Chainlink Review: Your Extensive Guide to Understand Chainlink Before Investing Your Money
You all probably know that smart contracts strengthen agreements on blockchain technology. After ensuring the data and conditions, smart contracts proceed with automating the deals.
Right now, blockchain faces some hindrances because it cannot wholly access external data. It is important to note that smart contracts face difficulty combining off-chain data with on-chain data, and that’s where Chainlink comes into play.
Chainlink provides an alternative to this problem with its decentralized oracles. Such oracles make smart contracts easily understand the external data, by translating it into understandable language for smart contracts.
Now let’s try to understand what makes Chainlink stand out from its competitive blockchain oracles.
- 1 What Chainlink is all About?
- 2 How Chainlink Works?
- 3 Is Chainlink Connected with DeFi?
- 4 What Makes Chainlink Different from Competitors?
- 5 Chainlink Use Cases
- 6 How Chainlink’s Native Token Works?
- 7 Trusted Execution Environments (TEEs)
- 8 Chainlink Development
- 9 What is Meant by Chainlink Marines?
- 10 Chainlink Community
- 11 Chainlink Partnerships
- 12 Chainlink (LINK) History
- 13 Is Chainlink Good for Investing and How You Can Mine it?
- 14 Conclusion
Chainlink is a decentralized oracle platform that connects smart contracts with external data. When decentralized applications were compromised easily, Chainlink developed a secure wall to protect them from malicious attacks.
The platform proves its value when the blockchain receives the data. At that point, the data is prone to attacks, and it can be manipulated or changed.
To keep the damage to a minimum, Chainlink highlights preferences in its official whitepaper. These priorities are following:
- Data source distribution
- Trusted hardware use
- Oracles distribution
LINK prefers security above all, and that’s why they acquired a startup dubbed TownCrier. The startup secures data feeds and oracles by using its hardware called “trusted-execution environments.”
Such external data sources include different external data feeds, Internet-connected systems, and APIs without compromising decentralization and security. The coin is backed by Ethereum, which users pay for using oracle service on the platform.
To understand Chainlink’s decentralization, you need to know about the centralized oracle system. It’s a single source that can represent numerous difficulties.
If it provides inaccurate data, then all the systems relying on it would abruptly fail. Chainlink develops a cluster of nodes that receive and transfer information to blockchain in a decentralized and secure way.
As said above, Chainlink implements a network of nodes to ensure the information given to smart contracts is secure and entirely reliable. For instance, a smart contract needs real-world data, and it requests it. LINK registers the need and sends it to the Chainlink nodes network to bid on the request.
After submitting the request, LINK validates the data from numerous sources, and that’s what makes this process reliable. The protocol spots trustworthy sources with a high accuracy rate because of its internal reputation function. Such a function increases the possibility of higher accuracy and prevents smart contracts from getting attacked.
Now you’ll be thinking about what it has to with Chainlink? However, smart contracts that request need for information pay node operators in LINK, the native token of Chainlink for their services. The node operators set the price depending upon the market value and conditions of that data.
Moreover, to ensure long-term commitment and trust towards the project, node operators stake on the network. Smart contracts incentivize Chainlink node operators to perform reliably rather than acting as harmful for the platform
The need for high-performing oracle service has been on the rise as Decentralized Finance (DeFi) picked up the pace. Almost every project uses smart contracts and faces the need for external data to run the task properly. The DeFi projects are left vulnerable to attack with the centralized oracle services.
It causes a variety of attacks that include flash loan attacks by manipulating oracles. Previously, we’ve had such attacks, and they’ll keep reoccurring if the centralized oracles remain the same.
These days, people tend to believe that Chainlink can solve such problems, yet, it might not be correct. The technology of Chainlink can pose potential threats and risks to the projects operating on the same oracle services.
Chainlink hosts a good amount of projects, and they all will probably face setbacks if LINK does not perform as expected. It might seem highly unlikely as Chainlink has been delivering on its potential for years and has no chance of failure.
However, back in 2020, Chainlink node operators experienced an attack in which they lost over 700 Ethereum from their respective wallets.
The Chainlink team abruptly solved the matter, but the attack shows that not all systems are completely secured, and they are vulnerable to attack. Is Chainlink Different from Other oracle service providers? Well, let’s find out what makes Chainlink stand apart from regular service providers.
The LINK coin is known for its use cases, and it has a list of reputable companies and digital assets using Chainlink’s services. The list includes leading DeFi tokens like Polkadot, Synthetix, from the crypto-community, and big guns such as SWIFT and Google from the traditional business space.
You can take SWIFT as an example; Chainlink creates a continuous interaction between the traditional business space and crypto world for SWIFT.
The LINK enables SWIFT to send real-world currency into a blockchain. Then showing the proof of receiving the money could allow them to revert it to SWIFT through LINK. Now let’s try to understand what Chainlink’s native token is and all about the supply and issuance.
The partnership between Chainlink and the SWIFT banking network spurs hugely to the development of Chainlink. With SWIFT as a giant in the global network finance industry, succeeding with them will invariably pave the way for collaborations with others in the finance industry. Such possible collaborations could be with payment processors, insurance outfits, or banks.
There’s a development of SWIFT Smart Oracle through the assistance of Chainlink. This’s a great breakthrough in the partnership of the SWIFT with chainlink. Also, when it comes to blockchain oracles, Chainlink is at the forefront with little competition. Others that are researching the development of blockchain oracle are way behind Chainlink.
The Chainlink token, the LINK, has experienced a tremendous breakthrough from 2018 till date, where its upward surge in price is over 400% compared to where it started in 2018. Despite being passing through pressure in the cryptocurrency market in 2018, the LINK went to the bottom.
However, the launching of Chainlink on the Ethereum main net marked the beginning of the resurrection of the LINK. This has drawn more investors and traders to have more interest in this token. Hence, the LINK’s price has moved upwards to where it is today.
The token LINK is used by data purchasers and buyers that pay for translated data into the blockchain. Such service prices are determined by data sellers or oracles while bidding. LINK is an ERC677 token that operates on the ERC-20 token, allowing the token to comprehend the data payload.
Despite earning the token as a data provider, you can invest in LINK by clicking on the button given below. Although Chainlink used to function on Ethereum’s blockchain, other blockchains like Hyperledger and Bitcoin cater to LINK’s oracle services.
Both blockchains can sell the data as node operators to the Chainlink network and get paid with LINK in that process. With a maximum supply of 1 billion LINK tokens, the coin stands at the second spot on the DeFi chart after Uniswap.
The founding company of Chainlink owns 300 million LINK tokens, and 35% of the LINK tokens were sold in ICO back in 2017. Unlike other cryptocurrencies, Chainlink has no staking and mining process that can speed up its circulating supply.
Trusted Execution Environments (TEEs)
With the acquisition of Town Crier by Chainlink in 2018, Chainlink gained Trusted Execution Environments for oracles. The combination of TEEs with decentralized computations offers increased security to node operators on an individual basis in Chainlink. The use of TEEs permits computation to be carried out by a node private or operator.
Subsequently, there’s an increase in the oracle network reliability. This is because, with TEEs, no node can tamper with computations they had made.
The main purpose of the development of Chainlink is to increase reliability. It ensures that all inputs and outputs are tamper-proof by decentralizing both the logic and the data layers. This implies that smart contracts can easily be created and managed.
Using its oracle network, Chainlink can connect contracts to real-world data. In the process, it bridges off loan attacks that put off any possibility of hackers discovering a weakness or fault in the contract.
In the development of Chainlink, smart contracts create autonomous agreements that no one controls. This makes agreements to be more transparent, reliable, and executable without any intermediary influence.
The contract operates automatically with a self-code. Thus in the world of cryptocurrency, Chainlink makes data more reliable and secure. This is, of course, why many systems rely on the network to provide accurate data for transactions using its oracles.
A closer observation of Chainlink’s public GitHub shows a clearer view of the Chainlink development. The development output is a measure of the repositories’ total commits. From GitHub, you’ll observe that Chainlink’s development output is quite reasonable compared to those of other projects.
It’s a common practice for cryptocurrency projects to name their tokens holders and community members. Chainlink became one of the very few projects calling its holders and members LINK Marines.
Creating a community and naming them provides exposure to specific projects in the crypto space. The supporters can drive high-quality attention from social media to the project, leading to an impressive surge in the metrics.
Among other blockchain projects, the unique features of Chainlink distinguish it. Also, these features serve as the marketing strategy for the project. The distinguishing factor lies in Chainlink completely levering on establishing partnerships while some projects are concentrating on uncompromised transparency.
Though the team in Chainlink does communicate with its users, the frequency is low, but the information always spread out with time. From its social media channels, such as Twitter, it shows a low number of followers of about 36,500.
This’s quite below a normal expectation for a blockchain project like Chainlink that has existed for a few years now. The inconsistency in the flow of the tweets on the Chainlink platform is prominent. There are many days between tweets.
On one of the top platforms where cryptocurrency enthusiasts meet, which is Reddit, Chainlink has only about 11,000 followers. Though there are daily posts with corresponding comments, these are mainly from the users. The Chainlink team hardly gets involved in the conversations.
The telegram channel of Chainlink is the project’s platform to access recent information concerning its development. This channel is the largest community of Chainlink, with about 12,000 members.
Chainlink has strived more progressively and is stronger by levering the numerous partnerships it has with other companies. The largest of Chainlink’s partnerships is with SWIFT. In addition to that, other solid partnerships have helped to boost the strength of Chainlink. By collaborating with these partners, the network gets stronger and more popular amongst crypto investors.
Here are some of the partnerships with Chainlink that has distinguished it:
- With banking institutions (with the SWIFT on the lead) by connecting them to smart contracts using Enterprise Grade Oracles.
- With security researchers and computer science academics (such as IC3) implementing the use of cutting-edge security research.
- With independent research firms (such as Gartner) by providing smart contracts.
- With start-up teams or operating systems (such as Zeppelin OS), they provide oracles with the needed security for their products.
- With exchange platforms (such as Request Network) by enhancing their exchange of cryptocurrencies and fiat.
Due to its unique performance, Chainlink keeps adding more node operators and partners on the Ethereum mainnet. There’s always the news of a new partnership with Chainlink almost daily. The new partners collaborate to run a node in Chainlink.
Through these partnerships, Chainlink is experiencing more growth to become one of the preferred blockchains. Despite its recent popularity, the team of Chainlink is not making more marketing moves for this blockchain.
Rather, they are concentrating on development. This implies that the features of Chainlink are the marketing strategies for this blockchain. Thus, investors are looking for Chainlink without any advertising, not the opposite.
It’s important to note that Chainlink was first launched in 2014 with the name SmartContract.com. However, the founder changed the name to what we now call Chainlink.
Such a move was intended to put a mark and represent its core market. Until now, Chainlink has earned its place because of its framework and use-cases.
Furthermore, its ability to decode and secure external data has been gaining a lot of attention. As highlighted above, Chainlink sold 35% shares in an ICO launch in 2017.
It became a huge event, and Chainlink bagged $32 million, which helped the network strengthen oracle services. The network landed a tremendous strategic partnership with Google back in 2019. The alliance secured LINK protocol under the Google smart contract strategic move.
As a result, investors became happy because the move allowed users to access Google’s cloud services and BigQuery through API. Not only that, Chainlink noticed a massive surge in price, which further attracted investors.
Miners can mine Chainlink the same way they mine other cryptocurrencies. For your ease, you can purchase an ASIC miner that is built for professional miners. You’ll mine the LINK token depending upon the power of your operating system or computer.
In 2017, Chainlink introduced its token dubbed LINK, which used to trade over a cent in USD. Its market capitalization was reasonably low.
The price per LINK remained stagnant, trading at 50 cents for quite a while until 2019. The token went onto marking an all-time high of $4.
In the latter part of 2020, LINK increased to $14 per token, which become a massive success for the holders. But the coin left the crypto-community shocked with amazement, when it reached $37 per token in 2021.
As of now, LINK holders have made millions of Dollars by just investing in it. While you see LINK tokens as an investment, they can also be used to pay smart contracts operating on the Chainlink network.
At the time of writing, Chainlink is trading $40 per token, breaking all the previous barriers and updating an all-time high.
This type of abrupt growth shows LINK has the potential to rise above $50. Investing in Chainlink now will turn out to be a good investment in the future, as the coin is projected to skyrocket.
Chainlink is one of the most critical aspects of the crypto and DeFi ecosystem. However, few threats on Ethereum DeFi and correct external data are essential building blocks for an effective on-chain ecosystem.
LINK outperformed reputable crypto-coins on the chart and gained significance in the market because of its impressive growth. Experts suggest that a bull might be nearing that will shoot its price above $50.
At DeFi Coin, we want our readers to stay connected with the world of cryptocurrencies and DeFi, so they don’t miss out on investment opportunities. If you invest in Chainlink, you’d likely make huge profits.