating a node, how to professionally contact API providers, and how to professionally negotiate with API providers. I WILL NOT respond to any posts that seem like empty FUD of pic related, and I WILL NOT respond to shills of pic related.
Now, I’m going to break down my investment thesis and try to intelligently discuss the pros and the cons. For the last 48 hours this board has been overrun with some of the most blatant coordinated FUD I’ve seen in a good long while, and the compensation to that FUD from the team has been just as annoying. But, in fairness, one of the two obnoxious parties might (depending of a few key factors) make me a significant amount of money.
I’ll start by saying this: my node is going to be better than your node. I’ve spent the last six months directly contacting API providers. I’m miles ahead of you all. When I see community members flying to Europe to attend Chainlink events, I say “that’s cute,” and then book my own flight to Berlin – except I’m going to the API conference. I’m eyeing a position at Google to write technical documentation for their APIs. I have multiple smart contract businesses in the works, all of which will rely on specific data sources that, at mainnet launch, I and I alone will be providing across multiple nodes. I intend to outstrip you all in building reputation and monetizing my node. Aside from steak house anon and whaleanon – both of whom I *think* I know – there’s simply not many people better prepared for mainnet than me. There’s more people in the community than some realize (and they’re often quiet), but I would be shocked if there’s a half dozen node operators in the same spot I am.
I’m coming to you now because I am comfortable, and because it’s time for you all to start catching up.
Here are some things you should know about the API market:
API providers ARE NOT YOUR FRIENDS. Take a minute to browse a few dozen pricing pages. Most run on a Freemium model, and once you get over the free calls at any real scale, you’re a goddamn guppy in shark waters.
They’re essentially built on exploiting entrepreneurs – specifically, app developers. They give hungry young guns a difficult choice: you can pay a lower per-month fee and higher per-call rates, or you can pay an exorbitant monthly fee with low per-call rates. This sounds like simple business practices until you actually look at the damn ratios: per-call between the basic and premium plans routinely range between 4-10x, and I’ve seen as high as 20x. They have their high-volume clients, but they mostly have young dudes trying to get something started, and they shake those guys DOWN.
And once you go over your monthly allotment? Then they come for your blood. “Oh, you didn’t anticipate these charges? But it’s all in your contract. Perhaps you would like to upgrade?” It’s like selling you a lemon because they know you’re going to buy a real car later.
THEN you add in the SLAs. Uptime guarantees are only given to premium subscriptions. You know what a functioning node needs? Uptime guarantees. Now, I’m not saying that they PURPOSEFULLY hit lower subscription tiers with downtime, but you know what’s a highly unregulated industry? APIs. Nodes NEED to negotiate their own rate with an uptime SLA, or they’re screwed.
When I’m working on my smart contract projects, I spend most of my time trying to get these fucks to give me a pricing model that won’t make me bleed from the goddamn eyes. “Data is the new oil” – goddamn right, and these fuckers are TYCOONS. Don’t fuck with API providers.
But the predatory pricing isn’t even the worst part.
Most of these providers won’t even GIVE YOU ACCESS TO THE DATA. I started off trying to contact every sports provider I could because I thought I was going to be the first node to enable gambling, and I was going to build rep and corner the high-value contracts.
My model is still roughly the same, but it sure as shit won’t be in sports. This isn’t to say that it’s impossible to get access to those providers, but I’ve noticed that you run into certain… invisible barriers. I couldn’t even get a call from anyone with the NBA, NFL, NHL, or any American sport data provider. When you start poking around available APIs, you realize that there’s a cottage industry of folks offering things like odds, predictions, and analysis data – it’s because the big boys don’t give entrepreneurs the REAL goods. No American sports gambling on smart contracts for at least 3-4 years.
Even in the industry I’m targeting it can be rough. I finally got someone on the phone, had a great half-hour talk and got them excited about working with me, and then they acted all cagey for four months. After countless back-and-forth e-mails, the sales rep finally admitted to me that I should expect to wait a whole fucking lot longer. He told me it takes half a year to let a UNIVERSITY RESEARCHER access their data, and even then only with significant legal protections. I don’t know how much paper I’ve signed already. For many of these people, their data is their lifeblood, and they protect it zealously.
This all leads to one big point:
THE MACRO CONDITIONS OF THE API LANDSCAPE COULD NOT POSSIBLY BE MORE HOSTILE TO THE LAUNCH OF CHAINLINK. Their CTO laid this out a little bit in the discord a few days back, and I was surprised when he did. It’s the most potent FUD of Chainlink that there is.
Nodes are useless without data. Without hundreds of nodes serving data, the network is similarly useless. But the data is behind SIGNIFICANT walls of access and cost. At mainnet, there will be hundreds of little pieces of hobby software doing absolutely nothing – and then a few, like mine, quietly humming away.
> But muh behind-the-scenes something something ISO 20022
Lol. There will be a few big announcements at launch and hopefully the data associated with those companies/contracts will be affordable, but by the looks of it they won’t be. Yeah, we’ve heard for months that Chainlink is working with providers. But look at the folks THEY’VE ACTUALLY SIGNED. BnC follows these pricing models. Data Sports Group follows these pricing models. On their end, they think this is GREAT – new guppies.
Node operators are WORSE than app developers. They’re chum. App developers can try to grow their userbase, they can market, they can have some agency in the whole thing. Meanwhile, 99% of node operators are blind, dumb bunnies signing up for expensive services and hoping a contract will request their data. So many contracts haven’t even been written yet. So many use cases require data that are either wildly expensive, or not even available. In the early days people are going to pay for data that isn’t even trafficked.
Here’s the kicker: even when traffic picks up, the node operator is still going to take it raw. Too many of you are going to sign up for the basic plans – so you’re going to get penalized when the APIs have downtime, penalized and charged when traffic picks up and they throttle your data, and bled raw until you’re talked into spending hundreds of dollars on the premium plans. So many of you are going to lose all the reputation on your nodes and have to start over. So many of you are GOING TO LOSE MONEY. It’s crazy to me that only a few dozen or so people have realized this.
And even if the Mainnet announcements and the data associated with them WERE affordable, it’d be a few contracts in a few industries… not exactly the Fourth Industrial Revolution.
The one-click NEET node is a naïve dream. It’s YEARS away from being that simple. For nodes to make the money people are dreaming of and for the network to achieve the valuation people are dreaming of, it will take WORK. The APIs need to become available, or developers won’t even write the damn contracts.
Obviously, this is where They step in.
Once you start to realize that the only data that will be used is “data affordably available to a large swath of the node community,” you realize that the only data that will be used AT ALL is what’s free and what They offer. Think about that for a minute. What’s available right now? Fiews’ list, and Their list. That’s it.
So, what contracts will developers write? Ones using Their data. What data will nodes need to get access to if they want in on the action? The data providers They signed. People don’t realize that They don’t have “first mover advantage” in the traditional sense. They are creating the damn earth that will be moved. As of right now, there are no providers available to nodes in almost a dozen industries that They represent. They will FUNDAMENTALLY shape the marketplace. In many ways, They WILL BE the marketplace.
You want to compete with them as an individual node operator? You need to go out and find TWO data sources for EVERY use case, get gutted by the APIs like a pig, and then have MULTIPLE NODES on MULTIPLE PLATFORMS (or a community of your own) that can provide the data. No matter how you feel about Them, you’re going to sign up because it’s the only thing that makes sense.
Depending on the announcements/partnerships that drop on mainnet, I see them easily cornering 25-50% of ALL traffic on the ENTIRE network. If that seems absurd, answer this: what else is there? What else WILL THERE BE? There is a GAPING HOLE between Mainnet and Lambo, and it’s one that they fill.
Again, there’s only a handful of people who understand how useless the network is/will be in the early days without the damn data providers. Maybe half of those people are Them. Or, hell, I don’t know, maybe even some of Their team doesn’t get how crucial They are, and only the CTO gets it.
But that’s only half of why I’m investing.
I’ll be keeping half my stack of Their tokens for those dividends, which I expect to become significant in short order. But half I’m investing as a pure spec play.
One of my buddies trades Uranium companies. Itty bitty miners on wild swings. A 2% move in the underlying asset, uranium spot prices, can lead to a 30% face-rip in the companies. He does maybe one trade a month, but knows how to spot them.
Similarly, during Bitcoin’s last bull (20x), an asset-backed derivative, GBTC, did a 1000x. It became significantly more valuable relative to the underlying assets due to scarcity of the shares and exposure. And, of course, we all just saw Linkpool do something similar.
They are my big trade for the year. LP had their big multiple happen over hints of a working product and nothing else, as far as I could see. They are offering a second round of funding in 2020 when there will be a working mainnet and a working product. If they capture the traffic share I expect them to, I don’t even want to tell you what I think the multiple could be. I’m not crazy – it’s under three figures – but only just.
I’m five steps ahead of all of you, but without some help – even with Them doing some heavy lifting – the network will be useless. You all need to be going out and signing deals with your providers. You can just sign up for Their service and make a little bank, but if you’re not getting your own, you won’t REALLY make it. I have two industries good and cornered, and I have plans to run nodes on multiple hosts to provide that data. When the time comes (when I’ve built the reputation for the high-value contracts) I’ll open up what I have and make myself a competitor to Them. You all should be doing the same.
It’s time to stop hunting for breadcrumbs, and it’s time to start doing the work to make this network run. PSA over.
I gotta help a buddy move, back in a few hours
Just got back, sorry all!
Neither! You should RUN A NODE!
If you're not technically savvy, find someone to help you. Best practices will be Fiews for EaaS, CLC (i'll drop the Them schtick, fair critique) for API access, and if you can do those two things, just put your faith in Linkpool. But honestly, unless Linkpool uses CLC's APIs, they're just hobby nodes.
If you're REALLY smart, though, you need to go out and sign your own damn APIs. Corner your own little slice of the marketshare.
If you can't do ANY OF THAT, sure, hold Link, it will accumulate if everything goes smoothly. CLC tokens are a significantly better spec play however, and have significant long term value as well. They do need to address the issues I mentioned, however!