Chainlink is the leading decentralized oracle network, used by leading blockchain networks and dApps to access real-world, off-chain data in a tamper-proof and secure manner on-chain. The Chainlink network leverages a proof of stake consensus mechanism, with validators required to stake LINK - the native digital asset of the ecosystem, to participate in the activities within the ecosystem.
LINK is an ERC-20 token built on the Ethereum blockchain and functions as the utility token within Chainlink. Validator nodes stake LINK and earn rewards for providing accurate data in LINK.
Chainlink’s decentralized oracles are the force behind leading dApps in the blockchain industry, from DeFi and gaming to enterprise and NFTs. The Chainlink DON (decentralized oracle network) uses smart contracts to pull reliable, timely, accurate, and tamper-proof real-world data and process it for access to resources on a blockchain ecosystem.
The meteoric rise of decentralized finance can be attributed as one of the key drivers of growth in Chainlink’s popularity and usage. Leading DeFi apps use its DON to gain access to accurate, real-world data, especially related to pricing.- essential to their functioning and success.
As more innovation takes place in dApps and blockchain-based applications, the need for decentralized oracle technology such as Chainlink is expected to take off higher, making LINK a formidable cryptocurrency investment. As of May 2022, Chainlink ranks among the top 30 cryptocurrencies by market cap.
You can learn more about ChainLink(LINK) at our KuCoin Blog.
Chainlink's decentralized network consists of several nodes or oracles that work to pull real-world data from off-chain resources and use smart contracts to convert this data into a format that can be accessed by applications running on the blockchain. The use of smart contracts ensures that the data supplied by these oracles remains as trustworthy as possible.
As we know, dApps run on smart contracts. These smart contracts require access to real-world data for functioning but are unable to directly communicate with off-chain sources for this data. This is where a decentralized oracle network like Chainlink comes in.
The smart contracts of the dApps can communicate with the Chainlink network, requesting data which its oracles then proceed to provide. The Chainlink nodes can bid to handle the data requests and the winning oracle will be tasked with supplying the requisite data, earning rewards in the form of LINK cryptocurrency for its effort. The data is then sourced from a data provider on the Chainlink network and after validation by a node, is supplied to the dApp via smart contracts.
dApps that require data through Chainlink pay for this service using LINK tokens, a portion of which is given to the data providers and the nodes as reward for their efforts. The prices charged for the services are decided upon by the network of nodes within the Chainlink ecosystem based on market conditions and other factors.
The rewards work as incentives to encourage accurate reporting from external data sources and the correct functioning of nodes within the Chainlink network. They also make the smart contract network more resilient and reliable overall.
Chainlink’s creation dates back to 2017 as an abstraction layer for blockchain to support universally connected smart contracts. Its official mainnet launch occurred in May 2019, offering a way for blockchains and blockchain-based applications to connect with and access off-chain data.
One of the first applications or services Chainlink started providing was Price Feeds - off-chain financial data to power DeFi applications running on leading blockchain networks. Soon, the team of developers added other products to Chainlink’s offering, including:
Chainlink released its updated white paper for Chainlink 2.0 in April 2021 which proposed more use cases for the blockchain agnostic DON. One of the most significant developments in this white paper was the off-chain reporting feature, which helped the Chainlink ecosystem slash gas fees of oracle updates by as much as 90%.
Chanlink has been one of the strong performers among digital assets over the past several years, posting a positive ROI in 2017, 2019, 2020, and 2021. The growth of the DeFi market through 2020 and 2021 also made it one of the best performing cryptocurrencies in 2021, with the LINK price registering new all time highs multiple times.
Looking ahead, Chainlink and its decentralized oracle network are poised for greater adoption amid the continued expansion of the DeFi and NFT markets. Chainlink’s oracles have numerous applications across sectors and can play a vital role in driving up commercial adoption of blockchain technology and blockchain-based dApps. A higher adoption of its technology can send the LINK price and market cap higher and make Chainlink even more valuable to invest in.
As Web 3.0 goes mainstream, more applications would look for services like what Chainlink offers to tap into a wider range of real world, off-chain data. This, in turn, could drive up Chainlink’s value as an investment and support the LINK crypto price.
Chainlink’s LINK token is a highly versatile cryptocurrency with several key uses, including:
LINK’s primary use is to pay for transactions between smart contracts and Chainlink’s node operators. dApps that require Chainlink’s services to access off-chain data pay their fees in LINK crypto.
While nodes can run without any LINK contributions, a node can participate in requests for data that require a deposit only after they have earned some LINK to start with. Within the Chainlink ecosystem, data requesters can specify that node operators deposit a certain number of LINK tokens as penalty fees which will be forfeited if the nodes don’t provide accurate off-chain data.
The LINK token is one of the most popularly traded and liquid digital assets in the crypto market. You can buy, hold or sell Chainlink against other cryptocurrencies, stablecoins, and even fiat currencies as you trade to grow your portfolio. We recommend that you check the latest Chainlink price, market cap, 24-hour trading volume and perform fundamental and technical analysis before trading LINK.
KuCoin lets LINK holders generate passive income and grow their investment. Head to our Crypto Lending section and look for LINK from the list of cryptos. Enter the amount of crypto you wish to lend as liquidity to our platform, select the number of days - choose from 7 days, 14 days, and 28 days.
Assess the daily interest rate on offer and verify the estimated profit you can earn. You can then confirm the transaction and lock up your LINK tokens to earn attractive interest.
Ethereum is the largest blockchain ecosystem to support decentralized applications using smart contract functionality. On the other hand, Chainlink is designed primarily as an infrastructure to provide these decentralized applications access to external data sources in a tamper-proof, blockchain agnostic, and secure manner.
Here are some of the key differences between Chainlink and Ethereum:
Ethereum is a Layer 1 blockchain that hosts decentralized apps. It supports smart contracts and has ETH as its native digital asset or cryptocurrency.
Chainlink is a platform that can support communication between different smart contracts and can supply real-world data to smart contracts in a format they can understand and use. Chainlink has limited functionalities in comparison with Ethereum. The Chainlink ecosystem is powered by LINK which serves as its native digital asset.
Ethereum’s ETH or Ether is a cryptocurrency or a coin that is minted, as the blockchain leverages a proof of work consensus mechanism. As of May 2022, Ethereum has not yet migrated to the proof of stake consensus algorithm.
Meanwhile, LINK is an ERC-20 token designed on the Ethereum blockchain. Forming a part of a PoS network, the LINK crypto cannot be mined but has to be staked or traded if you wish to obtain it.
Ethereum is the world’s second-largest cryptocurrency by market cap and enjoys extremely high trading volume, liquidity, and demand among investors worldwide. Chainlink has a far smaller market cap, although it is among the top 30 cryptocurrencies in terms of size and popularity.
The Chainlink decentralized oracle network is one of the key pillars supporting the global DeFi ecosystem with its price feeds. Its oracles power some of the leading DeFi apps by providing them access to secure, tamperproof, reliable, and timely updates on pricing, without downtime or corruption.
Chainlink’s DON is the most popularly used decentralized oracle service in the DeFi industry as of 2022, giving it an edge over its competition. In addition to Price Feeds, Chainlink also offers several other essential services for use within the DeFi market, including Proof of Reserve, Keepers, Verifiable Randomness Function (VRF) as well as Cross-chain Interoperability.
It lets DeFi protocols receive off-chain, real-world data and computation. In addition, the Chainlink 2.0 brings with it higher levels of scalability and capability with its plans to support multi-chain DeFi environments as well.