July 2, 2023
4 min read
ChainLink is what is known as middleware or software that acts as a bridge between an operating system and a database, for instance. ChainLink allows smart contracts on various networks to connect to the resources they need to be successful.
The Chainlink Network is driven by a large open-source community of data providers, node operators, smart contract developers, researchers, security auditors and more. The company focuses on ensuring that decentralized participation is guaranteed for all node operators and users looking to contribute to the network.
In this era of getting rid of the middleman, ChainLink, while it has good application intentions, however, it has been caught between a rock and a hard place trying to get itself established. You'll learn more about its history and hardships in the next section.
ChainLink is run by two key players Sergey Nazarov and Steve Ellis. Nazarov began his career building peer-to-peer marketplaces, going on to the investment team at FirstMark Capital. He joined the cryptocurrency revolution in 2011. Ellis was previously a Software Engineer and Team Lead at Pivotal Labs, where he worked on securing sensitive HIPAA compliant data and building scalable payments automation software.
ChainLink offers a lot of fascinating technology but failed to deliver early on due to overblown FUD which has marred its reputation.
Despite raising some $32 million during its month-long ICO throughout September and October of 2017, the token has not performed well for the first few years, despite the advanced technology. Betamax was also more advanced than the VHS tape but failed to achieve success despite its technological superiority. Some say it lost due to a rumor linking it to Porn-FUD from a bygone era.
Further compounding the price stunting, during the first few years, has been all the FUD that has been raked up and thrown into the media. There was a point where ChainLink was being called a scam. It seems that buying and selling the rumor is more the norm in the crypto-trading sphere, than buying or selling on the actual news. The FUD really put a wet blanket on the price.
A third factor is its partnership with SWIFT, while it might seem like a great partner, the idea behind cryptocurrency is to do away with antiquated, expensive payment systems. Unless, SWIFT will try to use Blockchain as a way to reinvent itself and become competitive with cryptocurrencies, which looks doubtful. Let's jump into Tokenomics and get a better idea of how Chainlink works.
A total of 1 billion LINK tokens were issued in September 2017 at the token's inception. There is a finite supply of these tokens which contributes to its scarcity and increases value. At launch, 35% of LINK tokens were sold, establishing an initial circulating supply of 350 million, which has since grown to around 467 million circulating tokens. Another 30% or some 300 million LINK tokens were allocated to LINK's parent company, SmartContract.com, and have likely been reduced to around 183 million since then. The reduction was due to overhead and operational costs to run the company. The last 35%, some 350 million tokens, are held in reserve to pay incentive rewards to network participants like node operators and/or used for the upcoming staking program that will start with the Chainlink 2.0 upgrade.
Overall, we have seen LINK's circulating supply grow at an average pace of around 1.4% per month. Note that circulating supply growth over the last three months has been limited, reflecting similar lower activity observed elsewhere in the crypto universe.
Let's dig into the financials before talking about tech.
ChainLink entered the market on Sept. 20, 2017 at $0.15 per token. It broke $1 in January 2018 for about 10 days hitting a high of $1.35 before falling, and falling back down into the depths. LINK pricing continued to sit in the tens of cents value range for quite a while, suffering from FUD and the first big crypto crash. It wasn't until May 2019 that the price finally started to see some upward movement. The price peaked on 4 July 2019 around $3.50 before falling down to around $2.50 and staying in that range until early 2020 when in February the price shot back up to $4.50. It wasn't until June/July of 2020 that Chainlink really started to see some big action.
In August 2020, Chainlink set off some fresh new highs at $19, falling down to below $10 and starting a meteoric rise! From January 2021 until May 2021 The price of Chainlink went from $13 to its all time high in May at over $50! That massive price spike triggered a sell off and by 21 July 2021 LINK fell from over $50 to $16 before taking back half its gains throughout the second half of 2021, hitting $30 to $35 before crashing into 2022 and continuing the downward trend. In May 2022, the price is around $7 per token. A far cry from the highs it used to command.
ChainLink is a decentralized oracle solution that bridges the gap between what is going on in the world and the Blockchain-based smart contracts. While smart contracts can only be executed internally on the Blockchain, there needs to be something that links external APIs to the Blockchain, so smart contracts can execute automatically based on real-world factors.
The problem with oracles are that they are centralized or owned by a company. There is a potential for bias in the information being transmitted by the oracal to the smart contracts.
When a third party provides the oracle service for executing smart contracts, that trustlessness or decentralization disappears.
ChainLink's solution to this problem is that it is the oracle: decentralized oracles powered by Ethereum-based ERC20 tokens are what makes ChainLink the middleware. The data being sourced from the decentralized oracles is unbiased not from a sole source but multiple sources which allows for better consensus and verification.
Chainlink is one of the first networks to allow the integration of off-chain data into smart contracts. This is done via the Oracle I mentioned earlier. With many trusted partners, Chainlink is one of the major players in the data processing field. Due to the integration of off-chain data, Chainlink has attracted the attention of numerous trusted data providers, including Brave New Coin, Alpha Vantage and Huobi. Data providers can sell access to data directly to Chainlink, thus monetizing the information they have.
As a decentralized network, Chainlink allows users to become node operators and earn revenue by running critical data infrastructure required for blockchains' success. Chainlink uses a large collection of node operators to collectively power a wide range of decentralized Price Feed oracle networks live in-production, which currently secure billions in value for leading DeFi applications like Synthetix, Aave, Compound and more.
Sometime in 2022, Chainlink is going to allow staking. It already has a proof-of-stake (PoS) mechanism, so moving to PoS is the logical decision for the crypto currency. This will allow LINK holders to finally be rewarded for securing the network with their validations.
Atomic Wallet offers you a great place to store your LINK tokens. Besides just being a wallet for storing, sending, and receiving, you can do much, much more with an Atomic wallet. Atomic Wallet has some great features such as having a built-in decentralized exchange/swap where you can buy more than 300 crypto currencies and have them securely stored in your Atomic Wallet. What's more is that you can stake a number of tokens right in the Wallet! On top of that, for each transaction you make in Atomic Wallet, buying, selling, or swapping, you are eligible to get up to 1% back per transaction paid out in Atomic Wallet's native token, AWC.
Do you still have some more questions or are you looking for resources with more information? Then look no further! Check out the FAQ and Resources section below!
An Oracle is software or Application Protocol Interface (API) from a trusted third party that brings in information to a blockchain from off-chain sources.The oracle is the layer that queries, verifies, and authenticates external data sources. It then encapsulates the data so that the data becomes decentralized and then posted to the blockchain's API, which is then filtered down to the smart contracts layers and can be used to fulfill smart contracts that use off-chain data.
Chainlink's oracle is different in the fact that it acts as an oracle between oracles. So it is getting off-chain data, processing it and then sending it to other blockchain's oracles. It is known as a decentralized oracle because it is not controlled by a single entity. Normally, oracles are a single source of truth. The concern with that is that in the blockchain and cryptocurrency world, things should be decentralized and a single source of truth oracle goes against the decentralization paradigm of crypto currency.
Smart contracts are computer programs that are hosted and executed on a blockchain network. Each smart contract consists of code specifying predetermined conditions that, when met, trigger outcomes. By running on a decentralized blockchain instead of a centralized server, smart contracts allow multiple parties to come to a shared result in an accurate, timely, and tamper-proof manner. Bitcoin does not have smart contracts.
The Web 3.0 is the next generation of websites that run on DeFi.This is allowing users to have a more robust experience using the web and at the same time making a profit from it. It could be said that it is the start of a new type of economy for the world.
It is an evolution of the current era of the Internet as we know it. Web 3.0 is an attempt to move things to a more decentralized space. The Web 3.0 moves towards a peer-to-peer system rather than a centralized system as it is in its current form.
CryptoCurrency is a digital asset that takes its value from generally providing a service of some sort or just being a store of value and being scarce. Crypto Currency has evolved so much to encompass more than just being a store of value. There are not entire digital ecosystems built on a digital currency.
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