The cryptocurrency oracle Chainlink(LINK) is preparing to launch its staking service on 6 December to early access participants, and to the public on 8 December.
LINK has been showing signs of a breakout, climbing23% over the seven days to29 November. But it is still facing resistance after the recent crypto crash, induced by the bankrupt FTX exchange, and chainlink was down 2% over the past month.
LINK to USD
Is its a good time to buy LINK? Read on to learn more about Chainlink and LINK, network updates and Chainlink price predictions for 2023and beyond.
Market leader of decentralised oracles
Chainlink is a network of decentralised oracles or data providers that relay information to enablesmart contractsto execute,based on inputs and outputs from the real world.
The network was founded by Sergey Nazarov and Steve Ellis in 2017. It has established itself as the market leader in the blockchain oracle sector.
About three years after publishing its original whitepaper, the network released an updated version for Chainlink 2.0in April 2021 to drive its next phase of growth.
“We foresee an increasingly expansive role for oracle networks, one in which they complement and enhance existing and new blockchains by providing fast, reliable and confidentiality-preserving universal connectivity and computation for hybrid smart contracts,” said Chainlink.
The Chainlink 2.0 whitepaper said the oracle network would focus on creating multiple decentralised oracle networks (DONs), which consist of a collection of nodes (computing devices).
DONs work to transfer data bidirectionally to and fro from existing blockchains, and “enforce correct oracle reports and arbitrate off-chain oracle disputes”. With DONs, Chainlink nodes can create custom oracle networks that support smart contracts on a target blockchain or on a main chain.
“DONs are formed by committees of oracle nodes that cooperate to fulfil a specific job or choose to establish a long-lived relationship in order to provide persistent services to clients,” said Chainlink.
The Associated Press news agency, the weather data firm AccuWeather, the telecoms firm Swisscomand the cloud services providers Amazon Web Services and Google Cloud Platform have already launched oracle nodes on Chainlink.
What is LINK token?
Chainlink’s native token, LINK, is used to pay Chainlink node operators for data used in smart contracts, for formatting of data into blockchain readable formats, for off-chain computation and for uptime guarantees provided by operators.
LINK is an Ethereum-based ERC677 token that “inherits functionality from the ERC20 token standard and allows token transfers to contain a data payload,” Chainlink said.
According to the crypto research firm Messari, the LINK token launched in September 2017 with a pre-sale offering price of $0.09 per token along with a 20% bonus depending on the time of the investor’s participation.
A LINK public sale followed at a unit price of $0.11. The two sales distributed about 350 million LINK tokens.
LINK has a maximum supply of one billion tokens. The token allocation is as follows:
- Initial token sales investors received 35% of maximum supply
- Node operators and reward incentives were allocated 35% of maximum supply
- Chainlink’s parent company SmartContracts.com received the remaining 30% of LINK’s maximum supply.
Data on Etherscan showed that 14 addresses out of the top 15 LINK holders were linked to Chainlink smart contracts. According todata compiled by blockchain research firmMessari, over 550million LINK tokens were locked in smart contracts on 29 November2022.
The largest non-smart contract LINK-holding address was linked to crypto exchange Binance, which held over 5% of the total LINK supplyas of 29 November 2022.
CoinMarketCap data showed the circulating supply of LINK stood at over 507 million on 29 November 2022. Chainlink was the 19th largest cryptocurrency network with a market capitalisation of over $3.7bn.
Next phase:Chainlink staking
Chainlink announced the roadmap to its LINK staking mechanism in June 2022.
“Staking introduces another powerful incentive and penalty mechanism for Chainlink nodes to consistently generate accurate oracle reports and deliver them to specific destinations in a timely manner,” Chainlink said.
The v0.1 release will introduce a “reputation framework and staker alerting system,” whereby LINK stakers will have the opportunity to get rewards on successfully detecting oracle networks that do not meet the obligations outlined in Chainlink’s on-chain service-level agreement (SLA).
It will also feature additional functionality, such as stake slashing to promote quality and security, and distribute a portion of network user fees to LINK stakers.
The v2 version will explore a loss protection service, which will protect “participating sponsors when a supported oracle network deviates from its SLA”. Loss protection could become a source of rewards to LINK stakers in addition to staking rewards and network user fees.
According to Chainlink, staking will evolve into a key mechanism for node operators who want to “gain access to higher-value jobs and more fee opportunities in the Chainlink Network” due to “a reputation- and stake-based node selection mechanism”.
A form of collaterisation similar to staking already exists on Chainlink, where node operators can choose to deposit their LINK tokens as collateral to insure data delivery services. Chainlink said onon 7 June 2022:
DOGE/USD
0.14 Price
-0.100% 1D Chg, %
“While the initial implementation of Chainlink staking is designed to minimise risk for participants and create a strong foundation, the long-term goals revolve around scaling Chainlink into a global standard with a growing and sustainable user base, which in turn offers greater opportunity of rewards for stakers who increase the network’s cryptoeconomic security and user assurances.”
Chainlink then announced on 21 November that the first version of its staking platform will go live on 6 December. At first, only addresses that qualify for early access will have the chance to stake their LINK tokens. Then, two days later, on 8 December, LINK staking will be open to the public with a cap of 7,000 LINK per address.
“The upcoming launch of Chainlink Staking v0.1 serves as an inflection point for both the Chainlink Network’s security and its economic design,” Chainlink said in a blog post. “The Chainlink ecosystem is entering its next stage of sustainable growth, increased cryptoeconomic security, and entirely new levels of value capture across the network.”
Price analysis: 16-month slump of LINK
Chainlink's all-time performance
Source: CoinMarketCap
2020 was one of LINK’s best years in terms of price appreciation, as the token gained over 1,000%. LINK extended its gains into 2021 and surged to an all-time high of $52.88 on 10 May 2021. ButLINK saw intense selling pressure after its all-time high and lost over 60% in the rest of 2021. The token closed the year at $19.50.
LINK’s losses have continued into 2022. The token has postedsix monthly losses in the firsteight monthsof 2022 and itsyear-to-date losses are more than 60%as of29 November 2022.
In June 2022, LINK fell to a near two-year low of $5.30. The token rebounded in July and added 22% to its value during the month.However, it once again stooped to a 90-day low of $5.58 on 21November.
LINK has started to recover on the lead up to the launch of its staking services. As of 29 November, it was trading at $7.37 and was up 23% in the past seven days.
Chainlink updates
Chainlink concluded its annual Smartcon conference in late September 2022. The oracle announced that SWIFT is using itsCross-Chain Interoperability Protocol (CCP)in an initial proof of concept. According to Chainlink,CCIP will enable the SWIFT network to become interoperable across differentblockchain environments.
A newinitiative called SCALE(Sustainable Chainlink Access for Layer 1 and 2 Enablement) was also introduced. This will allow blockchain projects to offset theoperating costs of oracle networks. TheChainlink BUILD Programwas also announced, which will focus on supportingearly-stage and established projects within the Chainlink ecosystem.
Coinbase Cloud collaborated with Chainlink to launchNFT Floor Pricing Feedswhich can be used to track the floor prices of the top NFT collections.CF Benchmarks partnered with Chainlinkto launch theCF Bitcoin Interest Rate Curve(CF BIRC).
Chainlink said: “The introduction of CF BIRC seeks to enable more predictable lending and borrowing, increased capital efficiency, and a more robust foundation upon which digital asset derivatives markets can grow. Importantly, CF BIRC also seeks to enable financial institutions to participate in digital asset markets by providing a standardised benchmark for Bitcoin interest rates.”
Coindesk reported on 27 September 2022 that Chainlink will team up with Galaxy Digital to provide reference spot prices of cryptocurrencies to blockchains. A week later,it was reported that quantitative hedge fund Two Sigma Securities will partner with Chainlink to provide data related to swaps, options and other derivative-related information.
After the liquidity crunch of the FTX cryptocurrency exchange, Chainlink has been promoting its proof of reserves service.
The oracle tweeted: "With the collapse of a once trusted exchange, an unprecedented number of users are migrating to self-custodial wallets. However, risk still exists in DeFi with entities like exchanges minting wrapped tokens. Chainlink Proof of Reserve is critical for reducing this risk."
Clients of Chainlink's proof of reserve service include the Avalanche blockchain, the Gemini cryptocurrency exchange, and thePaxos infrastructure company.
Chainlink price predictions for 2023and beyond
CoinCodex’s short-term chainlink coin price prediction indicated that the token’s value could have risen by 11% to $8.22 by 6 December2022. However,CoinCodex’s one-month Chainlink price prediction on 29November 2022 saw the token having fallento $7.07.
For the longer term, algorithm-based website WalletInvestor’s chainlink crypto price prediction was bearish and said it was a "bad" investment. It expected the token to have fallen to $0.71 in a year.
DigitalCoinPrice was bullish about LINK’s price performance over the longer term. The site’s chainlink price prediction for 2030expected the token to have traded at an average price of $104.46 that year.
PricePrediction’s LINK price prediction on 29November 2022 saw the token trading at $11.50 in 2023. Its chainlink price prediction for 2025 gave an average price of $24.28 and suggested it would have climbed to $158.77 in 2030
Analysts’ and algorithm-based Chainlink price predictions can be wrong. Forecasts should not be used as a substitute for your own research.
Always conduct your own due diligence and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals.
FAQs
Is Chainlink a good investment?
At the time of writing on 29 November2022,Chainlink was the 19th largest cryptocurrency network with a market capitalisation of more than $3.7bn. Its nativeLINK token has, however,fallen more than 60% year-to-date.
Always conduct your own due diligence and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals.
Will Chainlink go up?
As of 29 November 2022,DigitalCoinPrice was bullish about LINK’s price performance over the longer term. According to its Chainlink price prediction, DigitalCoinPrice expected the token to trade at an average price above $100 in 2030.
Note that analyst and algorithm-based Chainlink price predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research.
Should I invest in Chainlink?
At the time of writing on 29November 2022,Chainlink had fallen by over 60% year-to-date.
Always conduct your own due diligence and remember that cryptocurrencies are highly volatile. Your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals. Never invest more than you can afford to lose.
Markets in this article
LINK/USD
ChainLink / USD
14.59596 USD
-0.5715 -3.880%
Related topics
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