Overview
Introduction
Founded in 2017, Chainlink connects blockchain-based smart contracts to real-world data using decentralized oracle networks. It’s one of the first networks to support off-chain data integration. Using it, blockchains can securely connect to external data feeds, events, and payment methods. The network is powered by a large open-source community of data providers, node operators, smart contract developers, researchers, and security auditors. All node (used to connect smart contracts to external data) operators and users looking to contribute to the network are guaranteed decentralized participation.
Smart Contracts
Using chainlink’s smart contract, two or more parties that do not trust each other can execute transactions and agreements anonymously without requiring the involvement of a third party, a justice system, or another external party.This is a line-by-line computer program that encrypts the terms of the agreement between a buyer and seller. Since smart contracts are predefined statements of code that run when specific criteria are met, they require both off-chain (transactions occurring on a cryptocurrency network that moves the value outside of the blockchain) and on-chain (transactions occurring on a blockchain, verified in the public ledger) data.
Oracles
Oracles function as the blockchain’s information layer that provides data to smart contracts. Oracles like Chainlink can serve as a middleman in this situation. It is a decentralized network of nodes that offers information about the real world, and decentralization ensures that the blockchain receives accurate data at all times. In their own right, Oracles are not data sources. Rather, they acquire data from different sources and deliver it to smart contracts by querying, verifying, and validating it.
Off-Chain Reporting
Transactions on-chain usually take longer to verify than transactions on off-chain due to the longer verification process. Luckily, Chainlink has implemented its Off-chain Reporting protocol (OCR) to reduce this time. It aims to reduce on-chain transaction volume, minimize gas costs, reduce network congestion from Chainlink oracle networks, and have a more scalable side network of nodes. Data from this network is provided to aggregators for off-chain reporting by peer-to-peer nodes. In a consensus protocol, each node reports and signs its data observations. The combined single off-chain report, including all of their observations, is then signed by a quorum of oracles.
Usecases
Due to its application of Smart Contacts and Decentralized nature, Chainlink is used in a variety of industrial applications.
DeFi
Any DeFi (Decentralized Finance) application can use Chainlink oracle networks to gain access to a high-quality, tamper-resistant, and fresh source of financial market data on a variety of assets with full market coverage.
Enterprise
Due to its reductions in counterparty risk, intermediate overhead, and external conflicts, Chainlink is the only enterprise-grade Oracle infrastructure that offers a wealth of opportunities for businesses to reduce costs and boost efficiency in multi-party business operations.
Insurance
With the help of Chainlink, insurance contracts are moved toward a more unbiased, equal-standing model where data directly dictates the results and execution is predictable, with no intervention from either party.
NFT and Gaming
Top NFT and gaming applications are powered by chainlink oracles throughout the blockchain ecosystem, enabling dApps to offer dynamic and provably fair gameplay to users.
Social Impact
With the help of Chainlink, socially responsible businesses, NGOs, nonprofits, and other organizations may harness the potential of smart contracts to further societal goals including financial inclusion, environmental sustainability, and sustainability.
Authorization and Identifying Systems
Through Chainlink oracles, applications for smart contracts can be linked to traditional data infrastructure that contains user identities (such as governmental databases, social media, etc.), either by connecting a user’s identity to their on-chain address or attesting to data in an off-chain server.
About Team
With deep experience in cryptography, decentralized systems, and smart contracts, ChainLink’s team is a global community of developers, academics, and enterprise experts. Leading them is, Sergey Nazarov, who is a co-founder and CEO at Chainlink Labs. He graduated with a degree in business administration from New York University, with a focus on philosophy and administration, and is currently a very prominent figure in the Web3.0 space. Besides him, other prominent figures in the company include Ari Juels, ChainLink Lab’s Chief Scientist. A Co-Director of the Initiative for Cryptocurrencies and Contracts (IC3), he is a leading expert in blockchain technology and was previously the Chief Scientist of RSA. Recently Eric Schmidt, former Google CEO, has also joined the team to Serve as a Strategy Advisor and help Chainlink Labs achieve some of its desired goals.
Collaborations
Even though Chainlink was founded only a few years ago, it has already collaborated with a number of seasoned industry veterans. Some of them are:
SWIFT
In an initial proof-of-concept, SWIFT is working with Chainlink, a provider of price feeds and other data to blockchains, on a cross-chain interoperability protocol (CCIP).
DTCC
As the core infrastructure of global finance, the DTCC settles quadrillions of dollars worth of transactions every year. By leveraging Chainlink, DTCC will be able to interact with the blockchain space on an enterprise scale with an interoperability solution that will meet their needs.
BNY Mellon
It is one of the oldest and largest US banks, and it is currently working on achieving interoperability and tokenization, which are important tools to help banks connect as well as serve as hubs for multiple lines of business within large financial institutions.
Cathay Financial Holdings Co. Ltd.
As a publicly traded holding company, Cathay Financial Holdings offers banking, life insurance, and property and casualty insurance.
As a seamless solution, Chainlink enables external industry operations to be included in the company’s blockchain consortium and data control can be decentralized.
LexisNexis
The LexisNexis Corporation provides its clients and customers with legal, regulatory, and business data and analytics. In order to provide real-time flight status data to smart contracts, the company operates a Chainlink node.
T-Systems MMS
It is one of Deutsche Telekom’s subsidiaries that specializes in information technology and digital transformation. In its current role as a Chainlink node operator, T-Systems MMS facilitates the secure flow of real-world data to smart contract applications.
Tokenomics
LINK Token
LINK is Chainlink’s native token. It is a utility token that plays a number of roles on the network: it encourages data accuracy, keeps contracts stable, and rewards nodes for validating transactions.
In essence, these tokens are used to finance the growth of the project, similar to Bitcoin (BTC) and Ethereum (ETH).
In addition to being an ERC-677 token, it incorporates the key features of the ERC20 token standard and is currently backed by a proof-of-stake consensus mechanism that enables payloads to be sent with token transactions.
To use Oracle services, both the user and supplier must use LINK, in this case, the contract and the nodes. For operators to receive payment, the contract must use LINK.
From that total, 1 billion LINK tokens were distributed as follows:
- The investors in the token sales received a share of 35%.
- A 35% portion was set aside for Node Operators and ecosystem rewards that will be given out to encourage network users.
- SmartContract.com, LINK’s parent business, received 30%
During its debut year of 2017, it was priced under 20 cents and remained under $1 until 2019. In 2020, the price began to rise precipitously. As a matter of fact, the price climbed from $2 in early 2020 to $52 on 10 May 2021.
Though LINK has risen meteorically, it has since fallen from its high of $52 and hasn’t yet reached those levels again. After dropping nearly to $10 in just one year, the price of LINK tokens is currently around $8, with 491 million tokens in circulation. According to WhaleStats, LINK is one of the top ten tokens that major ETH whales are holding. One of the top smart contracts used by the top 2000 largest ETH whales today is LINK.
At the moment, Chainlink has 1769 integrations, which is more than 1,500 more than its closest competitor.
Along with providing some insights on the token, the graph below also shows that there has been a lot of LINK development activity over the past several months.
The timing of the SmartCon Conference is difficult for Chainlink and other cryptocurrencies. DeFi’s entire value was once more than $150 billion, but it is now just about $54 billion.
Over the past two weeks, LINK’s price has been increasing on the charts as a result of attention from whales and social media. The daily chart reveals that during this year, Chainlink’s price fell to a low of $5.90. The coin has since remained in a phase of consolidation, with a range high of $9.31 and a range low of $5.90.
High stake holders have reportedly been growing actively for a while, according to Santimentfeed. The LINK/BTC pair breaking above a long-term resistance level is another indicator of significant LINK domination. It’s important to note that the pair ended a downtrend that lasted more than 780 days. Positive price momentum and decent retail volume combined with increased whale activity might support LINK’s bullish bias.
Bulls would need to maintain LINK’s price above the $8.3 resistance level for the time being. The $8.7 to $9.5 point will be the next significant supply resistance.
As we get closer to the start of Q4, let’s see if Chainlink can continue to expand from the above growth points.
SmartCon 2022 Briefs
On 28th September 2022, ChainLink hosted the annual SmartCon event in New York City.
All members of the Web3 community come together here, whether they’re industry professionals, community members, or independent artists.
The keynote speaker includes highly influential figures like former Google CEO Eric Schmidt, Arianna Huffington, Kain Warwick, Ron Bodkin, and many more.
Featuring 150+ speakers and 100+ presentations, SmartCon 2022 has managed to explore the latest advancements accelerating Web3 innovation.
Eric, a board member of Chainlink Labs was also a part of the keynote speech, where he provides strategic guidance to the network. Also during this time, Chainlink has grown its social visibility, now having 886.1K Twitter followers.
Current Ongoing Developments
This keynote also included presentations, initiatives, announcements, and product updates from chainlink’s current milestones.
Chainlink Economics 2.0
During the first half of the SmartCon 2022, Chainlink announced that its economy was getting elaborated and updated, and now it has an array of programs focused on improving data security and utility while also reducing operational costs of Oracle services, increasing user fees paid to Chainlink service providers, and allowing a broader range of service providers, including stakeholder organizations, to participate in Chainlink.
Introduction of Chainlink SCALE & BUILD
- With SCALE, Chainlink Labs commits to offsetting operation costs of oracle networks to accelerate ecosystem growth and ensure long-term sustainability.
Participating blockchains and layer-2 networks in the initial launch include Avalanche, Metis, Moonbeam, and Moonriver.
- With BUILD, Chainlink Labs aims to accelerate the growth of early-stage and established projects within Chainlink’s ecosystem by providing enhanced access to Chainlink services and technical support in exchange for fees and other incentives.
Participating projects in the initial launch include Space and Time, Truflation, and bitsCrunch.
Chainlinks Integrations
That’s not all, as Chainlink announced some major integrations with their decentralized oracle network in the second half of the keynote.
Bitcoin Interest Rate Curve
In collaboration with CF Benchmarks, Chainlink is launching the CF Bitcoin Interest Rate Curve (CF BIRC), a benchmark for current and forecasted Bitcoin interest rates.
Coinbase Cloud x Chainlink NFT Floor Pricing Feeds
Chainlink joined with Coinbase Cloud to introduce NFT Floor Pricing Feeds, a collection of Chainlink Data Feeds tracking the floor prices of the top 10 NFT collections.
Competitors
Compared to other Oracle Tokens, Chainlink stands out due to its approach to Smart Contracts and its decentralized network.
Some of its competitors include; UMA, API3, Band Protocol (BAND), and Odin protocol (ODIN).
Although in terms of scope, each one of them is limited compared to Chainlink.
