ChainLink: Is LINK A Blue Chip Crypto?
ChainLink: Is LINK A Blue Chip Crypto?
In order for blockchain to provide the Internet of Money, collaboration is necessary. However, the type of data that blockchain shares, network topology, consensus mechanisms, and many other features vary greatly depending on its use.
For example, if a logistics company uses a blockchain to track shipments but is unable to communicate with the blockchain it uses for settlement, various problems could arise.
The problem is that each blockchain is a different world. It is always a weakness when exchanging information with the outside world because it is necessary to trust the source of information outside the blockchain and supply the correct information.
So, what is the solution?
The answer is Chainlink, a decentralized blockchain oracle network that allows smart contracts to communicate securely with real-world data and services outside the blockchain network. But why is Chainlink so important?
Chainlink is essential because it enables access to data outside the blockchain and off-chain computing while maintaining blockchain technology’s security and reliability guarantees, greatly improving the capability of smart contracts.
Like blockchain, it relies on Oracle (a decentralized network of independent entities) to collect data from a variety of sources. Chainlink also aggregates the collected data and delivers a single data point (verified) to the smart contract to trigger its execution, reducing the risk of centralized points of failure.
The various use cases of Chainlink include access to interest rates, asset pricing, and contract settlement automation through distributed financial (DeFi) applications. In addition, ChainLink can be used by insurance companies to settle crop contracts according to parameters such as the amount of rainfall in the temperature.
So, stay tuned to understand how ChainLink works, what are the project goals and relevant partnerships, whether it has a potential future ahead, and much more!
What is a Blue Chip Crypto?
The term “Bluechip” is used in the corporate world to refer to a financially stable company that has a unique profit mechanism even under severe economic conditions. In Cryptos, Blue chips imply a blockchain currency with having a major portion of the market capitalization of the total cryptocurrency market cap.
Reliability and industry dominance are also reasons for being a Bluechip. For example, Bitcoin celebrated its 13th anniversary in 2022.
Bitcoin has been a pioneer in cryptocurrencies and has kept its top spot ever since.
With regard to the crypto blue chip, it is necessary to compare the ordinary coin with the DeFi coin. Both use the concept of blockchain, but the usual one refers to the pioneer coin. However, DeFi coins with more than just a store of value is on the increase and may probably overshadow the former.
The best Examples of Bluechip Crypto assets are Bitcoin, Ethereum, and XRP (Ripple). So, keep watching to see if we can include ChainLink into that list.
What is ChainLink?
ChainLink (LINK) is a cryptocurrency and technology platform that allows non-blockchain companies to connect securely with the blockchain platform. Chainlink is a middleware that connects blockchain-based smart contracts with external data such as baseball scores and stock prices.
Chainlink’s LINK currency is a security for payments to network operators and network smart contract contracts.
Chainlink is known as a distributed oracle network or blockchain abstraction layer. Chainlink utilizes blockchain technology to safely enable calculations on and off the chain and support hybrid smart contracts.
Companies using Chainlink will have access to leading blockchain networks such as Ethereum and Solana. The Chainlink blockchain is hosted on an Ethereum platform that uses a proof-of-stake operating protocol. Chainlink is also an open-source blockchain project that anyone can browse and contribute to the code of the project.
The Chainlink blockchain can support the secure sharing of inputs, outputs, and calculations.
Features of Chainlink include the following:
- Support for distributed data feeds: It can safely collect data from many sources and process for hybrid smart contracts.
- To provide a verifiable source of randomness: Available for applications that require encrypted randomness, such as games.
- To enable automation: The smart contract of Chainlink enables companies to automate critical functions and event-driven tasks.
- It supports cross-blockchain interoperability: Chainlink can connect the Blockchain platform and support the exchange of messages, tokens and specific actions.
ChainLink (LINK) is an Ethereum token called LINK. This network allows Ethereum’s smart contracts to connect securely to other data sources, payment systems and user interfaces of applications.
In addition, LINK tokens compensate node operators for obtaining data (honest) for smart contracts and deposits required by contract creators. The LINK token is an ERC677 token that can take functionality from the ERC20 (issued over an Ethereum network) token standard and include data payloads in the token transfer.
Holders need to stake LINK tokens into smart contracts to become nodes and supply data to the ChainLink Oracle. This serves as a deterrent against fraud and the submission of false data to the network.
How Chainlink was created
Sergey Nazarov, Steve Ellis and Ali Juels, three of them, released a whitepaper of the ChainLink and began developing the project in September 2017. In the same month, the company held an Initial Coin Offering (ICO) to sell 350 million LINK tokens (35% of the total supply) and raised $32 million.
Chainlink launched its network in May 2019. The project is run by an organization of Smart contract Chainlink, Ltd., a registered corporation in the Cayman Islands, and Chainlink Labs.
How does ChainLink Work?
The buyer and the provider of the data are two parties in the Chainlink network. In addition, there are five types of Chainlink contracts:
- Request contract: When a smart contract requests data, the processing is started on the blockchain, and information requests called request contracts are transmitted from the smart contract.
- Service-level agreements: To obtain off-chain data, the Chainlink protocol registers this request as an “event” and generates matching smart contracts called service-level agreements (SLA) contracts on the blockchain.
The SLA contract generates three sub-contracts: Reputation contract, Order-Matching contract, and Aggregating contract.
- Reputation Agreement: The Chainlink Reputation Agreement verifies the correctness and performance history of the oracle provider and evaluates and eliminates unreliable nodes.
- Order Matching Contract: A chainlink order matching contract requests chainlink nodes, collects bids from them, and selects the appropriate number and type of nodes to fulfill the request.
- Aggregation Contract: ChainLink Aggregation Contract checks all data from the selected Oracle and obtains and validates the results.
The mentioned stakeholders need to perform the following steps to meet each other’s needs.
- Creating SLA Contracts for Oracle Selection
Chainlink users create SLA agreements that specify specific data needs. This SLA agreement is used by ChainLink software to match the most appropriate Oracle and the user who can provide data. The buyer selects the data they want, and the provider competes to provide it.
Providers must promise to invest in LINK tokens when making bids (order matching agreements), which may be taken away in the event of a bad deed. When a provider is chosen, it is responsible for ensuring that the correct response is added to the chain.
- Data collection and processing
In this step, Oracle interacts with the external data source to receive the real-world data specified in the Chainlink SLA. Oracle then processes the data and provides the data to the buyer through a ChainLink service.
- Consolidating and Validating Results
In the final stage, Oracle’s data collection results are aggregated and returned to the Aggregation contract. The Aggregation contract receives data points, evaluates their validity, and returns a weighted score to the customer based on the sum of all the data received.
Chainlink aggregates and weights the data provided using an Oracle evaluation system that can determine the reliability of the data source. Data providers can get paid for their honest service if everything goes according to plan.
What role does LINK play in all of these phases? For node operators’ services, smart contracts request data pay with LINK. The demand for data and market conditions determine the price paid to the node operator.
Goals of ChainLink
Chainlink aims to achieve continued growth by expanding support for blockchain environments and promoting new use cases for hybrid smart contracts. ChainLink can have countless opportunities to connect blockchain networks with off-chain information, as the significant accumulation of data and records is not yet maintained within the blockchain.
In 2021, the ChainLink network grew to include more than 1,000 projects and secured more than $75 billion in value.
Because of providing such valuable and essential services, Chainlink has built a huge number of partner lists, including many leading blockchain networks, distributed financial (DeFi) platforms, and crypto games. Next, are some of the major blockchain networks that are using ChainLink technology:
One of the most notable companies working with Chainlink is Alphabet (NASDAQ: GOOGL), which has decided to use Chainlink for its Google Cloud service. Google will put BigQuery’s data on the blockchain in the partnership through Chainlink.
A major Chainlink partner in the crypto industry is the Binance crypto exchange. The company is using Chainlink to connect its data to the Blockchain platform.
Apart from these, a major development in this regard happened on September 28th, 2022: SWIFT partners with Chainlink for a cross-chain crypto transfer project.
The SWIFT’s interbank messaging system partnered with price oracle provider Chainlink to work on a Proof of Concept (PoC) project that allows traditional financial companies to trade on a blockchain network.
Sergei Nazarov, the co-founder of Chainlink, presented the project at the SmartCon 2022 conference in New York on September 28th with SWIFT Strategy Director Jonathan Erenfeld Solé.
Keep in mind that these are just a few of the important connections made by Chainlink. The ChainLink ecosystem includes a number of partnerships and collaborations.
The @chainlink ecosystem growth never ceases! 🔥
This month lets welcome:@etherisc@SwipeWallet@0xProject@OffchainLabs@ChorusOne@QANplatform@StakingFac @Easy2Stake@ngrave_official@SetProtocol@NexusMutual@etclabs#4IR #PoweredByChainlink $LINK pic.twitter.com/qbMcaNFIQP
— TheLinkMarine (@TheLinkMarine1) February 28, 2020
ChainLink Use Cases
The following are some of the use cases for Chainlink:
- Verifiable Randomness Function (VRF)
One of the Chainlink’s most popular use cases is the Verifiable Randomness Function (VRF). VRF allows blockchain applications to generate random numbers in a provably fair manner.
This use case was first popularized by the Ethereum-based decentralized application (DApp) CryptoKitties. The VRF use case is also being used by a number of other DApps, including Decentraland, Etheroll, and Chain Clash.
- External Data Feeds
Another popular use case for Chainlink is External Data Feeds. External data feeds allow smart contracts to access real-world data, such as stock prices, weather data, and exchange rates.
This use case is being used by a number of popular DApps, including Synthetix, Maker DAO, and Augur.
Oraclize is a service that allows smart contracts to access data from external data sources. The Oraclize is built on top of the Chainlink network and uses Chainlink nodes to retrieve data.
So, Oraclize is being used by a number of popular DApps, including Gnosis, Melonport, and Aragon.
- Decentralized Finance (DeFi)
DeFi is a rapidly growing industry that is built on the Ethereum blockchain. DeFi applications use smart contracts to provide financial services, such as lending, borrowing, and trading.
Chainlink is being used by a number of popular DeFi applications, including MakerDAO, Kyber Network, and Augur.
- Staking Service
Chainlink also provides a staking service that allows users to earn rewards for participating in the network. In addition, the staking service provides security for the network and helps to keep the Chainlink network decentralized.
Is ChainLink a good investment?
ChainLink is a quality investment that is worth considering if you are building a cryptocurrency portfolio. It offers excellent practicality and widespread adoption and has a large lead-in profit compared to other distributed oracle networks.
Smart contracts on any blockchain network require (and will continue to require) real-world data. ChainLink provides an efficient and accurate oracle solution. The fact that many projects already use Chainlink networks proves its usefulness.
In addition, the fact that ChainLink is not bound by the blockchain and are not bound by any network has also positively impacted the spread of ChainLink. In addition, Chainlink has proposed and demonstrated the initiative of Cross-Chain Interoperability Protocol (CCIP), a global open-source standard for messaging between blockchains. Whether or not CCIP becomes a common global standard, the proposal is important, and Chainlink is in the spotlight as the blockchain industry continues to evolve.
Looking at the Oracle Token market, it is clear that ChainLink is in a very strong position.
However, it is also important to be cautious with any cryptocurrency investment. As we know, prices are volatile and can easily go up and down. If you decide to invest in Chainlink, other projects, or cryptocurrency stocks, you should be cautious about the amount. So, always do your own research and never invest more than you can afford to lose.
Is ChainLink a Blue Chip Crypto?
Yes, Chainlink is considered a blue-chip crypto by many crypto investors. This is due to a number of factors, including its strong technology, large market capitalization, and broad adoption by major enterprises. While there are many smaller coins with promising technologies, Chainlink stands out as a top choice for investors seeking stability and long-term growth potential. In addition, Chainlink has one of the most active development teams in the space, which is continuously innovating and delivering new features and upgrades. As a result, Chainlink is well-positioned to maintain its position as a leading player in the blockchain space for years to come.
What does the future hold for Chainlink?
The off-chain network built on Oracle will be one of the most advanced elements in future updates of ChainLink. The off-chain network is intended to keep most of the complex computational activities away from the main layer of the smart contract platform.
For example, Ethereum’s gas prices will rise due to the increased demand for computational power, and the network may not work for small transactions. Chainlink 2.0 aims to help users overcome this problem by making DApps’s computing processes more affordable and understandable. Moreover, developers will have the opportunity to work on multiple blockchains with the help of this update.
The team is also planning to implement anti-spamming mechanisms and improve the decentralization of their node network. By adding more security layers, they want to make sure that the data delivered to smart contracts is as safe as possible.
The future looks bright for Chainlink. With a strong team, active community, and exciting roadmap, the project is well-positioned to become a leading player in the blockchain space.
As we have seen, Chainlink is a top project with many exciting updates planned for the future. The team is dedicated to delivering a high-quality product that meets the needs of businesses and individuals around the world. With its strong technology and passionate community, Chainlink is well-positioned to become a leading player in the blockchain space. If you are looking for a long-term investment with high potential returns, Chainlink is definitely worth considering.
So, I hope this article was helpful in understanding what Chainlink is and its future potential. If you have any questions, feel free to leave a comment below.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.