What is Chainlink
Founded in 2017, Chainlink is a blockchain abstraction layer that enables universal connected smart contracts. Initially designed by the Ethereum platform, Chainlink is starting to be adopted by other platforms such as Tezos and Polkadot.
They were recognized by the World Economic Forum which named the start-up the top 100 most promising Technology Pioneers of 2020.
The native token of Chainlink, $LINK, provides the largest collection of decentralized services powering the world’s hybrid smart contracts.
The network is driven by a large open-source community of data providers, node operators, smart contract developers, researchers and more. The team also focuses on ensuring decentralized participation for all node operators and users looking to contribute to the network.
Chainlink is an Ethereum based ERC-20 token, secured by the proof-of-stake consensus mechanism.
It embeds itself in the very foundations of DeFi, by being an oracle blockchain, providing off chain data for smart contracts blockchains notably for $AAVE and $COMP.
3 reasons why Chainlink is pumping
1. Total value secured in Chainlink network
Chainlink now supports over 700 oracle networks equating to US$75 billion in total value secured.
Not only did Chainlink become the second most value securing form of decentralized consensus across the DeFi ecosystem, it solved the problem of executing smart contracts by eliminating third party risk in making sure data which are executed are truthful, secure and immutable.
2. Ecosystem growth
Chainlink grows proportionally with the DeFi space. Over 1000 partnerships were made, constituting to half of all integrations taking place in 2021.
It covers a significant proportion of TVL in numerous key DeFi vertical projects and secured value across number of additional innovative DeFi uses such as algorithmic stablecoins and DEXs.
Staking with $LINK
The increase in partnerships leads to greater utility with the protocol. Chainlink will launch staking, which allows LINK holders to secure the network by locking up LINK into the protocol, and earning staking rewards.
Nazarov says the team is satisfied with the security and scalability of the consensus system they’ve designed, and is ready to launch staking in 2022.
3. 12 blockchain and layer-2 main-net integrations
Given that vast majority of smart contract use cases require oracles, the deployment of chainlink services onto a new blockchain environment provides developers in on-chain ecosystem critical infastructure they require to launch into production.
The DeFi hype has started since the beginning of 2020, with a total cumulative locked up tokens to grow upwards of US$5.31 billion.
Most of these DeFi applications require special data which feeds to deliver real time data to smart contracts which is what chainlink solves with oracles.
With lacklustre price action in 2021, price is an unfair representation of value, but its use and utility will drive its value in the coming year.
Chainlink’s ground-breaking 2021 year saw it rise to over US$75 billion in total secured value and onboard over 1,000 projects, boosting the price of $LINK to enter 2022 strong.
With the narrative of the introduction in staking and more utilities on the $LINK token, Chainlink’s best year is yet to come. Their massive performance as a token in 2021 statistically showed increase in adoption and its concept in being the largest decentralized service powering smart contracts in notable protocols.
This also proved to be Chainlink’s reason for pumping despite the market tanking.
As more $LINK tokens are staked, securing the network will provide utility for token holders as rewards, potentially increase its user base.
The growing DeFi space will also boost the demand of chainlink amongst various protocols, increasing its use case and possibly open up doors for institutional and mass adoption.
The momentum they garnered in 2021 will spill over into the new year, attracting many more investors and positively affecting the price action of Chainlink.
Featured Image Credit: Chain Debrief