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Tuesday, October 4, 2022

What is Chainlink Crypto?

In the last 2 years, Chainlink has become one of the most popular projects in the entire crypto ecosystem, with a large community of followers that HODI the native LINK token in much the same way that preppers HODI canned vegetables.

But what problem does Chainlink solve, and how does it work? What’s the purpose of the Chainlink token LINK? Join us as we take a closer look and answer the question: What is Chainlink? Arguably the most game-changing innovation in the crypto space,  after the creation of Bitcoin, has to be the development of smart contracts.  

Smart contracts were originally proposed by Ethereum’s legendary founder and programmer  Vitalik Buterin and are basically lines of code that allow two parties to execute an agreement without the need of a third party. So picture selling your house to somebody that you’ve never met, with no real estate agent in the middle, just a trusty algorithm that both parties can rely on.

But most smart contract platforms are isolated on individual blockchains and unable to connect with external data feeds. This would make smart contracts unable to react to real-world events,  for example, when a goal is scored in a football match that changes the odds on a betting platform. Chainlink solves this issue with its network of decentralized data providers, otherwise known as oracles.

This continuous feed of live data comes from multiple sources that are spread all around the world, making it more reliable. To take part in the network, the data providers are required to stake the platform’s native LINK token, and from that point, they can earn rewards by providing accurate information or have their stake slashed if they send false information. 

This incentivizes cooperation and keeps the network secure from bad actors. As more and more smart contract platforms go live on their respective blockchains,  Chainlink and other smaller oracle providers, like Band Protocol, DIA and Tellor,  should find their services very much in demand.

Within the oracle space,  Chainlink has the benefit of first-mover advantage and larger amounts of funding. The popularity of the project among investors comes from the huge amount of working partners that Chainlink has already amassed. 

Almost every Ethereum-based DeFi project, from Aave to Yearn Finance, relies on Chainlink’s supply of live prices in order to do things like adjusting their lending and borrowing rates. Chainlink is also a key component of many blockchain platforms,  including industry movers Binance and Polkadot.

This impressive list of partnerships also extends outside the blockchain world,  as Chainlink boasts business relationships with Swift, Google Cloud and Intel. The strategic purchase of DECO, a project that improves how data is sent securely over the internet, suggests that Chainlink is interested in providing data solutions for large,  private enterprises that want a guarantee of protection for potential confidential data.  

If it achieves this, Chainlink could be one of the first blockchain start-ups that achieves true mainstream adoption in the corporate world. Despite all of the positive developments around the project,  Chainlink has recently received some negative press. The project faced accusations of centralization when it was pointed out that just 125 wallets control 80% of the total link supply.

On the surface, this suggests that the integrity of the network could be manipulated by a relatively small group of token holders. But Upon closer inspection,  35% of this wealth is held in one wallet from which node operators are compensated,  so over time, it should continue to be more widely distributed. A further 25% of tokens belong to the Chainlink team and are slated to be used as funding for development, which should benefit the platform in the long run.

Another factor to consider is that, unlike with many other projects,  Chainlink’s native token is not used for governance, so a concentration of funds in fewer wallets does not necessarily mean that the project is centralized.

In fact,  each individual network in the Chainlink ecosystem is free to implement its own governance scheme. Let us know your Chainlink price prediction in the comments and any juicy chainlink news we may have missed.

Read More: Best New 2021 Altcoin to 100x

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