Why Chainlink (LINK) Is Booming In 2020: Where is it Headed?
Chainlink, the decentralized oracle network that’s helping blockchains and dApps become more useful by connecting them to off-chain data, recently ascended into the top-10 projects per market cap in the cryptoeconomy — a significant milestone.
Indeed, Chainlink’s rise over the past few years has been one of the more notable and interesting threads in the cryptocurrency space, and the project has only continued to pick up steam in 2020. So what comes next for the oracle effort, then?
The future is wide open, to be sure. But to get a better sense of why traders are so optimistic about Chainlink lately, let’s explore some of the key happenings that’ve been popping off around the project lately.
LINK Buy Pressure Picks Up
After entering July 2020 with a price of $4.70 USD, Chainlink’s native LINK token hit its latest all-time price record of $8.66 on July 15th.
At the time of writing, the token was still hovering around $7.80 — a price that puts the token up nearly 80% on the month and +200% on the year. Accordingly, LINK has outperformed more than a few major cryptocurrency projects in recent weeks.
Why the major acute run now, though?
One significant factor is how altcoin markets have been heating up in recent weeks, particularly around projects in the blooming decentralized finance (DeFi) sector.
That said, as the influx of interested traders comes in, people look to take positions in promising projects. LINK’s status as the largest ERC20 token by market cap, as well as Chainlink’s technical and social advances around Ethereum and other smart contract platform communities, has seemingly made the coin a prime target for energized crypto traders this month.
Key DeFi Collabs Bloom
Chainlink partners with projects small, medium, and large, but a lot of the fresh excitement around the oracle network is a result of how the project has aptly positioned itself to serve the ongoing DeFi surge we’re seeing in the cryptoeconomy.
For example, consider how Chainlink has become the oracle provider for major rising blue-chip DeFi plays like Synthetix and Aave, which are respectively 4th and 3rd in tracker site DeFi Pulse‘s rankings of the largest DeFi projects per total value locked (TVL).
In this sense, the success of these projects and others like them are Chainlink’s successes, too. They validate Chainlink’s thesis that many projects won’t want to rollup their own oracles, and they show there’s real and growing demand in the DeFi arena for the services Chainlink has to offer.
Chainlinking the BSN
One of the biggest headlines to come out of China lately is the ongoing rollout of the country’s state-backed Blockchain-based Service Network (BSN), which is aimed at serving as a kind of “internet” of blockchains and dApps.
When BSN launches to the public in August 2020, it will support a handful of public blockchains including Ethereum, Tezos, and EOS. But the network’s oracle functionality provider? That’d be Chainlink as of this summer.
“This key integration will enable governments and enterprises to incorporate validated real-world data into their BSN applications using Chainlink oracles via the IRITA interchain service hub,” the BSN team said back in June.
Solid New Partnerships
Chainlink is arguably unmatched in the entirety of the cryptoeconomy when it comes to racking up new partnerships. And while some might not recognize the smaller projects Chainlink partners with, the project’s also wrapped up with some of the most interesting names in the crypto ecosystem.
For example, the Ethereum Name Service (ENS) has become the standard for address naming in the Ethereum ecosystem, and as of July 2020 the ENS project uses Chainlink’s ETH/USD price reference feed as its USD oracle. Solid, right.
Moreover, consider the case of Reflexer Labs, which is building collateralized reflex bonds on Ethereum dubbed RAI. The RAI is being created to form a new kind of very stable collateral for DeFi, and Reflexer Labs also just embraced Chainlink’s ETH/USD price feed. The takeaway? Chainlink is helping out early with some of the sexiest projects in the space.
Helping the NFT Sector
DeFi is Ethereum’s hottest sector right now, but the non-fungible token (NFT) ecosystem is also really promising at the moment. And Chainlink’s notably helping NFT projects become that much more flexible.
How? The Chainlink VRF solution. VRF stands for “Verifiable Randomness Function,” and it’s a tool that allows for true randomization rather than pseuo-randomization. To this end, Chainlink’s been linking up with NFT projects lately to help them embrace truly randomized assets and loot. These projects include:
Additionally, the Chainlink team has identified how to create an entirely new class of NFTs dubbed “dynamic NFTs.” This tech will undoubtedly be explored much more in the future! So things may be early now, but expect Chainlink to figure into the plans of a lot more NFT projects going forward because of ease of access.
Bringing Credit Scores to DeFi
Another avenue that Chainlink can prove very helpful in regards DeFi credit scores. Last month, Chainlink announced that it was teaming up with FinScore to help the project provide its alternative credit scoring system.
At the time, FinScore said:
“This integration will allow lenders to access real-world data about their users with the FinScore Social Presence Score, one of our fraud prevention products. The Social Presence Score provides partial information about the identity, existence, and creditworthiness of the borrower, allowing better decision making for lenders and potentially reducing mandatory collateral requirements or interest rates for the crypto-backed trading of loans. The Social Presence Score is known to be a strong fraud indicator, thus allowing the lender to improve their understanding of the borrower.”
Figuring Out Gas
To use the Ethereum blockchain to perform activities, one has to pay “gas,” or the amount of ETH that’s necessary to perform transactions.
Gas has been a huge topic in the Ethereum community lately, and with that in mind, a few weeks ago Chainlink released the Fast Gas/Gwei price reference feed. The feed allows referencing a “fast gas price at the point of execution ensures users don’t overpay for gas.”
In the least, it’s a really cool feature when many Ethereum projects are scrambling to figure out gas prices!
Attracting the Mainstream
Chainlink isn’t only a tour de force when it comes to the cryptoeconomy, because the project has been attracting mainstream firms, too.
For example, this month T-Systems, a subsidiary of the German giant Deutsche Telekom, announced that it had started running a Chainlink node to become a provider of decentralized data feeds. The firm said:
“By providing real-world data to the Chainlink network, T-Systems MMS engages in a so-called ‘generalized mining’, where it provides an IT service to a blockchain network while getting paid in digital assets for reliably doing so. As there is a significant value locked in DeFi, such IT services play an important role in the overall Ethereum ecosystem.”
Chainlink is one of the most exciting projects in the cryptoeconomy presently, and it’s because Chainlink is flying high in several regards.
Where the project goes from here is anyone’s guess. But there’s no question that traders have been piling into LINK lately because they think Chainlink can still rise much farther from here. In the process, a new crypto juggernaut has been created.
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