What Is Chainlink - LINK? Is Chailink A Good Investment?

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2 Feb 2024

KEY TAKEAWAYS

Chainlink functions as a decentralized oracle network that establishes a connection between smart contracts on the blockchain and real-world data as well as external APIs.
Oracles provide external data to smart contracts, enabling interaction with real-world events.
Data reliability and security are ensured by a decentralized network of independent oracles.
Multiple layers of security, data aggregation, and consensus mechanisms in the network's architecture.
Eliminates the need for a single trusted party, reducing data manipulation risks.
Widely adopted in finance, insurance, supply chain management, and gaming.
Smart contracts integrated with Chainlink gain access to real-time data.
Native cryptocurrency, LINK, is used for incentives, rewards, and data service purchases.

1. WHAT IS CHAINLINK?

What is chainlink? | Source : CoinGape

Chainlink tackles a fundamental challenge in blockchain technology, which is the ability to connect with external data sources. Since its launch in 2017, Chainlink has been dedicated to solving the oracle problem by providing solutions for integrating off-chain information from reliable sources.
Through a decentralized network of independent oracle nodes, Chainlink offers various decentralized services for smart contracts, including price data feeds for DeFi applications, VRF for dynamic NFTs, and Proof of Reserve for supporting stablecoins and cross-chain tokens.

2. HOW DOES CHAINLINK WORK?

Chainlink's primary objective is to connect on-chain and off-chain ecosystems. To facilitate seamless communication between smart contracts and blockchains, Chainlink employs a three-step process:

Oracle Selection: When a user requires specific data and drafts a Service Level Agreement (SLA) outlining their data requirements, Chainlink's software matches these requirements with suitable oracles. To participate in this process, oracle providers must deposit LINK tokens into an order-matching contract that accepts bids.
Data Reporting: Oracles establish connections with external real-world data sources specified in the SLA. They retrieve the requested data and process it through Chainlink's oracle infrastructure. Subsequently, the processed data is transmitted back to the smart contracts.
Result Aggregation: In the final step, the collected input data from various oracles is aggregated and weighted to produce a final score. This score represents the combined results of the data received.

Chainlink also incorporates off-chain oracle nodes that are connected to the Ethereum network. These off-chain nodes retrieve data from non-blockchain resources as requested by users. The collected data is then processed through Chainlink Core before being transmitted to the on-chain oracles.

3. FEATURES OF CHAINLINK

Chainlink boasts several noteworthy features that contribute to its prominence within the blockchain ecosystem. Its general architecture allows for flexibility in building and running oracle networks, enabling users to establish secure and reliable connections between blockchains and external data sources.
Chainlink's security measures ensure trust in the oracle network, providing users with verified and authenticated data for executing smart contracts. The platform also supports multiple layers of security, enhancing its overall robustness.
Chainlink's flexibility and emphasis on data integrity make it a preferred choice for developers seeking reliable and tamper-proof oracle solutions.

4. WHAT COINS ARE ON CHAINLINK?

As a versatile oracle solution, Chainlink supports a wide range of cryptocurrencies. Some of the notable coins integrated with Chainlink include Ethereum (ETH), Bitcoin (BTC), Binance Coin (BNB), and many others. By providing access to real-time and accurate data from various blockchain networks, Chainlink enables smart contracts to interact seamlessly with different digital assets, fostering interoperability and expanding the possibilities of decentralized applications.

5. IS CHAINLINK A SECURITY?

Is Chainlink a Security?

Security is a paramount concern in the blockchain space, and Chainlink prioritizes the protection of its oracle network and the integrity of data transmitted to smart contracts. The decentralized nature of Chainlink's oracle network, with its independent nodes sourcing and aggregating data, reduces the risk of single points of failure and potential manipulation.
Chainlink employs a combination of cryptographic techniques, reputation systems, and economic incentives to ensure the reliability and security of its oracle network. This multi-layered approach mitigates the possibility of data manipulation or unauthorized access, enhancing the trustworthiness of Chainlink's oracle solutions.

6. WHAT IS CHAINLINK TOKEN?

What is Chainlink Token?

Chainlink Token (LINK) is the native cryptocurrency of the Chainlink network. LINK serves several key functions within the Chainlink ecosystem.

Node Operator Incentives: LINK tokens are used to incentivize and reward node operators who provide data and computational resources to the Chainlink network. Node operators stake LINK tokens as collateral, which acts as a security measure to ensure the reliability and accuracy of the data being provided.
Data Provider Rewards: Chainlink allows data providers to monetize their services by selling data to smart contracts. Data consumers pay LINK tokens to access and use the data, and a portion of these tokens is distributed to the data providers as rewards.
Network Governance: LINK token holders have the ability to participate in the governance of the Chainlink network. They can propose and vote on improvements, upgrades, and changes to the protocol, ensuring a decentralized decision-making process.
Payment Method: LINK can be used as a payment method within the Chainlink ecosystem. Users can pay for various services, such as accessing data feeds, oracle services, and other value-added features, using LINK tokens.
Trading and Investment: LINK tokens are actively traded on various cryptocurrency exchanges, allowing users to buy, sell, or trade them as an investment or for speculative purposes.
LINK's market value and demand are influenced by factors such as the growth and adoption of the Chainlink network, market sentiment, and the overall performance of the cryptocurrency market.

6.1. LINK Price

The Chainlink token plays a vital role within the Chainlink ecosystem. Its value is influenced by market dynamics, demand for oracle services, and broader trends in the cryptocurrency market.
At the time of writing, Chainlink price is $17.82. Chainlink prediction in 2024 will continue on an upward trajectory. However, LINK will at times reach a low of 12.13 USD while the average trading price will be at 12.47 USD.

Chainlink Token Price

6.2. LINK Tokenomics

Chainlink's tokenomics govern the supply and distribution of LINK tokens. LINK tokens are primarily used to incentivize node operators to provide accurate data and maintain the security of the network. Additionally, LINK tokens are staked as collateral to ensure honest data reporting and integrity.

Token Name: Chainlink
Ticker: LINK
Contract:
- Ethereum: 0x514910771af9ca656af840dff83e8264ecf986ca
- Arbitrum One: 0xf97f4df75117a78c1a5a0dbb814af92458539fb4
- Avalanche: 0x5947bb275c521040051d82396192181b413227a3
- Optimism: 0x350a791bfc2c21f9ed5d10980dad2e2638ffa7f6
- Polygon: 0x53e0bca35ec356bd5dddfebbd1fc0fd03fabad39
Blockchain: Ethereum
Token Standard: ERC-20
Token type: Utility Token
Total Supply: 1,000,000,000 LINK
Circulating Supply: 568,099,970 LINK

6.3. LINK Token Allocation

The initial distribution of LINK tokens was conducted through an Initial Coin Offering (ICO), where a portion of the tokens were sold to fund the development of the Chainlink project. The remaining tokens are allocated for various purposes, such as ecosystem development, partnerships, and team incentives.

Public Token Sale: 35.00% - 350,000,000
Ecosystem & node operators: 35.00% - 350,000,000
Company: 30.00% - 300,000,000

6.4. LINK Token Use Cases

Chainlink crypto is applied in:

Payment: LINK is used as a means of payment for services on the Chainlink network. Data providers also receive rewards in LINK.
Stake: To provide data to the network, data providers also need to stake an amount of LINK to ensure they always provide the correct data. If they intentionally sabotage, they will be fined and deducted from the number of LINKs they have staked.
Governance in the Chainlink network allows LINK holders to actively participate in decision-making. They have the opportunity to vote on proposals that aim to modify network parameters or introduce new features.
Collateral & Liquidity Provision: LINK can be used as collateral and provide liquidity in decentralized finance (DeFi) applications such as Aave and DEXs

7. HOW TO BUY CHAINLINK?

To buy LINK tokens, you can visit reputable cryptocurrency exchanges that list the token. Follow their registration and verification procedures. Once registered, you can deposit and trade for LINK tokens.
Where to buy Chainlink? Currently, LINK coin is traded on many different exchanges with a total daily trading volume of about 123 million USD. Exchanges listing this token include: Binance, Coinbase Exchange, HTX, OKX, Kucoin, Bybit, Gate.io, etc. Or you can trade Chainlink on the Klarda platform

Where to buy Chainlink?

8. HOW TO STORE CHAINLINK?

Chainlink (LINK) tokens can be stored in various types of wallets, including hardware wallets, software wallets, and web wallets. Hardware wallets like Ledger and Trezor provide the utmost security by storing private keys offline. Software wallets, such as MetaMask and Trust Wallet, provide convenient access to your funds through mobile or desktop applications. Web wallets, like MyEtherWallet, allow you to access your Chainlink (LINK) tokens through a web browser.

9. HOW TO STAKE CHAINLINK?

How to stake Chainlink?

Staking Chainlink (LINK) involves participating in the network's consensus mechanism and locking up your LINK tokens to support the security and operations of the Chainlink network. Staking can provide token holders with rewards in the form of additional LINK tokens. Here's a step-by-step guide on how to stake Chainlink:

Obtain Chainlink Tokens (LINK): If you don't already have LINK tokens, you can buy and Chainlink airdrop from various cryptocurrency exchanges that support LINK trading. Make sure you have a compatible wallet to safely store your LINK tokens.
Choose a Staking Platform: Look for a reputable staking platform or a supported staking service that allows you to stake your LINK tokens. Some popular staking platforms include official Chainlink staking partners or third-party platforms that support Chainlink staking.
Set up a Wallet: If you don't have a compatible wallet, set up a wallet that supports Chainlink staking. This can be a hardware wallet, software wallet, or a wallet provided by the staking platform you choose.
Connect Your Wallet: Connect your wallet to the chosen staking platform or service. This usually involves authorizing the staking platform to access and interact with your wallet's LINK tokens.
Stake Your LINK Tokens: Once your wallet is connected, follow the instructions provided by the staking platform to stake your LINK tokens. This typically involves selecting the amount of LINK you want to stake and confirming the staking transaction.
Wait for Confirmation: After initiating the staking transaction, wait for it to be confirmed on the blockchain. This process may take some time, depending on the network congestion and the staking platform you're using.
Monitor Staking Rewards: Once your LINK tokens are staked, you can monitor your staking rewards. These rewards are typically distributed periodically and can vary based on factors such as the amount of LINK staked, the duration of staking, and the overall network participation.
Unstaking LINK Tokens: If you decide to unstake your LINK tokens, follow the instructions provided by the staking platform or service to initiate the unstaking process. Keep in mind that there may be a waiting period before your tokens are available for withdrawal.

10. IS CHAINLINK A GOOD INVESTMENT?

Is Chainlink a good Investment?

Determining whether Chainlink is a good investment depends on various factors, including your investment goals, risk tolerance, and market analysis. Chainlink has gained significant attention and adoption in the blockchain industry due to its crucial role in connecting smart contracts with real-world data. The platform's strong partnerships, wide range of supported cryptocurrencies, and robust security measures have contributed to its credibility.
Will chainlink go up? To answer this question, you can consider some evaluation criteria on Klarda:
Klarda Indexes
LINK Rank
Fundamental Score
95.02/100
Technical Score
96.16/100
Security Score
95.07/100
Liquidity Score
92.37/100
Social Score
98.13/100
DEX Score
93.38/100
How high can Chainlink go? With the potential mentioned above, it can be predicted that Chainlink crypto price will continue to increase in the coming years. So, can Chainlink reach $10 000? Many experts analyze the potential quite large in the future, but whether Chainlink will reach the $10,000 mark or not still depends on many factors and cannot be determined accurately. Regularly following Chainlink news will help you make the right decisions.