The addition of smart contracts onto a blockchain platform was a technological breakthrough, creating new integration possibilities in real-world uses. However, smart contracts are limited to their functionality when retrieving or sending data. They serve only as a store of data without actively distributing information to third parties. Chainlink originated as a middle layer of blockchain, serving to increase synergy between smart contracts and external data sources such as APIs or separate blockchains.
Developed as a “substrate” to blockchain technology, Chainlink added value by enabling blockchain to develop outside its P2P functions. That value has been reflected in the network’s acceptance and price action. Chainlink has reached a new all-time high of over $52 after being fairly silent in the current bull market. The release of Chainlink 2.0 shifted the focus back toward Chainlink as its hybrid smart contract proposition could enable increased adherence to the blockchain by off-chain services.
Chainlink’s oracle network supported blockchain’s evolution through its “middleware” integration, which in 2020 helped magnify DeFi’s utility in a previously centralized market. Chainlink has become an integral part of many DeFi projects, serving over 300 projects, including Crypto.com and NEXO.
Oracle networks have been normalized in the blockchain space, and institutions are increasing their investment in Chainlink. Grayscale’s trust holds over $8.2 million worth of LINK tokens, and their stacking habits are mimicked by token holders as well.
Behind the scenes, Chainlink is actively contributing to developing services that grow the blockchain network, facilitating a blockchain agnostic service. While hybrid smart contracts are a long-term vision that could strengthen mainstream adoption, Chainlink is improving processes within the current space. Adding value to the DeFi network, Chainlink is developing a DeFi oracle for Vesper Finance to accurately determine the total value locked (TVL) through decentralized price oracles.
Chainlink’s uplift into the top five coins by market capitalization was well-founded and reflected the value that it adds to the blockchain space. Its usability stretches beyond DeFi as Chainlink has secured partnerships with Paxos Global, Smart Zip, Wowswap.io, RCN Finance, and Upshot.io. What’s more, demand for Chainlink has grown, compelling eToro to list the token on their trading platform.
Chainlink’s current achievements strengthen its 2.0 vision for decentralized oracle networks. According to Timothy Peterson, Chainlink’s network is growing by 12%, and the increasing number of smart contract calls on the network correlates with the price increase. Compounding monthly increases will result in a yearly network growth of 300%. Furthermore, Chainlink reached 500 integrations globally, attaining over 500,000 non-zero account balances. Network integrations include “84 blockchains, 213 projects, 64 node operators, 43 data providers, 33 infrastructure [providers], 24 gaming projects, [and] 22 NFT projects.”
Chainlink’s rapid growth could enable a network effect which, according to Metcalfe’s Law, could rapidly amplify adoption. Metcalfe’s Law emphasizes that the linear growth of the network could entail an increase in its total value. As a result, adoption and integration could rapidly spiral to great heights and increase the price of the LINK token.
Chainlink’s 2.0 whitepaper amply describes the company’s vision of decentralized oracle networks (DONs). The development of DONs will give rise to new decentralized services that also incorporate off-chain networks. To that end, interoperability between off-chain and on-chain services will be facilitated by more agile oracle networks while decreasing fees by 90%.
The vision laid out by Chainlink depicts a digitized world fully immersed in blockchain technology. Smart contracts paved the way for the first use cases of blockchain beyond mere P2P transfers; now, Chainlink aims to enable the full potential of smart contracts.
Originally published at DailyCoin
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