Chainlink is a decentralized oracle network based on the Ethereum blockchain built to implement smart contracts between traditional data sources and blockchain infrastructure. An oracle might be referred to as an intermediate system, which translates information received from external sources into a language understandable by the blockchain network and vice versa to form smart contracts. Chainlink uses a reputation system for which node providers with a large number of Chainlink tokens – LINK receive more contracts as a reward. Initially, the network used centralized oracles, but later the founders decided to move to a more decentralized approach.
How does the Chainlink network work on the example of DeFi?
- A smart contract sends a request for information/quote.
- The Chainlink protocol, in turn, creates an appropriate smart contract on the blockchain to receive the requested information, called Chainlink SLA (Service Agreement).
- Data providers send normalized raw data received from centralized and decentralized exchanges.
- Chainlink decentralized nodes process the data received from suppliers and generate quotes.
- Smart contracts receive normalized quotes.
- Node operators receive their reward for processing a request in the form of LINK tokens.
Why is Chainlink so popular?
Thanks to its unique technology, Chainlink can be used in various fields. One is DeFi, in which there is a need to access external data. For example, exchange quotes between cryptocurrencies and fiat currencies.
To date, Chainlink has been integrated with services: Google Cloud, Oracle, Dapps, Matic, Reserve, Hedera Hashgraph, IOST, Binance, Bet Protocol, Ethereum Classic, Chilliz, GET Protocol, Fusion, Kardiachain, DigiTix, NEXO.
One of the more interesting integrations is IOST integration, which allows developers to create decentralized applications (Dapps) that are capable of exchanging data between different blockchain networks. The meteoric rise of DeFi and the use of blockchain technology in various fields has attracted the attention of LINK investors, which is traded on over 100 crypto exchanges around the world. So, after the announcements of partnerships with IOST, Hedera, Google, Oracle in May-June 2019, LINK price surged by 230.26%, validating an all-time high at $ 4.8023 per coin.
LINK Chart by TradingView
The market cap of the token as of today is $ 2,998,277,952 and in terms of capitalization LINK has
overtaken such coins as LTC, EOS and XTZ, the latter most recently was in the top-10 list according to the
Massive growth in July 2020
The demand for the product is growing and Chainlink is announcing new partnerships literally every week, in July 2020 there was an increase in the network activity. The top 1% of LINK token holders reached 76.7% of the total token circulation.
Since the start of the year up to June 15, 2020, the number of addresses with >0 balance in the network also increased, the growth was 100%, from 80,000 to 160,000 (digits are rounded).
As a result, the token increased in price by 72% and reached a historic high of $ 8.9649 per coin.
As for technical analysis, the LINK – USD pair is currently in correction and forms a bullish flag, exit from which can lead to repeated testing of the highs at the level of $ 8.92.
Aziz Kenjaev, SVP – Business Development at Overbit
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