Researching Chainlink 2.0 News: Current and Future Conditions
Chainlink 2.0 is the biggest update to Chainlink that has launched since 30 June 2023. Since the update, the LINK Token price has appreciated by around 117% to date, indicating success. This article will provide a summary and update on the current state of Chainlink 2.0 as well as future plans that are considered to be positive sentiment for the next six months to two years according to Chainlink enthusiasts called "Marines".
What is Chainlink?
As a quick reminder, Chainlink is a crypto project that has been established since 2017 as an oracle that acts as a bridge to send and receive data from one blockchain to another blockchain or Web2 network.
If you want to know more about Chainlink, Republik Rupiah has created a video that explains what the project actually does in a short but concise manner, which can be watched here.
Despite its success, Chainlink continues to make updates that keep its technological capabilities evolving along with the needs of the crypto market.
These updates are what led to Chainlink 2.0 coming in June 2023 along with the narrative of inter-network integration that is increasingly prevalent in the crypto world.
Chainlink 2.0 Update Results
There are three main updates that emerged after Chainlink 2.0, namely the use of LINK as a means of payment, new staking features, and integration with networks outside the blockchain in an easier way.
The first is LINK as a means of payment. When Chainlink was first established, LINK was already used as a means of payment, but specifically only for validator nodes that drive data movement.
This is because in the early days of Chainlink, the only services provided were data transfer services, where users paid in US Dollars and Chainlink converted them to LINKs for distribution to the nodes.
Changes in Chainlink's Service Payment System
After Chainlink 2.0, the services provided have evolved from oracles for simple data movement to new features such as off-blockchain computing to collect data, data aggregators to ensure all Chainlink-related sources provide the same data, and data storage and management.
All of these services are now payable using LINK but with a US Dollar denominated value, so while the price of the service will not rise if the price of LINK rises, providing convenience for users.
The payment system is also now diverse, with pay-per-use and pay-as-you-go features shared amongst users on the same network.
To understand the difference in these features, it is important to know that Chainlink operates with a collection of networks called DON or Decentralised Oracle Network.
In Chainlink, there are several DONs, where each DON has the role of fetching and moving data and then working with nodes to validate and process the data movement.
In the pay-per-use feature, users will pay per service used according to a monthly contract, for example per GB or per data interaction, depending on the agreement. In this feature, one user pays according to one agreement with one DON.
In the joint payment feature, several users can jointly use one DON so that the cost can be cheaper according to the agreement between the DON and several users.
This mechanism is used to ensure that the service fee remains cheap, plus there is an update from Chainlink 2.0 to keep the fee stagnant and not fluctuate like gas fees on blockchains like Ethereum.
One prominent member of the Chainlink community with the Twitter handle ChainLinkGod.eth reminded Chainlink users of the stagnant fees.
He gave a comparison between Ethereum gas fees and transaction fees on Chainlink, where on the Ethereum Blockchain gas fee, transaction fees will get more expensive the more people use.
This is different from Chainlink where because there are new features and joint venture features, the more users, the cheaper it can be.
This new feature ensures Chainlink's vertical and horizontal scalability. This means that vertically, Chainlink can allocate more nodes to a single user or a group of users if they need higher capabilities.
Horizontally, Chainlink can also allocate more DONs to a user or group of users if they need higher capabilities.
These two scalability capabilities ensure that Chainlink's transaction fees are not as volatile as older blockchains, making it easier for users to remain loyal to Chainlink's services.
It's worth noting that currently transaction fees are determined by each DON as well as Chainlink's relatively stagnant additional fees for nodes.
So while not as volatile as gas fees, service providers will not be at a disadvantage as they can set their own fair prices.
New Staking Feature
The second update coming from Chainlink is the staking feature where now not only nodes and DON providers can do staking but all communities can do staking for profit.
Staking is mandatory if you want to become a node or DON provider because this is part of the capital to become a service provider on Chainlink.
According to the analysis of two well-known members of the Chainlink community in an interview with Bankless, one of the leading media in the crypto world, there is an indirect link between the staking capital that must be provided and the services you want to provide.
This means that the more services provided, the more staking capital must be spent. This is because Chainlink uses a collateral system to ensure that service providers complete their work and do not work arbitrarily after being rewarded, by locking in capital through LINK staking.
In the interview, there is a narrative that there is also an indirect tie between the level of profit and the number of service users, where the higher the number of data users, the higher the yield or profit from staking.
However, after the launch of Chainlink 2.0, this narrative has not been clearly proven, as currently the profit value is still written in a fixed number.
This yield value is set alongside the new staking feature which is still being implemented in phases where each phase has a limited allocation for those who can stake.
Currently, Chainlink has reached the third phase where per phase there is a note regarding the fixed staking reward profit value.
In this third phase, community and ordinary investors can also stake for profit without being a node or part of DON.
The third phase is currently open and if you want to participate to see if you can stake or not, investors can visit the site listed here.
Update on Ease of Integration with Outside Networks
Last but not least is an update on the ability to integrate with networks in the Web3 and Web2 world. This update is considered by the market to be a major positive sentiment for LINK in the next six months to two years.
There are three new features prioritised by Chainlink in Chainlink 2.0 that are considered to bring its services to be used by more companies.
The first is the CCIP or Cross Chain Interoperability Protocol. CCIP acts as a bridge for communication between blockchains and communication between blockchains and Web2 networks.
CCIP accommodates easy data transfer between the two networks. So when an application on a blockchain wants to retrieve data from another blockchain or from another Web2 network, everything becomes easy with the help of CCIP.
CCIP also facilitates token or coin transactions between blockchains without any wrapping mechanism, thus speeding up transactions between users.
Second is the Oracle for Streaming Data, meaning that with Chainlink, an application can continue to get data in real time even if it comes from another network without any pause or the need to request a new data transfer transaction.
This mechanism is suitable for decentralised applications that require data with rapid changes such as price data or social media message data that keeps changing according to the time of delivery.
The third is the integration of Oracle's Self Service mechanism through Javascript implementation in the application's smart contract.
This mechanism will make it easier to connect data between applications and other applications or networks because through Javascript, smart contracts can be directly connected to any Application Programming Interface or API.
Future Plans
These three things are the main values driven by Chainlink 2.0 at the moment because according to Chainlink supporters, these mechanisms will make many applications use Chainlink services.
if true, then in the future many investors and users of crypto applications will use Chainlink without realising it because it is connected to the backend or kitchen technology of an application.
Currently, these three mechanisms are still in the development stage. But in the future these three mechanisms will drive a lot of adoption for Chainlink.
In addition to these three things, Chainlink also has some future plans to increase its adoption.
The first is a payment feature with any crypto. The Chainlink team is currently developing a feature to make it easier for users of its services to pay in any crypto which will automatically be converted to LINK when logging into DONs and nodes.
The second is the Decentralised Computing Market which is a market mechanism for DONs in Chainlink to offer their services to users.
Currently, DONs can set their own prices but the services provided are still limited to Chainlink's provisions. In the future, with this "marketplace", DONs can provide customised services according to the specific needs of users at different prices.
For example, currently DONs are given space to provide data movement, collection and storage services by Chainlink on a packaged basis.
But in the future, DONs can choose whether they want to provide only data movement services or only data collection and curation or even only data storage.
However, DONs are still allowed to use the service settings or templates provided by Chainlink so that the provision of customised services is not mandatory.
In the "marketplace", each DON can compete by providing different prices in the hope of increasing activity on Chainlink.
Thirdly, Chainlink is also offering the Chainlink Build and Chainlink Scale Programmes to encourage more new projects to use Chainlink's services.
These programmes will provide free of charge Chainlink services to new projects for a certain period of time, plus guidance from Chainlink to become a successful project.
The programme operates like an incubator or accelerator coupled with a trial of Chainlink users in the new project.
Overall, Chainlink seems focused on moving forward as an inter-network communications provider.
The good news is that for now, Chainlink has no direct competition as the majority of its rivals only provide some of the services that Chainlink does.
In addition, Chainlink's adoption has increased dramatically with companies such as Google Cloud, AWS, Meta, Spotify, Visa, Aave, Uniswap, OpenSea in the Web2 and Web3 world officially working with it.
Currently, there is no publicly accessible data on how much data Chainlink processes per day. But looking at the adoption, it can be said that Chainlink has a bright future if everything goes according to plan.
